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New automotive guidelines a boost to Eastern Cape economy

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Radical new guidelines for the automotive aftermarket sector, which take effect on 1 July 2021, will open entry and participation to SMMEs and black owned firms in South Africa’s lucrative aftersales value chain.
Commenting on the Competition Commission’s published guidelines pertaining to the servicing and maintenance of vehicles in South Africa, the Automotive Industry Development Centre Eastern Cape (AIDCEC) said the initiative would be instrumental in delivering “massive progress on targets set by the South African automotive sector to grow and transform the automotive supplychain.”

“The targets set for growth, transformation and localisation in the South African Automotive Masterplan were dealt a heavy blow by the economic impacts of COVID 19 but these new guidelines create an opportunity for real progress,” AIDCEC CEO, Thabo Shenxane said.
“The playing field has been levelled and the opportunity now exists for SMMEs and black independent suppliers to step up. The inclusive growth of the automotive sector depends on it,” Shenxane said.

Shenxane said the guidelines require industry players to adopt strategies and develop business models that enable small, independent and historically disadvantaged service providers to undertake service, maintenance and repair work while a vehicle is in-warranty and encourage more HDIs to own dealerships.

The guidelines include the removal of restrictions imposed by the automotive industry on vehicle owners on the choice of service providers for service and maintenance as well as replacement parts for their motor vehicles.
It also requires fair allocation of repair work by insurers to service providers on their panels and the promotion of consumers’ rights to use original or non-original spare parts during the lifespan of their vehicle. The guidelines also require the removal of original-equipment manufacturer (OEM) restrictions in the sale and distribution of original parts, in the purchase of maintenance and service plans and around access to OEM training and technical information by independent service providers.

Shenxane said some of the measures proposed in the Automotive Guidelines, would have cost, staffing and legal implications for participants in the automotive industry but would be “balanced against a fairer system of trade promoting inclusiveness and consumer choice.”

On 10 December 2020, the Competition Commission issued the final guidelines for competition in the South African Automotive Aftermarket (Automotive Guidelines). The publication of the guidelines is a culmination of extensive consultation and advocacy work that the commission has conducted since 2017, following numerous complaints from various independent players and members of the public. These parties raised concerns about alleged anti-competitive practices that excluded independent players in the automotive aftermarket.

Shenxane said the AIDC EC was working with the Competition Commission to assist industry role-players understand and optimise the implementation of the guidelines, which are expected to “significantly change consumer behaviour and the automotive business landscape when they become effective on 1 July 2021.”
“Our priority is to ensure that key stakeholders have a clear understanding and appreciation of what these new Guidelines entail. Our office together with Competition Commissioner team has developed a simplified information pack around the new Guidelines,” Shenxane said.

The Competition Commission will be conducting a series of virtual workshops across the country to ensure the readiness of both consumers and Independent Service Providers (ISPs), Shenxane said.

An online workshop for Eastern Cape role-players will take place on 05 May 2021 at 10:00am, entitled “Guidelines for Competition in the South African Automotive Aftermarket.”

RSVP to https://forms.office.com/r/4qXCHhfsTh.

Going forward, the AIDCEC has opened an email platform where stakeholders in the province can direct their questions to. They can be directed to the following email address: guidelinescompetition@aidcec.co.za

Author: Deon Engelke
Website: http://www.aidcec.co.za

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