During March I attended an automotive workshop, convened by the Competition Commission of South Africa, looking for solutions and remedies in addressing the vexing issue of improving access to the automotive aftermarket’s products and services.
This is a subject, and a much debated issue, that I have been following for many years, and I must admit, that after all this time, and after numerous interactions with the role players, and much discussion from all sides of the industry, this remains “a riddle, wrapped in a mystery, inside an enigma.” I borrow this phrase from Winston Churchill, who, in a speech in October 1939, when describing the intentions and interests of Russia, just after the outbreak of World War II, said "I cannot forecast to you the action of Russia. It is a riddle, wrapped in a mystery, inside an enigma; but perhaps there is a key. That key is Russian national interest."
This quote is now used to describe something that is so dense and secretive so as to be totally indecipherable or impossible to foretell. And the machinations going on before the workshop even started just added to the mystique. The first programme sent to me had the National Association of Automobile Manufacturers of South Africa (NAAMSA) listed as a participant in the first panel discussion, but on the day of the workshop they were no longer on the program. Two changes – first, NAAMSA was no longer involved, and secondly, the spelling of programme had changed to program. Who invited the Americans, in the form of bad spelling? – please guys, program means a computer program in the English speaking world, and only the Americans have not got with the programme! But, the Russians had been invited, in the form of the Federal Anti-Monopoly Services of Russia. They were there to present an international case study of how they had enforced transparency and compliance in their automotive market, but as I sat listening to the two presenters, one who looked uncannily like Vladimir Putin, Winston Churchill’s quote came to mind, and I smiled at the irony.
What is the key to our South African enigma? On one hand we have the original equipment manufacturers, many of whom have invested large amounts of money in the country, even though we are relatively insignificant in the big scheme of things (South Africa only makes up 0,6% of global vehicle manufacturing – and then with less than 40% local content), and these manufacturers, including the vehicle importers, are looking for a decent return on investment – it’s in their interest. Included in this return on investment is the profits made on parts and servicing, and if the truth be told, this is where the money is made. Then, on the other hand, we have the independent aftermarket, made up of mainly small and medium size businesses, who want a bigger slice of the automotive aftermarket, and this is driven primarily by the right to repair campaign – it’s in their interest.
Both sides have valid arguments, but both sides can also be accused of distorting the facts when presenting their arguments. For instance, if a panel beater repairs my bumper whilst my car is under warranty, I do not see how this minor repair could impact the integrity of the car. So why should I lose my warranty? But then, on the other hand, to bring emotion into the argument, and to accuse the automotive industry of genocide, is also taking things too far. I kid you not. One panellist at the workshop did just that, and I quote, “the industry must redress the wrongs of the genocide they have caused.” Pretty emotional and inflammatory stuff, which kills the chance of meaningful and mature debate, and does far more harm than good.
There is clearly a need and an imperative to transform the industry, but if I can give the Competition Commission some good advice, be more selective about who you invite to be panellists at the next workshop. Reasoned and constructive negotiation is the way to go. Crazy statements get you nowhere.