New guidelines set out by South Africa’s Competition Commission have prompted the automotive industry to respond to changing market conditions. Effective from mid-2021, the guidelines change the playing field for the aftermarket parts industry with new regulations that shake up how maintenance, repairs and services are to be carried out.
The guidelines are intended to increase transparency and improve consumer choice, as well as benefit small to medium-sized independent dealerships. However, both consumers and dealerships still need to take responsibility for choosing quality automotive parts and components.
Consumer safety is of primary concern, especially in the automotive industry. Formex believes that safety should never be compromised, and we encourage car owners and dealerships to use only the highest quality parts from trusted manufacturers.
Formex supplies automotive components and welded assemblies to major vehicle brands. Our quality management system is internationally certified. This ensures that our metal pressed parts and tubular components meet global standards.
Why have the aftermarket guidelines been introduced?
After receiving a number of complaints over the last ten years, the Competition Commission decided to address allegations of anti-competitive conduct in the aftermarket value chain. These complaints are mostly related to the fact that independent service providers are often excluded from carrying out automotive repairs and services.
These high barriers to entry particularly affect small and medium-sized enterprises (SMEs). To illustrate, if a new car owner wished to service their vehicle during the warranty period, they could only go to authorised dealerships and use branded parts. If the car owner decided to rather go to an independent dealership, this would void their warranty.
Since 2017, the Competition Commission has worked with the automotive industry to address these market-related issues. Supporting SMEs and independent distributors, as well as promoting competition in the automotive aftermarket industry are key points that the new guidelines set out to address.
What are aftermarket parts?
The automotive aftermarket includes maintenance, repairs, vehicle services, vehicle insurance and related products. Aftermarket parts include spare parts, tools and components needed to keep vehicles in good working condition on the road. These are products that are not necessarily branded or produced by the same brand as the vehicle.
Cars have between 30 000 and 60 000 parts and components, which is an indication of the scale of the aftermarket parts industry. Each part is highly specialised and parts are not always interchangeable from one car brand or model to the next.
The new guidelines make a distinction between original and non-original parts. Non-original parts are those that are not branded by a major car manufacturer. These parts, however, are not counterfeit or illegally-sourced parts. Instead, they are parts that meet South African industry standards and are in line with international standards, such as EU regulations. Some manufacturers produce spare parts which are identical to original parts but without branding. These are considered non-original.
Before the introduction of the aftermarket parts guidelines, consumers were prevented from using non-original parts during warranty periods. As a result, vehicle owners incurred higher costs because original parts tend to come with higher price tags. With the new guidelines, retailers are responsible for providing the best replacement options but can choose between original and non-original parts.
What do the new guidelines relate to?
The new guidelines relate to aftermarket parts for all types of motor vehicles including buses, cars, trucks, motorbikes, as well as electric and hybrid vehicles. The Competition Commission outlines issues around maintenance and repairs, the fitment of spare parts and access to technical information. The guidelines relate to independent third-party providers as well as authorised dealerships.
The guidelines are designed to promote inclusion and more participation of SMEs, as well as historically disadvantaged groups. It allows independent distributors to conduct in-warranty services, repairs and maintenance. Key points in the new guidelines include:
- Authorised repairs or service providers can use original parts from approved manufacturers, but also parts procured from other suppliers as long as they are parts of equal quality.
- Vehicle manufacturers cannot inhibit the use of original parts of components by authorised distributors and independent distributors. Both independent and authorised distributors must have access to the vehicle manufacturer’s original parts.
- Vehicle owners can use any repair shop for non-warranty maintenance, even during the warranty period.
- Vehicle manufacturers need to provide technical information and training related to the service and repair of motor vehicles, both to authorised and independent distributors.
- Vehicle insurers need to ensure the fair allocation of work to service providers, both independent and authorised.
How do the guidelines affect consumers?
Before the introduction of the new aftermarket parts guidelines, there was a lack of consumer choice in the sales and fitment of spare parts. With the guidelines, the Competition Commission hopes to bring about better prices for mechanical repairs, structural and non-structural repairs
Independent distributors and workshops must meet the standards of original equipment manufacturers (OEMs). OEMs cannot have exclusive arrangements only with authorised dealerships, which allows independent workshops to procure the right parts for the vehicle they are working on.
Dealerships are still accountable for providing high-quality services and parts, and if problems arise, an assessment will be undertaken to determine the cause of the damage. Vehicle owners can speak to relevant authorities to look into any issues.
Consumers must still make responsible choices regarding which brands to use. Using reputable brands is often a better choice as it guarantees that parts were manufactured using the highest quality materials and production methods. Vehicle owners are encouraged to use accredited workshops that are familiar with the type of vehicle they drive.
With the recent looting that happened in certain parts of South Africa, consumers also need to take care that replacement parts and components were not procured illegally. Where possible, it is advisable to ask for proof of origin to ensure that legitimate parts are being fitted into vehicles.
A new era for the aftermarket parts industry
With the new regulations from South Africa’s competition watchdog, vehicle owners can now shop around for their aftermarket parts and components. The guidelines set out to support SMEs and independent distributors, as well as increasing competition in the spare parts market. The guidelines maintain and promote competition in the automotive aftermarket industry which was previously dominated by a few big brands.
Formex provides quality automotive parts, both locally and to international markets. Vehicle owners can rest assured that our team provides expert advice and all our products meet not only local but international standards too. We encourage consumers to never compromise on quality, especially when it comes to their safety on the road. Always refer to a trusted dealership and, where possible, opt for the highest quality parts in your price range.
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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