The National Automobile Dealers’ Association (NADA) believes franchised dealers might lose revenue because of the increased choice consumers have regarding where they can take their vehicles for service and maintenance in terms of the final Guidelines for Competition in the South African Automotive Aftermarket.
NADA chairperson, Mark Dommisse, said: “I think initially it will be minimal but as independent service providers (ISPs) get authorised, the cake has to get thinner.”
The final guidelines were published by the Competition Commission in December 2020 and will be implemented from July 1, 2021.
The guidelines require original equipment manufacturers (OEMs) to adopt strategies and develop business models that, among other things, allow for independent service providers (ISPs) and historically disadvantaged individuals (HDIs) to undertake service and maintenance while a vehicle is still under warranty.
They also place responsibility on OEMs to disclose certain information to consumers, such as the price of any pre-included service plan, maintenance plan, extended warranty or scratch and dent product to enable them to make informed choices about the required future maintenance of their vehicles.
Dommisse said that when the guidelines take effect, consumers will be able to choose to undertake servicing and maintenance work at a workshop of their choice, including ISPs, but this will trigger certain obligations and consequences as set out in the guidelines, such as the possible voiding of parts of the warranty.
He said NADA worked closely with the Competition Commission to ensure that the consumer’s best interests in terms of safety and vehicle value are paramount.
Dommisse added that when working on the vehicle of a consumer, ISPs must disclose whether they have adequate insurance to cover all liability or potential damage to the vehicle; they must disclose the risk to the warranty in servicing at an ISP and the fact that the OEM or its provider will not pay for any work done.
ISPs will also carry full liability and risk for the work that they do, he said.
“Consumers should remain critically mindful that if their vehicles are not serviced or repaired correctly, and at an ISP, it could still have an impact on a particular vehicle’s factory warranty under the guidelines,” he said.
Dommisse said any damages to a vehicle as a result of work performed or non-original spare parts fitted by ISPs will be assessed by respective OEMs and either parts of, or the entire warranty can be voided, with any disputes handled by the Motor Industry Ombudsman of South Africa (MIOSA).
He played down the impact the guidelines might have on the ability of franchise dealers to retain customers whose vehicles are out of warranty.
“There is only a small volume of vehicles that franchised dealers actually look after in South Africa, with vehicles under warranty comprising only about 20% of the car parc.
“So, 80% of the car parc is out of warranty. We [franchised dealers] are only really playing in about 20% of the car population.
“Good dealers that do a good job, are honest, are transparent and have a good name retain these out of warranty customers anyway.
“The same thing will apply [when the guidelines are implemented] if consumers feel the money they are spending is worthwhile,” he said.
Dommisse said that if an ISP or any entity wishes to become an approved dealer, the OEM must have fair and transparent selection criteria and if the ISP meets those criteria, then the OEM should approve them.
An OEM is only obliged to approve an application if that ISP meets the full terms, conditions and criteria set out by the OEM, he said.
“This is vital for consumers to understand and is incorporated into the guidelines in order to protect customers and the integrity of their vehicles,” he said.
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