New guidelines set to transform auto supply chain – AIDCEC

5th May 2021

By: Irma Venter

Creamer Media Senior Deputy Editor

     

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The newly drafted guidelines for the automotive aftermarket sector, set to take effect on July 1, will allow for the increased participation of small, medium-sized and microenterprises (SMMEs), and/or black-owned firms in South Africa’s aftersales value chain, says the Automotive Industry Development Centre Eastern Cape (AIDCEC).

Commenting on the Competition Commission’s published guidelines pertaining to the servicing and maintenance of vehicles in South Africa, the AIDCEC believes that the initiative will be instrumental in delivering "massive progress on targets set by the South African automotive sector to grow and transform the automotive supply chain”.

“The targets set for growth, transformation and localisation in the South African Automotive Masterplan were dealt a heavy blow by the economic impact of Covid-19, but these new guidelines create an opportunity for real progress,” says AIDCEC CEO Thabo Shenxane

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

The guidelines include the removal of restrictions imposed by the automotive industry on vehicle owners regarding their choice of service providers for service and maintenance tasks, as well as the replacement of parts on their motor vehicles, he notes.

It also requires the fair allocation of repair work by insurers to service providers, and the promotion of consumers' rights to use original or non-original spare parts during the lifespan of their vehicle, he explains.

The guidelines also require the removal of manufacturer restrictions in the sale and distribution of original parts, in the purchase of maintenance and service plans, and around access to vehicle manufacturers’ training and technical information.

Shenxane says some of the measures proposed in the automotive guidelines will have cost, staffing and legal implications for participants in the automotive industry, but believes this will be “balanced against a fairer system of trade, promoting inclusiveness and consumer choice”.

On December 10, last year, the Competition Commission issued the final guidelines for competition in the South African automotive aftermarket. 

The publication of these guidelines was a culmination of work that the commission had conducted since 2017, as a result of some parties raising concerns about alleged anti-competitive practices that excluded independent operators from participating fully in the automotive aftermarket.

Shenxane says the AIDCEC is working with the Competition Commission to assist industry role-players in understanding and optimising the implementation of the guidelines, which are expected to “significantly change consumer behaviour and the automotive business landscape when they become effective”.

"Our priority is to ensure that key stakeholders have a clear understanding and appreciation of what these new guidelines entail,” he notes.

“Our office, together with the Competition Commission team, has developed a simplified information pack around the new guidelines.”

 

Edited by Creamer Media Reporter

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