Changes coming to franchise workshops

The customer’s right to repair a vehicle at any aftermarket workshop will become official in South Africa on 1 July 2021.

KZN R2 R Less Mc Master

Les McMaster, Vice-Chairman of the Motor Industry Workshop Association (Miwa) and a director of Right to Repair South Africa, (R2RSA), warns that this will totally change how dealerships’ workshops and parts departments function.

McMaster told Dealerfloor when he co-opted his colleague Paul Brits back in 2009 to help bring the Right2Repair movement to South Africa, Brits warned him that they were saddling “one very big horse”.

Twelve years later, with the Competition Commission having issued guidelines for the South African Automotive Aftermarket to allow consumers choice and effective competition in the automotive aftermarket, McMaster said they barely have a leg over the saddle and the ride is just starting.

This Mercedes-Benz mechanic and former head teacher at his old school, Spring Technical High, foresees three things happening next. In the immediate term, more multi-franchise dealerships will open their workshops to all brands to fit aftermarket parts without voiding the manufacturer’s warranty.

“I am already seeing this happening at our Miwa workshops, from Polokwane to Mossel Bay. The multi-franchise guys already service all the brands in the used-car lot and it is no problem for them to start quoting walk-in customers,” he said.

‘Competing brands’ in franchise workshops

The second trend McMaster foresees is for corporate, single brand workshops to also welcome jobs on “competing brands”. This will take a while, predicts McMaster, as entrenched corporate cultures are like ships, they need time to change course. But change course they will, says McMaster, as R2R has proven to be the best practice in Europe, and corporates are all about finding and applying best practices.

“Unlike South Africa, where we still bundle a highly profitable service contract with the sale price to lock in a customer, seventy percent of new cars sold in Europe get their first service at an independent dealership – just a guy with a workshop attached to his house and a few manufacturers’ brands on his wall – a well-trained but literal ‘backyard mechanic’.”

McMaster says profit margins will drive corporations to this trend. “Few Dealer Principals realise this, but independent workshops are more profitable than corporate workshops, simply because the independent does not have the same huge staff overheads.

“I’ve been in this business for 45 years of which 32 have been in my own workshop, on both sides of the fence and I’ve seen how a large corporate workshop that service 75 cars a day need to make about R180 000 a day to break even, because they have to pay a large staff complement comprised of managers and service advisors, costing and warranty clerks, foremen and a team of mechanics, support staff and their share of the rent on their Taj Mahal premises.

“An independent workshop that services 12 to 15 cars a day with maybe five staff members – including the washer – has a much lower turnover, but a profit margin that is a lot higher,” McMaster explains.

However, on the perception that OEM workshops charge a lot more than independents, McMaster is quick to defend the corporates. “In my experience, running a specialist workshop, I find the OEMs occasionally beat my quote. And taking job cards across the spectrum, I found the OEMs are on average only about a third more expensive than the independents.”

He said a lot of this has to do with the fact that all consumers are price conscious and all are word-of-mouth influencers, with access to Hello Peter. “In today’s digitally connected world, no franchise can afford to overcharge their customers, which makes the playing field fairly even when it comes to pricing,” said McMaster.

Personal touch

The aftermarket workshop has the distinct advantage of giving a far more personal touch to the whole service and repair experience by having personal interaction with the customer in every respect. This is lacking in the dealer space, as the clinical reception is a huge negative environment for the customer and once the vehicle disappears through the “no entry” doors, the customer only finds out on collection what was done on the vehicle.

He added workshop managers at franchise dealerships will have to start thinking like business owners in an R2R market. He said all mechanics who opened independent workshops learned fast that they have to factor in both labour and parts costs into the profit margin, or the family will not eat at month end.

McMaster said the third thing that will happen after R2R becomes official on 1 July, is a big rethink in corporate cultures, when the shareholders realise the many independents that come with R2R are the foundation on which to grow markets for all manufacturing sectors, not just the auto trade.

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