For the first time ever,
owners of new cars will have the right to repair or service their vehicles at
an independent provider of their choice, notes Filum Ho, CEO of South African
auto parts and glass specialists Autoboys.
These owners won’t be
locked into restrictive embedded motor or service plans, and vehicle
manufacturers won’t be allowed to void warranties if owners choose to go with
an independent service or repair provider.
Until now, South Africa
has been unique in the world when it’s come to these restrictive embedded motor
and service plans. This is why the Competition Commission started a process in
2017 to bring our country more in line with places such as the US, Europe and
Australia.
As a result, on 11
December 2020, the Commission published its finalised set of guidelines for the
automotive aftermarket.
These guidelines — which
will go into effect on 1 July this year — include several changes that will
boost competition.
Importantly, these
changes mark a major victory for consumers. Here are 5 things that you need to
know if you’re considering purchasing a new car from July this year.
Dealerships,
OEMs can’t lock you in
As per the new
guidelines, car manufacturers (known as Original Equipment Manufacturers or
OEMs) cannot obstruct you from seeking service, maintenance, or mechanical
repair work for your new motor vehicle at an independent Service Provider (ISP)
of your choice.
What’s crucial to note
here is that you as the consumer still have the right to seek these kinds of
services from your approved dealership, but you now have the additional option
of going to an ISP if you so wish.
Unbundling
of plans at point of sale
There will be an
unbundling of maintenance plans and service plans at the point of sale from the
purchase price of the motor vehicle. This will allow consumers to exercise
choice regarding whether or not they want to purchase the maintenance plan or
service plan from their dealership or from an independent provider.
This is common practice
elsewhere in the world. In the instance where a car is written off, OEMs and
independent providers must transfer the maintenance plan or service plan to a
replacement vehicle. Dealerships or independent providers also have to disclose
all information regarding the maintenance and repair of their vehicles, as well
as the terms and conditions thereof.
You
can fit non-original parts
Consumers will be able to
fit original or non-original spare parts, whether by an approved dealer,
motor-body repairer, or an ISP, during the in-warranty period. The quality of
these parts will be dealt with in line with consumer protection laws, as well as
existing warranties.
Consumers should look out
for what are called OEE, or Original Equipment Equivalent parts. These have the
same specifications and safety features as OEM parts but are sold at lower
prices. Interestingly, OEE and OEM parts are often made in the same factories
and are only differentiated by their branded markings.
More
accessible dealership choices
In South Africa, motor
dealerships have traditionally been large, multimillion rand showrooms,
situated mainly in suburbs, towns and cities. There have historically been very
few dealerships situated in townships or outlying areas.
A big reason for this has
been that OEMs often place specific requirements regarding, for instance, the
procurement of furniture, fittings and finishes as well as the size and
location of the premises.
But with the new
guidelines, the Competition Commission has set out that OEMs must lower the
financial barriers and location requirements for new dealerships to boost their
footprints. This must still be balanced with the need for economic rationale,
but it could open up a whole new market.
Insurers
must give you more choice
Other changes outlined in
the guidelines are set to particularly impact the way your insurer deals with
your repairs, especially when your car parts fall out of their warranty period.
These changes include that insurers will need to offer consumers more choice of
repairers within geographic areas for out-of-warranty repairs.
Insurers are expected to
approve any repairer that meets their standards and specifications to undertake
repairs on out-of-warranty vehicles.
Once the implementation
date of 1 July 2021 comes and goes, and if consumers stumble upon dealerships
or OEMs which don’t adhere to these new rules, then these consumers will still
have recourse.
One option will be to lay
an official complaint with the Competition Commission. A complaints form on the
Commission’s website provides guidance on this.
Article courtesy of
Businesstech