Big win for SA car owners as they are freed from pricey service plan, parts restrictions
- The Competition Commission has issued new guidelines for the car repair industry, giving vehicle owners more choice, and potentially boosting independent car repairers.
- The new guidelines include that owners won’t risk their warranties if they don’t service their cars at the manufacturer’s approved outlets, or only use “original” car parts.
- Also, the commission wants service plans to be sold separately in future.
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The Competition Commission has published a new set of guidelines with big implications for vehicle owners and car manufacturers alike.
On Friday, the commission announced new guidelines aimed at addressing complaints it has received over the past decade. Car owners and vehicle repairers have objected to car manufacturers demanding that in-warranty vehicles can only be serviced by their own outlets, and there is also unhappiness about the requirement that only “original” car parts may be used in repairs.
Here are some of the new guidelines, which are effective from July 1, 2021:
No restriction on service providers
Currently, owners of new cars are typically locked into a service plan that requires that they use the vehicle manufacturer's service centres for maintenance or repairs. If they don’t, they are at risk of losing their warranty.
But the commission has now said it wants car manufacturers to allow customers to seek service, maintenance, and mechanical repair work from any service provider of their choice – without risking their warranty.
Maintenance plans and service plans must be unbundled from the sale price of the car, and sold separately, the Commission says. This means that customers will know exactly what the plan costs, and can make a more informed decision.
The buyer should also know details of all inclusions and exclusions included in the maintenance or service plan beforehand – including the average price for each service interval, the average price of the parts that commonly require replacement at specific kilometre intervals, or upon the vehicle reaching a specific age.
Car parts group Autoboys’ CEO Filum Ho has welcomed this move, saying that its car buyers can now expect better competition in the market, greater transformation, access, and freedom of choice.
The guidelines also said that where a motor vehicle is written off by an insurer, the service plans must be transferred to a "replacement" vehicle.
‘Original’ versus ‘non-original’ spare parts
The guidelines also address the fitting of “original” (parts with the manufacturer’s branding) or non-original spare parts (the same parts, but without the branding).
Many car owners are prevented from fitting non-original parts – which are cheaper – because these parts will void their warranty. The Commission says it has also received complaints from independent repairers that manufacturers refuse to sell them original spare parts.
It says consumers must be able to use non-original spare parts from any provider, without risking their warranty. Car manufacturers may only put restrictions on items linked to the car’s security system.
If the non-original part damages the car, the car manufacturers must conduct an assessment at its own cost to determine the cause of the damage, and if the warranty can be voided. The car owner must then claim from the part provider.
Insurers forced to use different repairers
The Commission found that some insurers allocate repair work to only a few service providers, and limit the number of accredited repairers within specific areas.
It has now said that insurers must adopt a number of measures to promote the fair allocation of work to repairers, with a preference for firms owned by historically disadvantaged individuals.
The commission wants car manufacturers to lower financial barriers to entry and promote the participation of historically disadvantaged individuals in the dealership market. “The requirements for approved dealers must be reasonable and have an economic rationale, particularly concerning the size of land, showrooms, furniture, fittings, and finishes.” These measures can include, amongst others, offering “varying iterations” of dealership options, and not imposing onerous obligations on prospective dealers.
Although the new guidelines are non-binding, it indicates the Commission’s approach on any matter falling within its jurisdiction in terms of the Competition Act, says Dominique Arteiro, director of the law firm Werksmans.
"Businesses should, therefore, carefully consider the implications of the measures proposed by the Commission in the Automotive Guidelines on their franchise and dealer arrangements, and on their different services and product offerings pertaining to motor vehicle servicing, repair and/or maintenance."
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