Standoff continues in motor industry's right-to-repair saga

The right-to-repair saga isn't over yet.

South Africa’s car manufacturers and importers will meet other industry stakeholders on Thursday July 18 to discuss a way forward for the controversial automotive code of conduct, which proposes that in-warranty cars may be serviced at independent dealerships.

The Competition Commission published the code of conduct in August 2018 in response to a right-to-repair (R2R) campaign that called for improved transparency and competition in the motor-repair industry.

Among other things, the voluntary code proposed that vehicle owners would no longer have their warranties voided by having their vehicles serviced at non-franchised workshops or fitted with non-original spare parts. Currently, car owners are usually locked into using a vehicle manufacturer’s repair shops and parts because of maintenance or service plans bundled into the car’s price.

The code also promoted greater ownership of dealerships and other automotive businesses by historically disadvantaged individuals.

When the code was published its implementation seemed imminent, but the matter reached an impasse when only two manufacturers — Mercedes-Benz and Volkswagen — agreed to it. The Competition Commission subsequently adopted a harder stance by announcing that the voluntary code would be replaced by enforceable guidelines.

The motor industry and independent workshops have been at loggerheads over the issue, with original equipment manufacturers (OEMs) fearing the new rules may threaten the profitability of franchised dealerships, and R2R saying consumers should have the right to choose where their cars are serviced.

Both sides claim to be championing consumer interests but it’s really about who gets the consumer’s money, as most franchised dealerships make the bulk of their profits from their workshops rather than from selling cars.

R2R argues that franchised dealers charge more for labour and parts than independent workshops, and many of these parts — identical except for not being OEM branded — are available much cheaper elsewhere.

The OEMs, represented by the National Association of Automobile Manufacturers of SA (Naamsa), hold that they cannot be held responsible for shoddy parts or workmanship at nonfranchised dealers, and shouldn’t have to carry out warranty repairs on such cars.

The National Automobile Dealers' Association (Nada) said the code as it stands would have a catastrophic effect on investment and employment in this important sector of our economy, saying that SA has 1,600 franchised automotive dealerships worth R48bn and employs 60,000 people.

Naamsa’s new CEO, Mike Mabasa, requested more time to consult his members on the matter, and has convened the July 18 meeting which will also be attended by Nada, the SA Insurance Association and the Retail Motor Industry which represents workshops.

Mabasa says the association plans to meet directly with stakeholders on the other side of the R2R divide, including the African Panelbeater Motor Mechanics' Association, before reverting back to the Competition Commission by October with revised proposals.

“We wish to resolve the right-to-repair issue amicably, opening up the market in a way that won’t negatively affect the consumer or the motor industry,” says Mabasa.

“We as the industry need to protect ourselves legally.”

Finding middle ground seems improbable, however, with Naamsa still opposing in-warranty vehicles being serviced at non-franchised dealers, which is at the heart of the issue.

The Competition Commission insists that, unlike the former voluntary code of conduct, its new guidelines will be enforceable.

 “Any company that breaches or disobeys the guidelines will be prosecuted,” says the Competition Commission’s Sipho Ngwema. “The code is being converted into guidelines — and the intention is to retain the intention, essence and the effect. The difference will be that, unlike a code, we would not need the OEMs to concur or sign.” 

Ngwema said the guidelines will be introduced soon, subject to Naamsa reverting reasonably soon.

“If their new further consultation delays unduly, we shall go ahead.”