Competition code should cut price of car repairs
The effect of greater competition and less expensive motor parts is likely to lead to lower repair costs
The days are numbered for absurdly pricey motor repairs and a lack of choice on where you can have your vehicle serviced for fear of losing the vehicle warranty or maintenance plan.
Wynand van Vuuren, head of legal at King Price, says that in SA vehicle manufacturers have been manipulating the market by insisting that you use a limited list of accredited service providers which is chosen by the manufacturer. The manufacturers further specify that only original parts may be used for services or repairs, which has driven up the cost of these parts to the consumer.
Van Vuuren says if you look at the original motor parts and compare them with after-market parts that are also SABS approved, the original parts are a "mind-boggling" 300%-400% more expensive.
The Competition Commission has been investigating anticompetitive practices in the automotive industry and has published a final draft code of conduct for vehicle manufacturers and the insurance industry. When the code is implemented there will be more than 8,000 workshops to repair your vehicle and, provided they meet standards the code proposes, you will not lose the warranty on your vehicle.
The effect of greater competition and less expensive motor parts is likely to lead to lower repair costs, which should filter through to lower insurance premiums, according to Van Vuuren.
This, in turn, will hopefully encourage drivers who do not have any insurance cover on their vehicles to take out cover.
About 70% of cars on the road are not insured because owners cannot afford insurance, he says.
The final draft states that it aims to widen the pool of approved service providers that can undertake in-warranty service and maintenance work, in-warranty mechanical repairs and in-warranty motor-body repairs and to allow independent service providers to undertake such work in addition to authorised providers.
The code also plans to introduce measures that will give the consumer a greater choice of service plans, compel insurers to allocate motor-body repairs fairly among service providers and will ensure there are no unfair restrictions on the sale or distribution of original spare parts by allowing you to choose suitable spare parts for repairs.
Under the proposed code, manufacturers of particular brands may not prohibit approved service providers or approved dealers from servicing or doing maintenance on motor vehicles made by other manufacturers.
You will be assured of the right to service and maintain your motor vehicles at a service provider and panelbeater of your choice, regardless of whether that provider is an approved service provider or an independent service provider. Most important, work done by an independent service provider will not invalidate the warranty.
The code says you must be advised that you are not compelled to use approved dealers or approved service providers only for in-warranty services and maintenance.
The code will prohibit manufacturers and insurers from entering into exclusive arrangements to do motor-body repairs on a manufacturer's vehicles within a designated geographic area.
The code states that insurers must ensure the fair allocation of work among manufacturers and insurance-approved service providers. Insurers will have to publish a list of all their approved service providers on their websites and offer you a choice of these within your geographic area.
You will be able to fit non-original spare parts when those specific parts' warranty has expired, without voiding the balance of the vehicle's warranty, and can have them fitted at a service provider of your choice.
According to the draft code, any liability that arises from damage to the motor vehicle, including damage as a result of the spare part or the fitment thereof, will be resolved in terms of the Consumer Protection Act or any other applicable legislation.
Manufacturers will be prohibited from entering into any agreements with manufacturers or suppliers of spare parts, components, tools or equipment that restrict the manufacturer or supplier's ability to sell those goods to service providers or end users, except for those spare parts, tools or components that are protected by intellectual property rights or are linked to a motor vehicle's security systems.
Manufacturers will also be prohibited from setting minimum retail prices for spare parts and components.
To recognise the rights of the consumer, the code proposes that you must be able to refuse to buy value-added products (such as maintenance plans, service plans and extended warranties) and to separately buy such a plan from any provider of your choice, to select the duration of maintenance plans and service plans on a new motor vehicle, and to transfer a maintenance plan and/or a service plan to a replacement motor vehicle if the original vehicle is written off by the insurer.
In instances where there is no replacement motor vehicle after a vehicle write-off, you must be given the right to cancel the value-added contract and/or receive a refund of the value of the balance of the product.
Kwanele Sibanda, the manager: corporate affairs at the South African Insurance Association, says the code will be voluntary and will bind parties such as manufacturers, insurers and industry associations that are signatories to it. To ensure the quality of the work undertaken by independent workshops, the code provides for access to training and technical information, he says.
Submissions on the final version of the code are being considered by the Competition Commission. Once finalised, the code will be published in the Government Gazette along with a list of signatories to it.