Implementing the proposed automotive industry Code of Conduct (CoC) in its current form will have a “catastrophic effect on the economy as it undermines investment, employment and consumer welfare in this important sector of our economy”, says National Automobile Dealers’ Association (NADA) chairperson Mark Dommisse.

Speaking at a media briefing in Johannesburg on Thursday, he said NADA believed its comments on the draft CoC had largely been ignored.

“The code is exceptionally dangerous as it has not been properly considered in terms of economic sustainability.”

“We agree with the fundamental principles of the code, such as transformation, but there needs to be proper consultation,” added NADA director Gary McCraw.

The Competition Commission is drafting the CoC.

In launching the initiative in 2017, the commission stated that the intended outcomes of the code will include for small and historically disadvantaged independent service providers to undertake service and maintenance work while a vehicle is in warranty; for these same groups to undertake in-warranty auto-body repairs; for more historically disadvantaged individuals to own dealerships; and the use of equal matching spare parts, in addition to the manufacturer’s parts, in the repair of motor vehicles.

It is not yet clear when the CoC will be implemented. A second round of consultation is under way.

It is a voluntary code, and no party will be forced to adhere to its principles. However, NADA fears that low adherence may see the code evolve into legislation.

South Africa currently has about 1 600 new franchised automotive dealerships, at an investment of roughly R48-billion. It employs 60 000 people directly, said Dommisse.

“Only around 20% of the entire South African car parc comprises in-warranty vehicles and this is a small portion which the new code is addressing.

“We feel that significant effort and focus should be placed on developing the other 80% of the industry, which is predominantly made up of out-of-warranty vehicles,” he noted.

The code could not be the result of uncompetitive behaviour, he added, as the commission would have launched an investigation into the industry were that the case.

“To say we are anti-competitive is untrue and defamatory.”

ALTERNATE PARTS
One of the concerns raised by NADA is around the CoC proposal of the use of parts other than that of the vehicle manufacturer while the vehicle is under warranty.

“There is no quality control of alternate parts coming into the country and we don’t believe this is responsible,” noted Dommisse.

“Our question is: How will the industry ensure quality parts are utilised in consumers’ vehicles? Who is going to police the parts and vehicles coming into the independent workshop?

“If the industry is not required to use genuine or approved parts, there can be no monitoring of safety standards. And this won’t only apply to passenger vehicles — heavy commercials, trucks and buses will also be affected.

“If the independent workshops are going to use quality parts, made by an original parts manufacturer, such as Bosch or Denso, and of the same specification, design and model, then this might, one day, in theory, be acceptable. However, the reality is that it is unlikely that all independent workshops will use these parts due to the very high cost. And it is doubtful that the manufacturers will allow this during warranty.

“What we will likely see is the use of ‘equivalent’ generic parts that fit, but are nowhere near the quality nor have been tested under the conditions that Original Equipment (OE) parts are. Even in the case of OE parts, unless the person knows how to install them properly, test them, and assure that the work is completed to specification, the parts themselves are meaningless.

“Take cola for example. Cola is stored in the same container, is the same colour, has the same ingredients as Coca Cola, but nobody comes close to the original. Applied to safety, this difference is critical,” explained Dommisse.

“It is extremely important to emphasise that the sale, maintenance, repair and operation of a motor vehicle is ultimately about the safety of the customer.”

NADA represents the interests of business people who own, operate and manage new passenger and commercial vehicle franchise motor dealerships and qualifying used-vehicle only outlets in South Africa.