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Competition will cut car ownership costs

May 31, 2021

Freedom to have your car repaired by a non-dealer will increase competition and reduce the cost of repairing and insuring your car.

Competition will cut car ownership costsA couple of years ago when I was buying a second-hand car that didn’t have a service plan, I discovered what a rip-off my dealership had been when it came to servicing and repairing my vehicle.

As I was free to shop around, I discovered a service provider who specialises in my make of car but who charges one-third of the fee for a service that the dealership charges. My eight-year-old car’s most recent major service, which included a full service of the automatic gearbox, cost me R4 200. That same service would have set me back at least R15 000 if I had used the dealership.

A bulb for a headlight may cost R3 400 at a dealership compared to R700 from an independent spare parts dealer. Motorists have paid as much as R13 000 through a dealer-authorised service centre for a windscreen replacement, while a fully SABS-approved windscreen would cost R2 000 at an independent provider.

This is why the introduction in July of the Guidelines for Competition in the South African Automotive Aftermarket is so important.

Freedom of choice

These guidelines, issued by the Competition Commission, allow motorists to have their cars serviced by, and to buy spare parts from, independent service providers without losing their warranty.

According to the Guidelines, “Independent service providers in South Africa have been over the years excluded from undertaking the service, maintenance and mechanical repairs on motor vehicles that are in warranty. One of the reasons for this is that when a motor vehicle which is in warranty is serviced, maintained or repaired by a party other than an approved dealer, there is the potential risk that certain provisions of the warranty on the motor vehicle may become invalid or void.” This has effectively created a monopoly and driven up the prices of repairs.

Head of client experience at insurer King Price, Wynand van Vuuren, explains that currently, a car manufacturer only upholds a warranty if the car is serviced or repaired at their specific providers and that all parts must be bought from these providers.

The upcoming changes should result in pricing competition, as well as provide more options to motorists as to where they can service and repair their vehicles.

According to the Competition Commission, manufacturers have limits on the number of motor-body repairers that they approve in a particular geographical area.

“With few options available for insured consumers, the arrangements can be inefficient, often leading to delays for appointments to repair their motor vehicles (long lead times). Further, many consumers are compelled to travel outside of their geographic locations to have their motor vehicles repaired at often far-located approved motor-body repairers,” it states in the Guidelines.

Van Vuuren notes that the shortage of approved motor-body repairers can often create bottlenecks, for example, when a hailstorm hits Gauteng, resulting in a spike in the number of cars needing to be repaired.

Lower insurance premiums

He also points out that increased competition and the resultant lower prices should have a positive impact on insurance premiums. If it becomes cheaper to repair cars, insurance premiums should come down.

While the widening of service providers will bring competition, the challenge now will be to ensure that standards are maintained, that the independent service providers are properly accredited by the manufacturer, and that any non-original spare parts meet SABS standards.

As the Ombud for Short-Term Insurance points out, while the new guidelines will present some advantages and benefits for consumers, there can also be some disadvantages.

“Service providers may not be regulated in terms of their compliance and the service provided may not be of the level required or sought. We will see how it goes once it is in effect.”

The guidelines also affect insurers who came under fire for using only a limited number of providers.

From complaints received, the Commission found that some insurers “appoint large numbers of service providers onto their panels, but allocate work to a few, repeatedly”.

Guidelines are now being introduced to “encourage a fair allocation of work and promote inclusivity in the selection of motor-body repairers onto panels of insurers”, especially for historically disadvantaged providers.

This article first appeared in City Press.

1 Comment

  1. I’m so excited about this development, because I’m one of those who thinks these dealers don’t do their work honestly, some won’t even inform you about yr expiry of the warranty, then immediately after that you are told your car has a problem and you must pay it personally.

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Maya Fisher-French author of Money Questions Answered

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