There are changes on the automotive industry\u2019s horizon \u2013 and they will affect every single South African seeking to buy, repair or service a car. The changes \u2013 effective 1 July 2021 \u2013 are coming about thanks to guidelines published by the Competition Commission.<\/p>\n
According to George Mienie, chief executive officer at AutoTrader, the guidelines are about to introduce substantial changes to the car buying and servicing processes.<\/p>\n
\u201cThese changes will mean that original equipment manufacturers (OEMs), dealerships and workshops will have to alter the way that they do business in the future,\u201d he said.<\/p>\n
So, what are these changes and how will they impact the OEMs, dealerships, workshops and \u2013 most importantly \u2013 the consumer? Here are some of the most important guidelines \u2013 and their implications.<\/p>\n
1. Freedom of choice<\/strong><\/p>\n Consumers who do not have insurance cover may repair their motor vehicles at a service provider of their choice at any point during the motor vehicle\u2019s lifespan. They don\u2019t have to go to a so-called “approved motor-body repairer\u201d anymore.<\/p>\n 2. More options<\/strong><\/p>\n For various reasons, consumers\u2019 options when it comes to motor-body repairers have been limited. This won\u2019t be the case in the future. The OEMs need to promote and\/or support the entry of new motor-body repairers, with a preference for firms owned by Historically Disadvantaged Individuals (HDIs).<\/p>\n The OEMs also cannot enter into exclusive arrangements, either with one or more approved motor-body repairers, for effecting repairs on an OEM\u2019s motor vehicles within a designated geographic area.<\/p>\n Practically, this should mean that there are more motor-body repairers \u2013 and the consumer has more options. In theory, cars should also be repaired faster.<\/p>\n 3. More flexibility with maintenance and service plans<\/strong><\/p>\n Dealers won\u2019t be able to include a maintenance or service plan in the purchase price of a vehicle; the plan has to be \u201cunbundled\u201d. Practically, this means that the consumer can say yea or nay to buying a plan from a dealership. He or she is free to shop for one elsewhere.<\/p>\n In addition, if a vehicle with a maintenance or service plan is written off by an insurance company, that plan must pass on to the replacement vehicle.<\/p>\n 4. Dealerships will become less grandiose<\/strong><\/p>\n The commission says that dealership start-up costs \u2013 at an average of R60 million \u2013 can be exorbitant and a high barrier to entry. In future, the OEMs will need to adopt measures to lower financial barriers to entry and promote the participation of HDIs in the dealership market.<\/p>\n In addition, OEMs should not impose so-called \u201conerous obligations\u201d on prospective dealers. So, expect a lot more smaller, far less grandiose dealerships to pop up, Mienie said.<\/p>\n
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