Motor – R2R update
[Strap] CONSUMER WATCH
[Title] R2R – THE FIGHT CONTINUES
[Intro] R2R – The Right To Repair – is a campaign that aims to give motorists more choice in where and with whom they can have their vehicles serviced without their service/maintenance plan or warranty being compromised. The Competition Commission has now called for a code of action. MIKE MONK explains the build up.
[Main body copy] As the cost of motoring continues to escalate, the decision on where to take a vehicle for servicing. Do you stick with the manufacturer’s dealership or do you move to an independent workshop where costs will be lower? In the April 2016 issue of Motor we published a report on the campaign’s progress and recently the situation came under the spotlight of the Competition Commission.
To briefly recall the background, in May 2013 the Motor Industry Workshop Association (MIWA) announced a Right to Repair (R2R) campaign based on the belief that in order for there to be fair competition, South African legislature needed to follow the international Right to Repair movement in line with SA’s existing consumer and competition laws. R2R aims to allow consumers the opportunity to select where their vehicles are serviced, maintained and repaired at competitive prices in the workshop of their choice.
Successful R2R campaigns in other countries have led to the enactment of legislation dictating that Original Equipment Manufacturers (OEMs) are required to provide the same information to the independent aftermarket dealers as they already provide to their franchised dealers. Certain legislation also codifies the consumers’ right to choose its preferred dealer without fear of losing their warranty.
Since April 2014, representatives from MIWA, in a collaborative engagement process, have met with several key stakeholders and these meetings have generated a greater understanding of the R2R concept for all concerned. At the Competition Commission’s Automotive Aftermarket Workshop held recently in Pretoria, MIWA director Vishal Premlall said there has been a longstanding need for a fair and competitive regulatory environment that enables freedom of choice for consumers and which gives aftermarket Small Medium Enterprises (SME) a chance to stay in business.
“Consumers have been facing tough economic times for a considerable period now so we welcome the Commission’s efforts to investigate finding a workable solution that will not only relieve the burden of consumers but also facilitate discussion between industry stakeholders,” says Premlall. “While we understand the Foreign Direct Investments that manufacturers put into South Africa have natural benefits like job creation, we are also aware that the automotive aftermarket employs a greater number of employees with a far higher value creation in South Africa. The model as it stands is slowly squeezing out the little business at the bottom of the chain trying to remain sustainable in an already difficult market. We are encouraged that in addition to the Commission’s efforts we have also seen the formation of an external R2RSA Section 21 company in which MIWA members are actively involved. The new R2RSA company is an open and inclusive company and will be actively advocating for change.”
Viviene Pearson, a representative for the SA Insurance Association (SAIA), pointed out that premiums are becoming unaffordable because of the price of repairs. “Only 35% of cars in South Africa are insured because consumers are under pressure. Alternate quality parts do exist and could go a long way to bringing down the cost of insurance premiums if used in repairs,” she says.
“The timing is right for reforms,” said Leonard Smith from the SA Auto Repairer and Salvage Association (SAARSA). He told the audience that pre-2002 car repairs were done based on skill. After that it became all about investment as OEMs started dictating which specialised and expensive equipment needed to be used. “Many workshops could not afford to comply,” he said.
Bruce Allen, representing the National Automobile Dealers’ Association (NADA), said that due to the complexity of vehicles and the resultant skills required to service them it was imperative to protect consumers both in terms of their vehicle integrity and safety.
Sisa Mbangxa from African Panel Beaters and Motor Mechanics Association (APMMA), said accreditation processes imposed by the OEMs are exclusionary. “The OEMs keep using safety as a reason for restricting access to vehicles under warranty. But what about the 70% of vehicles on our roads not under warranty? Is safety less important?” he asks.
For a considerable period of time now, MIWA has tried to engage with industry stakeholders to reach a workable solution to some of the unfair practices that pervade the local market. “We are delighted to see that the Competition Commission is finally putting this topic in the spotlight,” says Premlall.
The Commission has had the issue on file since 1994 and Hardin Ratshisusu, Deputy Commissioner of the Competition Commission, said there is a need to improve transparency and it is long overdue that the industry be regulated. and the time has come to form a code. He added that this needs to be a voluntary code with consequences and laid down a deadline of six months for it to be drafted.
Jakkie Olivier, CEO of the Retail Motor Industry (RMI), which represents 14 different trade associations in the automotive aftermarket, confirmed the RMI would be convening workshops to prepare a draft code which will be submitted to the Competitions Commission for consideration. “We will offer our full co-operation to the Commission to help reach a workable solution in the best interest of all, and we are willing to take the lead on this initiative, together with affected stakeholders,” concludes Olivier.