Small business support grows for Commission’s proposed regulation of auto industry

LOCAL mechanics have thrown their full weight behind the Competition Commission’s new guidelines to regulate the automotive industry.

The Commission published a draft report recently that, if passed, will allow all vehicle owners to repair, use generic parts and service their cars at a dealer of their choice while keeping their warranty.

According to the Commission, this would open the door to more choice for customers and expand the automotive market to be more inclusive of independent stores.

Ken Janisch, owner of Distributor SA, an independent repair and parts shop that has been operating in Umbilo for 25 years, is one such supporter of the Commission’s proposed guidelines.

“Manufacturers are making big money on repairs when they have a one or two year guarantee and they don’t allow you to buy anything but their parts. Their prices are just astronomical, it’s unbelievable. They make more money through their parts than car sales,” said Janisch.

“Do you know what it [proposed guidelines] will do? It will bring down the cost of genuine parts because they [manufacturers] will have to be competitive and they have not got a market that is married to them through a contract that says you have to buy from them,” he said.

Janisch, who sells imported generic parts, said there would have to be checks and balances regulating which generic parts are acceptable and which aren’t.

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In the report, the commission makes the submission that generic parts would have to be of similar quality to the original, and would need to be approved by the manufacturer.

Ismail Limbada of Ace Performance, an independent exhaust repair company, said it would benefit customers and businesses if vehicle owners did not have to worry about losing their warranty when coming to his shop.

“We hear that story constantly here about people coming through and then fearful for their warranty, but their exhaust is damaged and they can’t afford to go to their agents and replace it for an astronomical figure, so they come to us and hope for the best,” he said.

Limbada said the new guidelines would bring more business to smaller automotive companies allowing them to expand and employ more people.

The only drawback, he said, was that there was nothing stopping manufacturers from declining to approve small businesses.

However, the Commission’s report states that manufacturers would have to list detailed reasons for not approving a business and give the business a chance to meet those requirements for later approval.

The Competition Commission is widely considered as the last bastion of democratic oversight not susceptible to political capture.
The South African Motor Body Repairs Association, a countrywide organisation representing hundreds of businesses, called the guidelines a “big win” for all stakeholders.

The guidelines speak to the elimination of anti-competitive behaviour in the market, to transparency, to an equal playing field for smaller business, to competitive pricing and to freedom of choice,” it said.

Right to Repair South Africa, a nonprofit organisation advocating for consumer freedom of choice for repairs said it was encouraging to see such a strong focus on increased consumer choice, fair competition and competitive pricing.

However, NAAMSA (National Association of Automobile Manufacturers of South Africa) has accused the commission of acting in bad faith and said its proposed guidelines require carefully considered interventions that can be implemented gradually over a reasonable period of time.

“Introducing these enforceable guidelines is extremely punitive and a dangerous retrogressive step that is counterproductive and which will harm the economy,” said Michael Mabasa, CEO of Naamsa.

The deadline to comment on the Guidelines for Competition in the South African Automotive Aftermarket Industry is 16 March.
Interested parties can submit their written comments to: advocacy@compcom.co.za

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