20th August 2018

Code to fix cars cheaper

Code to fix cars cheaper Auto trade suggests 24 ways to give owners more choice UNFAIRLY high prices charged by original equipment manufac turers were top of the list of con cerns from 24 private comments on the first draft of the Code of Conduct for the automotive in dustry. Gunther Schmitz, acting chair for Right to Repair SA R2R , said there were several issues raised in the comments, but pricing domi nated, with contributors saying they hope the code will end unfair pricing practices. Many allege that dealerships have been benefitting for years from maintenance and service plans at the expense of the con sumer. One commented saying dealerships have been forcing consumers to comply by using threats of voiding the warranty. Unrealistic targets Another raises an issue he terms ‘manufacturer banks’. This re lates to the inordinately high tar gets the dealerships are forced to meet. These targets do not offer the retail customer the best deal and in many cases, coerce the cus tomer into weaker deals. Schmitz said the current anti competitive situation means in flated prices for consumers. “Extended warranties are locking consumers into periods where firstly, they have no choice but to use the dealer for repairs and secondly, they are at the mer cy of dealers who can charge whatever rates they choose?’ R2R aims to allow consumers to select where their vehicles are serviced, maintained and re paired at competitive prices in the workshop of their choice. “Ultimately consumers are be ing denied the right to have their vehicle repaired at a workshop of their choice. We believe this also inhibits the consumer’s right to support local business,” he says. Insurance claims Schmitz said insurance was also mentioned by several contribu tors. One comment stated that insurers are currently focused on lowering the cost of claims ratios, but vehicle manufacturers’ ap provals are a stumbling block. The contributor says that the manufacturers list what repairers need to have in order to qualify as approved repairers to specific brands. These requirements gen erally include expensive and of ten unnecessary equipment. And they differ from manufacturer to manufacturer. Another contributor believes the code does not address the in surance industry’s direction of repairs and alleges that insurance companies are as guilty of direct ing repairs as manufacturers. A third believes insurance pre miums will decrease dramatical ly if a code is passed. Gunther Schmitz, acting chair for Right to Repair SA. PHOTO: SUPPLIED Schmitz says there’s no doubt that the code will need to tackle issues surrounding insurance. “Interestingly at the Automotive Aftermarket Workshop, hosted by the Competition Commis sion in March last year, Viviene Pearson, a representative for the South African Insurance Associ ation SAIA , pointed out that premiums are becoming unaf fordable because of the price of repairs. She said that only 35% of cars in SA are insured because consumers are under pressure. Unused motorplans “Alternate quality parts do exist and could go a long way to bring ing down the cost of insurance premiums if used in repairs?’ Schmitz said another interest ing concept brought to the table was the issue of motor plans when vehicles are written off. A contributor points out that the manufacturer receives the full amount of the price of the motor plan in an upfront payment for future repairs and services on the day that the vehicle is sold. Should the vehicle be written off in the first few years, the man ufacturer retains the full payment of the motor plan. Another contributor suggests that the manufacturer should be obliged to refund the unused por tion of the motor plan to the ve hicle owner or the insurance company that settled the claim. “The Competition Commis sion has addressed many of these issues in the draft code. It is going to be interesting to see how the manufacturers implement the Code to address these,” says Schmitz. “There is a need for a fair and competitive regulatory environ ment that enables freedom of choice for consumers and gives aftermarket Small Medium En terprises a chance to stay in busi ness. South African legislation needs to follow international Right to Repair trends which pro mote South Africa’s existing con sumer and competition laws. “We believe that the code will be a good starting point for this to happen,” Schmitz said. Supplied.