On Friday the Competition Commission published its draft guidelines for the Automotive Aftermarket sector. There has been a lot of industry reaction in the media and some consumers may not fully appreciate the impact of these guidelines.
Right to Repair South Africa (R2RSA), a Section-21 not-for-profit organisation that has been advocating for freedom of repair choice for vehicle owners over the last six years, has touted this as a big win for consumers and an opportunity for market players to report uncompetitive behaviour. It is encouraging to see such a strong focus on increased consumer choice, fair competition and competitive pricing.
There are some aspects of the guidelines which give immediate direct benefits to the consumer and other aspects which impact the industry players more with no direct effect on the consumer. “We are nevertheless confident that all of the aspects will increase competition and allow easier access to the market by independent service providers. This in itself is a major benefit to the consumer because more competition always leads to better prices, better quality and better service,” says Gunther Schmitz, Chairman of Right to Repair South Africa (R2RSA).
So as a South African motorist here are the 4 main benefits to you?
- Unbundling - OEMs cannot bundle service plans or motor plans and other value added products or ad-ons with the sale of motor vehicles. These need to be offered as separate products showing the cost and saving for the consumer. Schmitz says this means consumers can now shop around for the best possible price.
- Freedom of choice during the warranty period: This is a big win. The warranty cannot be voided because the consumer chooses to go to an independent service provider (ISP) for maintenance or for repair work which would not traditionally be covered by the existing warranty. The fitment of non-original parts or accessories can also not be penalised. Schmitz explains the liability for the parts fitted stays with the ISP. For example if a consumer fits brake pads, a headlight or a roof rack from an independent supplier and the engine fails, the warranty remains in place. If the roof rack fails or causes damage to the roof, the provider of the roof racks will be liable as provided for in the CPA.
- Access to technical information and training by ISPs: This allows independent workshops to get the same technical information, programming tools and training as the OEM approved workshops. For the consumer this brings peace of mind but also, and more importantly, freedom of choice to select where one wants to go. Competition is always healthy and has been shown to lead to more investment.
- Insurance work: Insurers must advise consumers, in clear and explicit terms, that they have a right to have the repairs on their vehicles undertaken by any service providers of their choice. This could be an approved motor body repairer or an independent service provider. Basically this means the consumer has the freedom to choose where his vehicle is repaired, irrespective if it is an insurance claim.
“It is important to bear in mind that these guidelines are still in draft format. The good news is they are following the highly successful model that has worked in Europe and America and the biggest winners, are motorists. You may hear a lot of noise in the market about standards and disinvestment but that is simply noise. There is not one single example overseas which supports the claim that this will lead to disinvestment and stunt growth. Just the contrary. In South Africa particularly the employment numbers and the local value creation is far bigger in the aftermarket than in the production of motor vehicle. The aftermarket industry has been gearing itself for the last 6 years to be ready for this exact guideline. Real growth is going to happen is in the small to medium sized businesses. It is important that industry and consumers report unfair business practices to the Competition Commission. This is an opportunity to use your voice to fight for freedom of choice,” concludes Schmitz.