Nada decries proposed new automotive code of conduct

The National Automobile Dealers’ Association (Nada) has strongly criticised a proposed new South African Automotive Industry Code of Conduct that seeks to allow independent service providers to undertake service and maintenance work while a vehicle is in warranty. It says the latest draft will have a catastrophic effect on the economy as it undermines investment, employment and consumer welfare.

Speaking at a media briefing in Johannesburg, Nada chair Mark Dommisse said the association believes its comments on the proposed new code of conduct, which was drafted by competition authorities, have largely been ignored. 

Despite the code being voluntary in its present form, Nada expressed concern over its implementation and the fast-tracking of the legislation in the near term.

The automobile dealership industry in South Africa has over 1 600 new franchised automotive dealerships, which employ about 60 000 people directly. In addition, the automotive retail industry’s holistic contribution ranges from apprenticeship programmes, a broad range of employee benefits, and hundreds of millions of rands in staff training and funding healthcare and pensions.

“Only around 20% of the entire South African car parc comprises in-warranty vehicles, and it’s this small portion that the new code is addressing,” says Dommisse.

“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.”

Alternate parts remain a contentious issue

Nada’s foremost criticism of the latest draft code relates to the use of parts other than those of the vehicle manufacturer while a vehicle is under warranty.

The condemnation is in line with the draft code of conduct for competition in the South African automotive industry published on September 22, 2017. Section 3.18.3 states that “spare parts of matching quality are spare parts that are of the same quality as original or identical parts and which carry legitimate Warranty from its manufacturer, but are not distributed by the OEM/Importer or by the official distributor of the OEM/Importer, and are not marked with the OEM’s trademark”.

The draft continues: “Spare parts are deemed to be of matching quality where they have been certified as such by the South African Bureau of Standards or by a testing process through a SANAS-accredited laboratory.”

With cheap Chinese alternative parts flooding the South African market, Nada argues that commercial and passenger vehicle safety will be compromised. “There is no quality control of alternate parts coming into the country and we don’t believe that this is responsible,” says 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?”

The code in its current form allows for the use of ‘equivalent’ generic parts that fit, but are nowhere near the quality of original equipment manufacturer (OEM) parts and haven’t been tested under the same conditions. In a statement, Nada says, “Even in the case of original equipment 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.”

Dealerships have also come out strongly to condemn the proposed code of conduct. In a submission to the competition authority, Toyota South Africa Motors (TSAM) said: “TSAM cannot authorise warranty work or pay for repairs to Toyota vehicles outside the Toyota network to repair manufacturing defects.”

MAN Automotive (South Africa) says: “The Draft Code will materially and negatively affect objectively-justified OEM distribution and quality requirements, investment incentives by OEMs and by dealerships, research and development and the protection of intellectual property rights.”

Source: moneyweb.co.za