Warning on harm to carmakers

The vehicle manufacturing industry has warned the Competition Commission to be careful to avoid irreparable harm to an industry which has become the successful cornerstone of growth and development in South Africa.

The caution was issued by the National Association of Automobile Manufacturers of South Africa (Naamsa) in response to the recently published Draft Code of Conduct for the South African Automotive Industry.

The code was gazetted late last month for comment and submissions from the industry and consumers.

Naamsa, among others, represents South Africa’s seven major automotive manufacturers.

It warned that the publication of the draft code and associated uncertainty had already resulted in established businesses, as well as potential new entrants, placing on hold any expansion decisions pending the outcome of the process.

The proposed code, which could have far-reaching implications for the country’s vehicle aftermarket, targets small and independent repairers and maintenance service providers in particular. According to the Competition Commission, it was devised to address anti-competition concerns, to enhance transformation in the industry and to foster inclusive growth.

But while the proposals are aimed at giving small and independent players a stronger foothold in the market, the proposed code places a range of new burdens on manufacturers.

These may include ceding elements of vehicle service and parts operations, intellectual property and technologies to competing businesses.

Two of Nelson Mandela Bay’s largest automotive companies, Volkswagen South Africa and General Motors both opted not to comment on the code, referring The Herald to their representative organisation, Naamsa.

Volkswagen spokesman Matt Gennrich said the company would not comment independently, bar to say that it was “very concerned about the draft and believe that this code cannot be implemented”.

According to the commission, the code seeks to address concerns it has identified in the automotive aftermarket industry and will “bind various OEMs (original equipment manufacturers), government bodies and industry associations who will be signatories to it”.

The commission said the intended outcomes of the code included:

  • Small, independent and historically disadvantaged service providers will be able to perform service and maintenance work on vehicles while they are in warranty;
  • For more small historically disadvantaged individuals and independents to undertake in-warranty autobody repairs;
  • More small historically disadvantaged individuals will own dealerships;
  • The use of equal matching spare parts, in addition to original equipment manufacturers and identical parts, in the repair of vehicles;
  • The removal of restrictions in the sale and distribution of parts by retailers; and
  • More price and product options for consumers in the sale of parts.

Commission communications head Sipho Ngwema said that many submissions had already been received.

“We have found that there are features of this industry that are uncompetitive,” he said.

“At this stage, the document is a draft code which proposes changes.

“A process will be followed before the final code is drawn up.”

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