Competition commission hosts aftermarket workshop

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The RMI has offered its full co-operation to the Competition Commission to help reach a workable solution for all stakeholders regarding perceived exclusionary practices in the motor industry

Delegates at a recent Automotive Aftermarket Workshop – hosted in Pretoria by the Competition Commission – presented their views on the need for change regarding perceived exclusionary practices in South Africa’s motor industry.

Billed as an information gathering session to bring together industry stakeholders, the workshop was attended by representatives from a number of motor industry sectors.

Vishal Premlall, Director of the Motor Industry Workshop Association (MIWA), said the insights shared were valuable. “There was broad agreement among stakeholders that the existing status quo was exclusionary and unsustainable and could not continue,” he said.

In his address to the Commission, Premlall said MIWA directly represented more than 2 500 independent aftermarket workshops ranging from start-ups to well-established, five-star businesses and, indirectly, a further 5 000 or so non-member enterprises.

He said today’s motor industry consumers were locked into restrictive warranties that were of long duration, which denied them the right to choose where to have their vehicles serviced.

“Similarly, while their vehicles are under warranty consumers are compelled to pay a much higher rate for repairs and parts, compared with prices charged by independent workshops.”

Premlall said the parts price issue had already received wide and concerted international coverage, the most recent being in India where that country’s Competition Commission ruled against 14 car companies which were found to be engaging in price manipulation.

“While we understand the foreign direct investments that motor manufacturers put into South Africa have natural benefits like job creation, we are also aware that the automotive aftermarket employs a greater number of employees with a far higher value creation in South Africa.

“As it stands, the model is slowly squeezing out little businesses at the bottom of the chain, which are trying to remain sustainable in an already difficult market,” he said.

Premlall added that there had been a longstanding need for a fair and competitive regulatory environment that would enable freedom of choice for consumers and which would give the aftermarket’s small and medium enterprises a better chance to stay in business.

“Consumers have been facing tough economic times for a considerable period now, so we welcome the Competition Commission’s efforts to investigate methods of finding a workable solution that will not only relieve the burden of consumers, but also facilitate discussion between industry stakeholders,” he said.

In her address, Viviene Pearson, a representative for the South African Insurance Association (SAIA), pointed out that insurance premiums were becoming unaffordable partly as a result of the high cost of vehicle repairs.

“Only 35% of cars in South Africa are insured, mainly because consumers are under financial pressure. Alternate quality parts do exist and could go a long way to bringing down the price of insurance premiums if used in vehicle repairs,” she said.

Equally, Leonard Smith, representing the South African Auto Repairer and Salvage Association, said the time was right for reform. He said that prior to 2002, technical skills had formed the basis of many types of vehicle body repair.

“After that it became all about investment as Original Equipment Manufacturers (OEMs) started dictating which specialised and expensive equipment needed to be used.

“Many workshops simply could not afford to comply. And there are further barriers to entry. Even those who have achieved compliance still don’t get work,” he said.

Bruce Allen, who spoke on behalf of National Automobile Dealers’ Association (NADA), said that in line with global trends and South Africa’s drive for the consumers’ right to choose, the Competition Commission discussion was relevant – worthy of further debate.

He warned, though, that due to the complexity of vehicles – and resultant skills required to understand the technology and build design – ensuring that vehicles were worked on by people with the correct skills and tools was imperative to protect consumers in terms of vehicle integrity and safety.

Further, he pointed out that it was an OEM’s right to protect the integrity of its products while it was the custodian of the insurance product that covered defects – the warranty.

Sisa Mbangxa, representing the African Panel Beaters and Motor Mechanics Association (APMMA), described accreditation processes imposed by OEMs as exclusionary.

“OEMs keep using safety as a reason for restricting access to vehicles under warranty. But what about the 70% of vehicles on our roads not under warranty? Is their safety less important?” he asked.

Mbangxa added that the APMMA supported the MIWA-driven Right2Repair (R2R) campaign, an initiative started locally in 2013 – and affiliated to the International R2R Coalition – with the aim of enabling consumers to make their own choices regarding vehicle service providers in terms of maintenance and repair.

“The primary focus of R2R is to champion a workable solution for South Africa’s consumers,” said Premlall. “MIWA’s members are very active in this regard and have worked hard for a considerable period to engage with industry stakeholders. We are, therefore, delighted to see that the Competition Commission has finally put the topic in the spotlight.”

Hardin Ratshisusu, Deputy Commissioner of the Competition Commission, said it was his view that many regulations governing the motor industry were in need of an overhaul. He asked stakeholders to consider the introduction of a voluntary code – with consequences for defaulters – with a draft to be formulated in the next six months.

Jakkie Olivier, CEO of the Retail Motor Industry (RMI) – a broadly representative collective voice for the automotive aftermarket in that it represents 14 different trade associations – confirmed that the Organisation would be convening workshops with its members to prepare a draft code which would be submitted to the Competitions Commission for consideration.

“We will offer our full co-operation to the Commission to help reach a workable solution in the best interest of all and we are willing to take the lead on this initiative, together with affected stakeholders,” he said.

 

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