WATCH: Competition watchdog turns eyes to South Africa’s automotive aftermarket industry

The Competition Commission recently embarked on a two-day road show in two provinces to raise awareness about the recently introduced guidelines for competition in the South African automotive aftermarket industry.

The final guidelines for competition in the industry came into effect last year in July and seek to do away with identified restrictive practices by vehicle manufacturers in the industry.
These include abolishing the restrictive fixed motor or service plans that deprive consumers of the right to repair or service their vehicles at independent service providers (ISPs) of their choice.
That means, under the new guidelines, vehicle manufacturers would not be allowed to void warranties if vehicle owners choose to take their vehicles to an independent service provider.

Other key changes under the new guidelines include unbundling of maintenance and service plans from the vehicle’s purchase price at the point of sale. You can also now choose to fit non-original or original spare parts by an approved dealer or an ISP during the in-warranty period.
The quality of those parts will be dealt with in line with consumer protection laws.

The competition watchdog visited automotive hubs and workshops of independent service providers (ISPs), panel beaters, and small and medium enterprises in the automotive aftermarket in Gauteng (Johannesburg, Pretoria, and surrounding areas) and the Eastern Cape (East London, Gqeberha, Mthatha and surrounding areas).

“The guidelines are aimed at promoting competition in the automotive aftermarket, specifically to promote economic access, inclusion and greater spread of ownership for historically disadvantaged individuals (HDIs),” said the watchdog.

The new rules give guidelines on the following:
• In-warranty service, maintenance and repairs by ISPs
• Appointment of motor-body repairers by original equipment manufacturers (OEM)
• Appointment of service providers and allocation of work by insurers
• Appointment of dealers by OEMs
• Preventing anti-competitive information sharing by multi-brand dealerships
• Fitment and access to spare parts
• The bundled sale of motor vehicles with value-added products
• Access to technical information and OEM-training for ISPs, and other guidelines.

According to the commission, the latest roadshow follows the receipt of several complaints regarding practices perceived as unfair in the automotive aftermarket sector.

These complaints include unbundling the sale of motor vehicles with value-added products; appointment of service providers to panels by OEMs and insurers and allocation of work; voiding of manufacturer warranties when consumers take their in-warranty vehicle to an independent service provider and access to OEM technical information by ISPs.
The commission handed out educational publications on the automotive aftermarket and charts that can be put up in the workshops containing information on what the guidelines mean for different stakeholders including consumers, ISPs, OEMs, insurers and approved dealers.

The commission pointed out that vehicle servicing, repairs and parts supply about 80% of the automotive aftermarket industry. This is why it is crucial to promote economic access, inclusion, and a greater spread of ownership in this industry.
“The guidelines for competition in the automotive aftermarket seek to do just that.”

The commission’s research shows that many consumers and independent service providers are not aware of these measures and the impact thereof on the purchase of products such as warranties and service plans.

“Since the guidelines came into effect in July 2021, the appointment of independent service providers to panels by insurers and OEMs and allocation of work also remains a top concern for consumers, associations, and independent automotive service providers.”

The guidelines can be accessed here.

Also Read: Competition Commission opens door to aftermarket service providers