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How SA’s new automotive code of conduct could kickstart the economy

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South Africa is grappling with a recession, but a new automotive code of conduct could lead the way in showing how the country could create stronger, more long-term inclusive growth.

In September 2017, the Competition Commission of South Africa published an historic first draft of a new Code of Conduct for the South African Automotive Industry.

Groundbreaking changes

Ordinarily, such a development may be easily overlooked amid the busy workload of the Commission. But this Code of Conduct could potentially usher in groundbreaking changes for players in the automotive aftermarket, South African car owners and even the broader economy.

This is because the proposed Code of Conduct will empower car owners with the right to repair or service their vehicles at a provider of their own choice, without voiding their warranties.

Today, car owners in South Africa are typically locked into using a vehicle manufacturer’s repair shops and parts because of embedded motor or service plans. South Africans are powerless when it comes to choosing where their vehicles can be serviced or maintained.

Level of free choice

Organisations such as Section 21 company Right to Repair South Africa (R2RSA) – which was founded by the Motor Industry Workshop Association (MIWA) and represents 2 500 independent workshops and automotive aftermarket distributors, parts manufacturers – want car owners in this country to have the same level of free choice.

Already, South Africa’s Competition Commission has travelled a long way in hearing this call with its proposed draft Code of Conduct that received a final round of feedback and submissions on September 11 2018.

The latest draft of this Code seeks to address competition constraints in the automotive aftermarket industry by, for instance, ensuring that “independent service providers can undertake in-warranty service and maintenance work and in-warranty motor-body repairs”.

The Code also seeks to widen “the pool of approved service providers who can undertake in-warranty service and maintenance work, in-warranty mechanical repairs, and in-warranty motor-body repairs.”

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The properparts

Another key part of the Code is that there should be “no unfair restrictions on the sale or distribution of original spare parts; allowing greater consumer choice in choosing suitable spare parts for repairs and maintenance of their motor vehicles”.

The draft Code will also be unique, in a global sense, as it has a strong transformational element to it by pushing for historically disadvantaged individuals to own more dealerships and other business in the local automotive sector.

Original Equipment Manufacturers (OEMs) will have to promote the entry of historically disadvantaged individuals into their networks of service by, for instance, the subsidisation of capital, facilities, tools, equipment and training.

While the code will be voluntary, the likes of R2RSA will monitor and flag any transgressors.

Overall, these proposals are expected to create a more level playing field in the aftermarket sector and provide a much-needed boost for the 8 000 independent workshops in South Africa, which employ thousands of South Africans.

If we want an economy that is creating jobs, then we really have to support Small to Medium Enterprises (SMEs), such as the thousands of independent workshops scattered across the country.

Studies by the International Finance Corporation (IFC) have shown that SMEs account for more than half of all formal jobs worldwide.

This is why efforts by R2RSA and the Competition Commission in respect of right to repair could become an example of how South Africa is able to open up its economy and make it more inclusive.