The South African Competition Commission has set out guidelines regarding competition in the car industry, particularly related to aftermarket parts, services and repairs. These guidelines came into effect in July 2021 and aim to improve consumer choice, transparency, and give greater opportunities to small and medium-sized dealerships. Even though these guidelines have been in place for a few months already, not all motorists are aware of what they mean for them.
Similar guidelines are common practice in other places, including the US, Australia and Europe. Their introduction in South Africa brings the local market in line with an international trend to promote more competition and transparency in the automotive industry. It started in 2012 when the State of Massachusetts passed a law that required car manufacturers to give independent dealerships access to spare parts as well as diagnostic repair systems. Two years later, the whole of the US enacted this law and it has since been adopted internationally.
This article will make all motorists aware of their rights when it comes to looking after their vehicles. Formex is a leading supplier of metal car components and assemblies, both in South Africa and abroad. We believe that consumers have the right to high-quality, affordable car parts and these new guidelines do just that. There are four key things vehicle owners need to know when it comes to the new vehicle service regulations.
1. Consumers can choose to use non-original spare parts
Before these new guidelines came into effect, vehicle owners had to use original parts in order for their warranty to remain valid. Original parts are those that are branded by a car manufacturer and often come with a higher price tag. These parts include those that are commonly changed during a service, like oil filters, spark plugs and brake pads.
Non-original parts are often just as good in terms of quality but are not necessarily produced by the original equipment manufacturers (OEM). Non-original parts still need to meet international and local standards but do not need to have OEM branding. As a matter of interest, many OEMs produce both original and non-original spare parts, which are equal in quality and performance.
With the new guidelines, consumers can use non-original parts during their warranty period and service providers no longer have to void the warranty. Illegally-sourced or poor quality parts do not fall into the category of non-original parts, so car owners and dealerships should certainly avoid using them. The quality of parts must be in-line with consumer protection laws and, if non-original parts are used, they need to have the same safety features and specifications as their original counterparts.
2. Consumers can choose their service provider
Responsible car owners take their vehicles for a service once, preferably twice, a year and services can cost anywhere in the range of R1000 to R10 000. In general, authorised dealerships charge more for services than independent workshops. With the new guidelines, motorists can choose where they take their vehicles, which is often to the most affordable service station in their local area.
New car owners are no longer locked into service plans at specifically authorised dealerships and insurance companies are required to allocate work fairly among both authorised and independent dealerships. This translates to improved convenience and lower costs for consumers.
OEMs are no longer allowed to have exclusive contracts with authorised dealerships and independent dealerships are able to procure the parts they need for services and repairs. All dealerships can have access to original parts, which significantly improves competition and transparency.
With this in mind, consumers must still choose a reputable workshop, making sure the dealership they use has insurance covering faulty workmanship or incorrect service procedures. Dealerships still need to provide high-quality services and can be held liable if maintenance and repairs were not properly performed.
3. Your warranty is valid regardless of which service provider you choose
Customers can now shop around when choosing which service provider to use, even during in-warranty periods. Before the new vehicle service regulations came into effect, the warranty would be voided by car manufacturers if the vehicle was not serviced at a recognised dealership.
This has been deemed anti-competitive and the new guidelines ensure that car owners can go to the dealership of their choosing for services and repairs, even during the in-warranty period. This is great news for independent dealerships, who can now perform in-warranty maintenance.
Vehicle manufacturers are also required to give technical training and information regarding the services and repairs. Before these guidelines, only authorised dealerships received this training, but now independent dealerships can also request the information they need regarding motor vehicle repairs and service. However, both consumers and dealerships need to be aware that the use of inferior parts will void the warranty
4. Service and maintenance plans need to be unbundled from car prices
Car retailers need to provide a clear breakdown of what is included in the cost of buying a new car, separating service and maintenance plans from the price of the vehicle itself. Value-added products, such as service plans, range from R30 000 to R60 000. Consumers are charged interest on this amount if vehicle finance is taken out.
The new guidelines mean that consumers can choose to opt out of service or maintenance plans. This reduces the cost of new cars and gives consumers the freedom to purchase a service plan from an independent provider. At the point of sale, dealerships must disclose all information regarding service and maintenance plans, including all terms and conditions.
New vehicle service regulations boost competition
The new guidelines go a long way to promote fair competition and support customer choice when it comes to new vehicle service regulations. They promote more affordable repair and service options, allowing motorists to repair their vehicles more regularly. If more vehicles are kept in a good condition, this means better overall road safety.
Dealerships need to comply with the new regulations. If they don’t, consumers can report non-compliance to the Competition Commission. At Formex, we hope to promote consumer awareness so motorists can make informed decisions when it comes to servicing their vehicles. We encourage drivers to assess their options, and always ensure that they go to trusted dealerships that only use high-quality automotive parts. For more information about our products and components, please leave us a message.
Formex Industries is a metal forming and assembly company that supplies a variety of complex products to the local automotive industry and the export market. The company is based in the Nelson Mandela Bay metropole, South Africa’s foremost region for automotive manufacturing and export.
Formex is a supplier with 69% black ownership, of which 37% are black women. The company is owned by Deneb Investments Limited – a subsidiary of Hosken Consolidated Investments Limited (HCI) – one of South Africa’s biggest true B-BBEE companies listed on the Johannesburg Stock Exchange (JSE).
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