Extraordinary times call for extraordinary strength and courage

This is without a doubt the most challenging economic and trading period the RMI and its associations have experienced in our history. The sustainability of the automotive aftermarket is at a critical junction.
I appreciate that the last two months have created a lot of financial pressure on all of our members. The survival of the automobile aftermarket sector is key for South Africa, not only as a vital employment sector and contributor to the fiscus, but also as a significant enabler of, and support function to, many other sectors. Without an effective and operational automotive aftermarket, strategically located in each district, community, town, metro and city across all provinces, we are of the view that vehicle safety and effective vehicle repairs and maintenance will be negatively impacted and detrimental to the much needed and speedy recovery of the economy.
In preparation for work readiness our members have adopted a phased approach to help alleviate financial pressure until business momentum can resume. It has allowed us time to ensure our businesses are all fully compliant with the stringent sanitisation regulations and protocols which need to be carefully adhered to. The reality is that just one positive COVID-19 case will close a business and we cannot afford that at this stage.
The RMI has accordingly developed an indepth COVID-19 business risk plan which will be used and updated for some time to come. We feel confident that our industry is ready and committed to implement all measures and maintain compliance at all times.
We understand that business recovery will take as long as six to nine months, if not longer, post lockdown to return to a sustainable and profitable return on investment. We not only have to deal with the impact of the virus and the lockdown, but at the same time the global retraction of the economy.
We need to be agile, adaptable and resilient during this time. We have found new ways of connecting and talking to members and customers with zoom calls and podcast and we have seen virtual training taking the lead. Moving forward we will continue to use these digital channels but I still see a more blended approach to avoid losing the power of face-to-face interaction. Our industry is known for its innovation and now more than ever, we need to find new, more effective ways of connecting with customers and staff. We will find a new normal.
I would like to end off by expressing my appreciation and pride in the way our member businesses have conducted themselves in these hugely challenging times. I would like to believe that this crisis will present an opportunity to come back stronger together.
Jakkie Olivier

Cost of compliance

Last year RMI commissioned IQ Business, the largest independent management consulting firm in South Africa, to conduct research into the cost of compliance and its impact on commercial sustainability in the retail motor industry. The provisional findings of this report have just been concluded and I wanted to share some top level findings with you.

Business owners generally see the value in regulation

Barring some exceptions, business owners understand the role that compliance plays in their industry and are more often than not, grateful that the industry is regulated. Albeit to varying degrees, many business owners also recognise how the current set of compliance that pertains to their business is relevant to both their industry, as well as to South Africa’s unique socio-economic context. This generally means that if communicated properly, resistance to regulation is unlikely to be unmanageable. However, this does not mean that business owners perceive the regulatory environment to be perfect.

Health & Safety and the environment

The research provided insights into the compliance areas business representatives believed they could perform better in. Health and Safety enjoyed a lot of emphasis. This has been earmarked, given the potential risks involved, as an area requiring further investigation.

Environmental matters

There is overwhelming consensus amongst business owners that not enough is being done by all stakeholders concerned to reduce the impact that industry is having on the environment. Many RMI members also believe that this is an area that is under-regulated. Given the attention that sustainability and sustainable development is receiving globally this finding is not surprising and, at the same time, encouraging to see. It also suggests that if regulation matters in this area are communicated and driven tactfully, then businesses are likely to respond responsibly.

Labour-related matters

Although, business owners didn’t always highlight compliance in labour-related matters as an area that they could do better in, across the associations there exists a unanimous and almost-consistent view that labour-related matters are over-regulated. Specifically, business owners expressed the view that the regulation disproportionately favours the employee, with employers feeling that they have inadequate recourse in cases of poor performance. There is a perception that employees are excessively protected even when underperforming or transgressing. Assessing the extent to which regulation in this space is fair and just to both parties is beyond the scope of this exercise. However, one can conclude that this is an area that cannot be ignored for long.

Commercial impact: Smaller businesses are more likely to be threatened by compliance costs

In spite of the fact that many business owners find themselves worried about the impact of cost of compliance on commercial sustainability, as well as the fact that 23% of business owners overall have considered closing their business on account of compliance costs, when it comes to the question of threat to commercial sustainability, not all businesses are impacted to the same extent. Smaller businesses (categorised as less than R30 million turnover per annum) are the most susceptible. Therefore, this research lends support to the notion that small businesses are the hardest hit, relatively. For example, a SAMBRA business with turnover under R30 million is calculated to show a net profit margin of 14% when not compliant and only 5% when compliant. This phenomenon will inevitably serve as a disincentive for non-compliant SMMEs that are considering becoming compliant and also considering becoming RMI members. It begs the question if there is scope for the compliance obligation to be relaxed somewhat for businesses that fall under this smaller category? If so, what could it mean in practical terms?

The start of a new decade

I wish all of our valued members, industry stakeholders and staff the very best for 2020. We are positive and excited about the start of this year and the new stories we will be sharing with you through Automobil.
As mentioned in the last edition, we have launched the new RMI and associational logos and merged 13 associations into eight. Each of the logos has been simplified and modernised, whilst still retaining its unique essence and rich heritage.
This change has also prompted us to re-look how Automobil is managed in 2020 and we felt it made sense, in line with the general trend in printed media worldwide, to reduce the publication of our magazine from monthly to every second month. We will focus on six excellent issues which will each enjoy a two-month shelf life, commencing with this edition.
The magazine remains an important and valued source of information for the industry. During the next few months we will be carrying out some further research to ensure both our content, and the platform on which it is presented, remains relevant, appropriate and in line with changing media trends and the growth in digital news. We will be contacting readers and would appreciate your input in this regard.
We will continue to share weekly news in our RMI web letter. We will also continue producing a digital version of the magazine which can be easily downloaded from our website. This is an easy and quick way to access Automobil.
We are living in changing and dynamic times with artificial intelligence (AI), robotics and automation being applied to create ingenious innovations and speeding up the evolution of industries. The retail motor environment is no exception. We will need to keep abreast of this fast-moving transformation, especially around customer care and after-sales service issues.
A priority of the RMI will be to ensure we ready our members for these changes through awareness, education, and skills development. I have no doubt our objectives and actions this year will influence not only the automotive industry, but generations to come. A new-look automotive industry is no longer a dream. It is happening and it is happening at a rapid rate. How our members and business owners think about their future in the industry, how they prepare for the change and most importantly how they meet the ever increasing demands of consumers will largely be influenced by our actions and aspirations at the beginning of this new decade.
We all are faced with concerning external challenges over which we have little or no control. An ongoing low growth economy and performance with the threat of a downgrade to junk status by Moody’s and other rating agencies; pressure from load shedding and Eskom’s inability to provide sustainable power for businesses and industry to produce and deliver products and services coupled with a lack of appropriate skills and leadership to save our country from a total collapse will colour our business landscape this year. A collective effort, effective co-operation and collaborative relationships amongst all key stakeholders are therefore fundamental as we enter the year 2020.
We hope you enjoy our latest edition. The focus of this edition is on one of our newly-merged associations, the Automotive Remanufacturers’ Association (ARA). ARA represents the remanufacturing trade sector. ARA promotes the responsible reuse of remanufactured engine components for a ‘greener’ environment (carbon footprint). Its members are dedicated to providing consumers with only the best advice, finest service delivery, and highest quality workmanship.
The RMI and its various associations and structures remain committed to making a difference in the lives of business owners and the economy going forward. Our hope is that 2020 be the beginning of great and lasting outcomes in the automotive industry – outcomes we can all be proud of in time to come.

Driver's Seat

As we head into the ‘20s it is with enthusiasm that we bring to our members, associations and the public a new RMI look with the introduction of our modern, new RMI logo as well as new logos for our associations.
The organisation, as we know it today, was restructured and named the Retail Motor Industry Organisation (RMI) in November 1999 from the then Motor Industries’ Federation (MIF) and South African Motor Industry Employers’ Association. The current RMI and association logos were all designed and implemented during 1999. Twenty years later, in 2019, the industry has changed drastically which prompted the RMI to re-think how best to position itself to deliver products and services that would meet the demand of its members and new generation entrepreneurs in the automotive industry.
The RMI is a well-known name in the motor industry, representing over 7,500 member businesses. Its highly-skilled staff operate out of six regional offices. The RMI plays an important role in the motor industry as it enables motor traders to deliver top-class service to motoring customers in South Africa.
The RMI brand carries weight in industry as well as government circles. This is due to the fact that the RMI’s endorsement of events provides credibility to both local and international exhibitions, conferences and other events. We wanted to make sure that the refreshed look and vision honoured all the RMI is and stands for.
Another primary objective of the design brief was to unify a group of 13 different constituent association’s logos, that have developed at different times and in different ways, into eight new logos that represent the eight associations. We believe this has been achieved through a rigorous consultative process and the new look will take the RMI, its associations and industry forward during the next couple of years. For more on this story and how the logos developed please read the RMI feature on page 24.
We implore all members to embrace the new look organisation and to distinguish themselves from non-members through the display of the new signage and image on their buildings, stationary, delivery vehicles and so on.
On a final note, while the struggling economy is likely to continue during 2020, team RMI is excited and committed to take the industry with our new look to a new level. We have the best interests of our members and the industry top of mind at all times.
I conclude by wishing all our members, the RMI Board and other committee structures, management and staff of the RMI as well as our readers a happy festive season. Please travel safely and enjoy time with your loved ones.
I would also like to thank you all for your support, loyalty and contribution to making the RMI a success.
As we look toward a new year, I would like to leave you with this quote from Winston S. Churchill – Success is not final, failure is not fatal: it is the courage to continue that counts. See you in the new year.

New app connects industry and consumers

For several years now there has been a call from the motoring sector as well as the motoring public for a quick and convenient way to find service providers. We are excited that, following months of development, RMI Connect is live and available on Play and Apples Stores.
RMI Connect is an app that assists motorists in finding an accredited service supplier in the category of service required closest to them via GPS or in the region of their choice. It provides the full contact and address details as well as any service or product specials.
From a customer-service point of view, RMI members will be able to use the app to find compliance documentation; to market products and events; for training purposes; to connect with other RMI members and to access up-to-date RMI news. There is a plethora of information available on the app making it a very handy tool for our members.
We have also included a section where motorists can log a complaint if they are unhappy with any element of the service they receive, or to report a supplier claiming falsely to be an RMI member.
I strongly encourage all RMI members to download the app and to tell their customers and friends about it. We want to spread the word that there is now an app that takes the guess work out of locating a good partner for vehicle care and seamlessly connects consumers to the closest RMI member.
Please note that in the case of Android phones, only version 7 and higher of the operating system are supported by Google Play Store and will have access to the RMI Connect app.
On a different topic, this edition includes a feature on training in the sector and it is encouraging to see the efforts being made to upskill our industry. It is up to every business and every person in the industry to be involved in training, mentoring, coaching, and upskilling of some sort.
As the RMI, training is one of our strategic priorities and as such we are involved in various transformation initiatives including the Centres of Specialisation programme in association with the Department of Higher Education and Training, the NAAASP Business Entrepreneurial Development project in association with merSETA, Gender and Disability management programmes in association with MISA, a partnership with SEDA on small business development to black informal and semi-formal businesses, and more.
Our associations are also, in their own rights, spearheading or getting involved in training partnerships with industry players. This means that there are ample opportunities for RMI members and industry stakeholders to make a difference through upskilling their sectors. This is vital if we are to ensure the health and longevity of the motor industry. If you are looking for a way to get involved Louis van Huyssteen, the RMI’s National Training Director, is on hand to discuss what opportunities would best suit you. Alternatively contact your respective associational director.

Understanding company responsibilities under Aarto

RMI members and businesses in general are, on an on-going basis, challenged with costly and sometimes controversial regulatory compliance matters, the most recent being the Administrative Adjudication of Road Traffic Offences (Aarto) Act and Amendment Bill. The implementation and consequences for business was, and still is, the topic of much discussion since the Amendment Bill was passed in August.
What I believe is pertinent is that companies need to understand their responsibilities as well as ways to protect themselves from possible liability relating to employees’ driving offences.
While there is no proxy system when it comes to the demerit system, companies are responsible for their company fleet, and need to ensure a system is in place for company drivers to comply with the Aarto Act.
In many cases business owners serve as the representatives of the company on behalf of their fleet. While the Aarto Amendment Bill is quite clear that company representatives cannot lose points on behalf of company drivers, they have to ensure demerits accrue to the correct person.
Every company must have a responsible person who is ultimately accountable for dealing with licencing, roadworthiness, as well as traffic fines issues. It will fall on the responsible person of a company to be answerable so as to ensure that all provisions of the National Road Traffic Act and the Aarto Act are complied with. Where they are not, they will need to assign the blame to the natural person who was caught committing an infringement. The most common infringements are those received in the mail (a camera fine) and addressed to the company, with the responsible person’s name and ID number also on it. Infringements or offences for which the driver is stopped for at the time of commission would be written up in the driver’s name at that time.
Not keeping a register of the driver or person in control, while not specifically mentioned in the Aarto Act, becomes an infringement under the obligation that does exist of ‘failing to obtain the particulars of a driver prior to letting them exercise control over that vehicle’. For the first time in traffic legislation in this country, companies and organisations are required by legislation to record these details. It is vital that the address details on record with eNatis are correct and up-to-date so that infringement notices are deliverable to the correct person. The Aarto Act deems all notices that have been posted to the last known address of the infringer to have been received 10 days after posting by registered mail.
Companies need to include an Aarto clause in employment contracts for all employees who will be exposed to the demerit system. This must include company reps, delivery drivers, and so on. This clause must allow the employer access to the employee’s demerit history. The reason for this is once someone has received 13 demerit points they are no longer allowed to drive a vehicle. The employer can be held responsible if the employee drives after that.
Unfortunately, currently there is no system available from authorities where demerit points accrued can be monitored in a real-time live database.
I highly recommend that company representatives take the time to familiarise themselves with Aarto.

Dealing with disputes – we are here to help

Being in the service industry, customer disputes and the resolution of these is a large part of what businesses in the motor sector face almost daily. And it’s not easy. But RMI members can rest assured that the RMI is here to help.
We have a dispute resolution rate of over 90%. This means that when customers or members approach the RMI for assistance because they can’t find common ground, we assist in finding a solution, almost 100% of the time. Considering the RMI receives over 20,000 complaints and inquiries through its various regional offices annually we believe this percentage of resolutions is commendable.
What’s key to remember is that there is a complaints process that members and consumers need to follow. We addressed this issue in last month’s edition of Automobil but I’d like to highlight some important points.
There are different bodies with specific mandates within the industry. The Motor Industry Ombudsman of South Africa (MIOSA) is tasked with the resolution of consumer complaints through a process of adjudication. This can be a time-consuming exercise and the consumer is never quite guaranteed of a specific outcome.
Rulings made by the MIOSA are not legally enforceable in their own right. Only the consumer tribunal can convert MIOSA rulings into awards that are executable in law – a process that can also be extremely time consuming.
With this in mind, the RMI developed an alternative for members and consumers before the MIOSA is approached, or the legal route taken. The process is based on facilitation between consumers and accredited- RMI members and is designed to produce speedy and equitable outcomes.
Members are always encouraged to try and resolve the matter directly with their customers first. If this doesn’t work then members can direct disgruntled consumers to the RMI. We have tried to make the process as easy as possible so complainants can download a complaint referral form from our website and submit it to the nearest regional office.
Please bear in mind that the facilitation process is non-legal. No legal representation is allowed unless otherwise advised and is done without prejudice. The process is quick and effective. In most cases, disputes are resolved but if no suitable outcome can be reached, the complainant can then escalate the case to the MIOSA.
The mediation process is a free service offered by the RMI. And is one of the many benefits that RMI-accredited members enjoy. Only if a technical inspection and report is required is there a charge and these costs will be for the complainant’s account.
The RMI is a reputable brand and we strive to ensure this remains the case. We believe that a fair and just dispute resolution service reinforces this. By following the process set up by the organisation it is highly likely that the case will be resolved so we encourage all members to do so and advise their customers accordingly. Let’s work together to make sure the system works for all.

Ethical business in the motor sector is a two-way street

Doing the right thing even when no one is watching. This is the crux of what the Retail Motor Industry Organisation (RMI) believes ethical business best practice should be based on.

Ethical behaviour, however, needs to extend not only to best practice by service providers in the industry but to consumers too. It really is a two-way street. The RMI’s Code of Conduct encourages ethical behaviour through quality servicing and products, reasonable pricing and the honouring of warranties. It also includes a commitment to being environmentally responsible. To be an RMI member, service providers have to adhere to the Code and there are repercussions if this is not the case.

Unfortunately, consumers are not always transparent or forthcoming when dealing with service providers. We regularly get cases where customers do not disclose the full story before booking their vehicle in for repairs or services etc. The vehicle, for example, may have been through several providers prior to this who may have damaged or altered the vehicle. Without knowing the full history, it becomes more complicated and difficult to properly address the issues. We then find the customer becomes disgruntled and dissatisfied with the service provided.

While the RMI is continuously encouraging compliance to ethical norms and best practice within the motor industry, and especially amongst its members, customers can also play a part in improving the ethical standards of the industry.

We propose that our members have processes in place to safeguard against unethical practices. For example, when a vehicle is booked in for a repair or a service, they need to ensure photos are taken of the vehicle including parts or damages that may not have been explicitly mentioned by the customer. These should be shared with the customer, if necessary. All quotes need to be explained in detail and signed by all parties before any work commences. There also needs to be a discussion with the customer if policies, such as a pay-before-release policy, may apply to this customer’s particular situation.

Most complaint cases received by the RMI boil down to miscommunication between the customer and service provider. Transparency and ethical behaviour from both parties will go a long way to remedying this. We encourage customers to be upfront when engaging with service providers, to ask questions and to use reputable, accredited service providers within the RMI. By doing this they can be assured that there is a body that they can go to if they believe the service provider is behaving in an unethical way. There is also a dispute resolution process through the RMI to assist customers and members.

We strongly believe that the motor industry needs to be an ethically sound, and, socially and environmentally responsible, especially since there is an emotional and financial attachment to vehicles. We call on the public to commit to being transparent when dealing with service providers and they will commit to offering the best service possible in an ethical way.

2019 MIBCO wage negotiations

The table has been set for the 2019 round of wage and substantive negotiations for the retail motor industry, under the auspices of the Motor Industry Bargaining Council (MIBCO).

The two trade unions and three employer bodies were given the opportunity to exchange bargaining proposals (or demands as the trade unions refer to it) on 27 April. The RMI has indeed received the trade unions’ demands and conducted extensive mandating roadshows throughout the various regional main centres during the first two weeks of May 2019.

These roadshows were well attended, and members actively participated in the development of a consolidated RMI/ business mandate, which will form the basis from which the core negotiating team will engage with the trade unions at the first of three negotiation sessions on 22 and 23 May. The second session will take place on 5 and 6 June and the date for the third session is still to be determined.

The parties to negotiations are hard-pressed to conclude and sign a new three-year MIBCO Main Agreement before the end of June in order to ensure that sufficient time is afforded to the Minister of Labour to publish and extend the agreement to non-parties. The current Main Agreement, and for that matter the Administrative Agreement too, expires on 31 August 2019. The RMI and its negotiating partners appreciate the urgency with which a new agreement needs to be concluded. This will be no easy task, considering the large number of trade union demands, ranging from (to mention a few) a 15% across-the-board wage increase, to a R5,000 per month housing allowance, a 20% shift allowance for all employees, and a 20% increase in non-wage cash components like stand-by and call-out allowances.

In the absence of published and extended Main and Administrative Agreements by 1 September 2019, MIBCO risks serious challenges in relation to the continued collection of MIBCO levies, trade union subscription fees, Sick-, Accident- and Maternity-Pay Fund (SAF) contributions, additional holiday pay, and the like – all of which are collected in terms of the Administrative Agreement. This will have an adverse impact both on MIBCO, as well as the various social security funds in the industry.

We urge our negotiation partners to share the urgency, earnestness and good faith with which we are approaching this process. We believe a positive outcome will ensure the sustainability and profitability of the industry, as well as aid the creation of much-needed jobs and the alleviation of poverty in our country as a whole.

Do apprenticeships make financial sense for your business?

For two years, the RMI, merSETA and IMI UK embarked on a research project on whether is makes financial sense for automotive employers in South Africa to take on apprentices. After the project was completed in 2018, the resounding answer was yes. South African automotive employers can achieve up to a 200% return on their investment from contracting or employing apprentices.

The research focussed on three occupations, namely auto mechanic, body repair and spray paint. The research criteria was made-up of three parts. Firstly, to apply modern data collection and analysis techniques at automotive employers for the three trades. Next to ascertain the estimated business value in Rands that an apprentice can be expected to deliver, and lastly to develop a Return On Investment (ROI) calculator for use by employers.

The data collection and analysis included utilisation which referred to worked hours in proportion to attended hours, efficiency which was sold hours compared to work hours, and productivity – sold hours in relation to attended hours. A ratio was then formulated to identify the ROI.

What’s interesting is that small and medium sized employers are reluctant to contract and train apprentices. Why? Because the perception is that apprentices don’t pay their way and it’s costly to train them. This perception has now been disproved by scientific research. Historically there has been a lack of measurable apprentice performance and productivity data. Essentially no access to current and reliable information. We believe this problem has been resolved by the ROI Calculator which is available, free of charge to employers.

It is a web-based, easy and user-friendly tool. Employers only need to input three items – expected sold hours for the selected occupation, the charge-out rate applicable in the business, and the apprenticeship duration. Using this information, the ROI Calculator’s algorithm will calculate, in seconds, the estimated ROI for the apprentices as if they were employed by the business. It incorporates actual employer costs including: time and level-based national minimum apprentice wages; training; level and trade testing; and ancillary costs and opportunity costs to calculate a truly reliable ROI.

The ROI Calculator intelligence already has productivity data (in the form of standard productivity curves) attributed to actual apprentices enrolled on the Competency Based Modular Training programme installed. All data remains anonymous.

It is such an easy process – there are literally three steps. As an employer all you need to do is logon to http://roi.merseta.org.za/, follow the steps and a headline figure of the gross benefit in Rands is displayed, with a choice of three apprenticeship durations.

This information is supplemented by a graph showing the net monthly Rand benefit and cumulative ROI. A second click of a button reveals a graph of the rolling monthly net benefit up to the end of the apprenticeship where the full apprentice ROI is displayed.

The ROI Calculator shows without doubt that when well-recruited and guided through an apprenticeship, an apprentice can pay back the investment (and more) that the employer made during the apprenticeship period.

As the RMI, along with merSETA and the IMI, we are proud to promote the Apprentice ROI Calculator to you. We need more automotive employers to recruit apprentices for the economic benefit of our sector and communities so we are appealing to all our RMI members to make use of this ROI tool.

We urge you to be proactive by employing apprentices and investing in the youth for increased productivity. As an industry we have to address the automotive skills shortages, reduce unemployment and be part of real transformation.

The reality is that there has been no real skills development and/or under-investment in human capital for many years in our country. Skills have been outpaced by technology and there has been a loss of businesses and profits. Improved skills will result in increased productivity. It is all about professional standards and changing of perceptions. Consider an apprentice. Use the ROI Calculator. You may be surprised by the results. It is never too late to make a difference.