The Competition Commission has welcomed the initiative by the Department of Small Business Development (DSBD) to support small and independent players in the automotive aftermarkets during this Covid-19 pandemic, affirming the need for inclusivity.

The DSBD's Automotive Aftermarkets Support Scheme will work to bring relief to some of the vulnerable entities in the automotive value chain, the commission says.

It states that there has been an overall lack of transformation in the automotive aftermarket sector, with limited entry and expansion of small and medium-sized enterprise (SMEs) and firms owned by historically disadvantaged individuals (HDIs) in the value chain.

Earlier this year, the commission published its draft Guidelines for Competition in the Automotive Aftermarkets document, which is aimed at guiding the behaviour of car manufacturers, insurers and other industry players towards pro-competitive outcomes.

The guidelines were issued in response to concerns of exclusionary and exploitative conduct by incumbent players in the sector related to the arrangement between these stakeholders, says the commission.

The draft guidelines seek to widen the pool of service providers who undertake repairs and service work during the period covered by the warranty or insurance.

With the implementation of the guidelines, consumers should be able to choose to repair their motor vehicles at a service provider of their choice, whether an original equipment manufacturer- (OEM-) approved service provider or an independent service provider without nullifying the motor vehicle’s warranty or cover.

Car manufacturers and insurers will be required to approve any service provider that meets their standards and specifications to undertake such services during the warranty and insurance period, respectively.

The guidelines also require car manufacturers and insurers to implement specific measures to promote the entry and participation of SMEs and HDIs into their network of approved service providers and dealerships.

Importantly for consumers, the guideline requires dealerships to be transparent about the pricing of their vehicles, including items that are bundled into the purchase price.

The effects of the Covid-19 pandemic on the automotive industry require a re-imagining of the sector, to ensure its sustainability in the future, says the commission.

It states that its work in promoting competition and transformation in the sector is all the more imperative for the survival of both OEMs and independent repairers.  

“The commission’s guidelines seek to ensure that the benefits of investments made by both the State and private players are realised by a greater group of stakeholders and that possible exclusionary and exploitative conduct is addressed,” it adds.

Stakeholders have until June 30 to provide their comments on the draft guideline, which is accessible on the commission's website.