A win for the 'right to repair' as Competition Commission publishes key guidelines
The ruling means motorists can choose their own independent service or repair providers, if they wish to, without their warranties being voided.
The stranglehold which the SA motor industry has had on the servicing, maintenance and repair of in-warranty cars will end in just over six months, thanks to watershed guidelines published by the Competition Commission.
Owners of new cars in SA are unique in the world in being “locked into” using a vehicle manufacturer's service centres, repair shops and parts with “embedded” motor and service plans.
If they decide to use an independent service or repair provider of their choice, vehicle manufacturers void their warranties.
The commission on Friday made public its final set of guidelines for the automotive industry — effective from July 1, 2021 — that will completely unbundle in-warranty servicing, maintenance and repair of in-warranty cars.
This means motorists can choose their own independent service or repair providers, if they wish to, without their warranties being voided.
They’ll be able to make informed choices because service and maintenance plans will no longer be an unspecified part of the purchase price of vehicles — they’ll have to be listed separately by the manufacturers, known as original equipment manufacturers, or OEMs, as optional extras.
Filum Ho, CEO of Autoboys and the vice-chair of the Right to Repair movement — a Section 21, not-for-profit organisation which has been advocating for freedom of repair choice for vehicle owners for several years — hailed the development as a major victory for consumers.
The changes include:
- OEMs must recognise and not obstruct a consumer’s choice to seek service, maintenance, and mechanical repair work for their motor vehicles at a service provider of their choice, regardless of whether that service provider is an approved dealer or independent operator;
- Maintenance plans and service plans will be separated at the point of sale from the purchase price of the vehicle, allowing consumers to exercise choice regarding whether to purchase the maintenance plan or service plan. This is intended to make and will make servicing a more affordable option for South Africans, while allowing for more players to provide car maintenance products for consumers whose motor vehicles are in-warranty;
- OEMs must adopt measures to promote and/or support the entry of new motor-body repairers, with a preference for firms owned by historically disadvantaged operators;
- Consumers can fit original or non-original spare parts, at a service provider of their choice, whether that be an approved dealer, approved motor-body repairer, or an independent one, during the in-warranty period, without voiding their warranty. The quality of these will be carefully dealt with in line with consumer protection laws as well as existing warranties;
- OEMs must make available to independent service providers the OEM-technical information relating to its cars, including security-related information that permits access to cars' security systems, including coding and programming, software, and safety systems. Such access must be subject to OEMs' intellectual property and data privacy rights and the independent operators meeting their accreditation requirements; and
- OEMs and/or approved dealers are required to provide training to access to training to employees of independent repairers who request training, at a reasonable cost that may not exceed that imposed on employees of approved dealers.
“By unbundling the service and repair warranty market, we can expect better competition in the market, greater transformation, access, and freedom of choice,” Ho said.
“Global institutions such as the World Bank have regularly said that highly concentrated, uncompetitive sectors are a big reason for sluggish growth in SA. At a time when our country is still dealing with the impact of the coronavirus pandemic, this must change for us to break free from our status as the world’s most economically unequal country.
“SA is merely following a worldwide trend that started in the US,” Right to Repair said earlier this year.
“The US automotive industry was the first to attract legislation requiring automotive OEMs to open up maintenance and repairs to independent workshops, without the vehicle’s warranty being voided.”
Not everyone welcomes the news.
The OEMs have fiercely resisted the changes, warning that if they lose the ability to stipulate that their vehicles be serviced at dealerships which are quality assured and monitored by them, consumers won’t have the assurance that staff at independent workshops have the training and skills of those in the manufacturer-linked workshops, or that top quality parts will be used.
And when the draft guidelines were published in February, some social media commentators were sceptical.
“This will drastically lower the used car prices as nobody wants a car repaired with sub standard parts of back yard mechanics,” Edwards Vernon tweeted.
And Eben van Zyl added: “I will still pay more for a second-hand vehicle serviced by a dealer than an 'unknown'.
“I am in the tooling business, and sadly we see the state of many of these unknowns. I see major problems with poor workmanship.”
The Competition Commission’s guidelines end with this: “These guidelines are not exhaustive and will not affect the discretion of the commission and/or the tribunal and courts to pursue anticompetitive conduct through enforcement.”
The latest guidelines are a product of a process that started in 2017 when the Competition Commission consulted widely in the automotive industry with a view, at first, of creating a single, voluntary Automotive Code of Conduct to help open up the market, promote greater transformation and encourage increased economic participation of SMEs and black South Africans.
That code also sought to deal with issues such as restrictive in-warranty service and maintenance plans as well as a lack of transformation.
But given the wide range of divergent views and difficulties in achieving consensus on a final voluntary code for the industry, the Competition Commission opted to convert the code into guidelines of the Competition Act.
The draft guidelines were gazetted on February 14, 2020 and the final guidelines were published on Thursday, with the implementation deadline set for July 1, 2021.