The Competition Commission has gazetted draft guidelines that aim to change anticompetitive service and warranty plans in South Africa.
Currently, the majority of owners of new cars in South Africa are locked into using a vehicle manufacturer’s service centres, repair shops and parts in ‘embedded’ motor and service plans.
If these owners decide to use an independent service or repair provider of their own choice, vehicle manufacturers punish them by voiding their warranties.
This has also locked out independent workshops and service centres, thereby limiting small-to-medium-sized enterprises’ abilities to transform and grow the sector.
The Commission’s guidelines stipulate that consumers will no longer be compelled to conduct in-warranty service, maintenance or repair work only at approved dealers or approved service providers.
The guidelines further state that vehicle manufacturers and approved dealers must allow consumers to fit non-original parts where a specific part’s warranty has expired, without voiding the balance of the motor vehicles warranty.
This is a breakthrough in the adoption of OEE or Original Equipment Equivalent parts, which offer the same standards of safety and quality as their counterpart Original Equipment Manufacturer (OEM) parts, but at a lower cost.
“At the point of sale, dealers and financiers must provide the consumer with details of all inclusions and exclusions included in the Service and Maintenance Plans,” the commission said.
“This will allow consumers to exercise choice regarding whether to purchase the Maintenance or Service Plan and make servicing a more affordable option for South Africans, whilst allowing for more players to provide such Value-Added services for consumers whose vehicles are in-warranty.”
The deadline for submission of comments is 16 March 2020.
A finalised set of guidelines will ultimately be implemented as part of the Competition Act and will give authorities the power to pursue anti-competitive behaviour through enforcement.