It looks like another bulldozer act from the DTI as they plough forward with many-contentious issues by implementing new codes of conduct in the automotive repair sector. This will include some radical changes in the collision repair trade of operations going forward and at a recent press conference held in Johannesburg the new car franchise dealers outlined their position with the proposed new Code of Conduct for the benefit of independent dealerships.
South Africa currently has approximately 1 600 new franchised automotive dealerships, comprising R48 billion worth of investment. It employs 60 000 personnel directly. According to Lionel October, Director-General of Trade and Industry, the South African motor industry is impressively sustainable. Speaking on behalf of the Trade and Industry Minister, October described it as a “South African success story.”
The industry provides substantial benefits to the country and its impact on the overall economy and employment is substantial and far-reaching. Production and sale of automotive products also generates profits for a wide range of industries up and downstream.“ To say we are anti-competitive is untrue and defamatory,” says Dommisse. “We want to work with government and we want prosperity for all, but we want it to happen in a responsible manner that does not adversely impact consumer safety, the economy and job creation. We support a code that opens up the market in a way that protects investment, economic sustainability and consumers.”
“We are a highly regulated industry and this protects our South African consumers. It will be impossible to effectively regulate a bigger industry in such a short space of time. Furthermore, if someone, or some organisation, is prepared to invest in us and set up costly facilities and services, then we have an obligation to protect them and their investment. This is not anti-competitive, it is responsible business practice. We also believe strongly that manufacturers have the right to determine the standards of those that service their products in much the same way that Boeing does with airliners or Apple does with cell phones, tablets or any of its executive products,” says Dommisse.
“We want to build our competition but it’s not reasonable to do it immediately. Our businesses have to meet global manufacturer standards which, on average, take many years to establish a return on investment on meeting these standards. Our level of investment is mandatory. We therefore support opening the market slowly and responsibly. There are no defined standards in the code yet. These need to be developed appropriately, and here we can help,” Dommisse adds: “South African consumers should consider that service and maintenance plans which are built into vehicle purchase prices at the time of sale are beneficial to them. The volatility of the Rand should be a very big concern for motorists, and securing parts prices at current exchange rates is a wide move. Ultimately, service and maintenance plans are designed to help the customer, not hurt them.”
“Factory plans have a cost to them, but so does a steering wheel or car seats or any other standard feature, the costs of which will always have been lower when there is a massive scale (such as in every car) as opposed to purchases that cannot match these economies. Additionally, inflation and currency issues affecting South Africa are not the same in the EU, US etc. where their economies are stable, growing and mature,” says Dommisse.
Service and maintenance plans add value and give customers peace of mind. NADA believes that over time, the cost of these should plans be disclosed. In the interim customers can assume that the costs for these are in line with any of the third-party bolt on plans – the costs will be similar, and most likely a bit less. “There is no quality control of alternate parts coming in the country and we don’t believe that this is responsible. Our question is, how will the industry ensure quality parts are utilised in consumers’ vehicles?” Who is going to police the parts and vehicles coming in the independent workshop?” says Dommisse.
“If the industry is not required to use genuine or approved parts, there can be no monitoring of safety standards. And this won’t only just apply to passenger vehicles – heavy commercials, trucks and buses will also be affected. In the case of a dispute, the Original Equipment Manufacturer (OEM) will have to inspect the vehicles. There are bound to be many claims and compliance will be unmanageable.”
“If the independent workshops are going to use quality parts, made by an original parts manufacturer (Such as Bosch or Denso) and of the same specification, design and model, then this might, one day, in theory, be acceptable. However, the reality is that is unlikely that all independent workshops will use these parts due to the very high costs. It is doubtful that the manufacturers will allow this during warranty,” says Dommisse.
He concluded by saying, “In general, we agree with the principles noted throughout the code. It is the application and machinations of it that we object to. The changes made to draft 2 of the code have not taken on board the submissions made by NADA to the first draft. In order for the automotive industry to continue to contribute positively and sustainability to the South African economy, all stakeholders need to engage, discuss and constructively develop a meaningful and sustainable new Code of Conduct.”