Right to Repair Guidelines Are Positive For Automotive Consumers, But Could Raise Regulation Issues

Aug 2021

New right to repair guidelines are likely to empower automotive consumers in several important areas, while also posing significant regulatory and management challenges…
The December 2020 release by the Competition Commission of final guidelines for competition in the South African Automotive Aftermarket signal an important shift in the South African automotive sector. In summary, there’s no doubt they have the potential to open up the competitive landscape and empower consumers, but regulatory challenges could also be a significant hurdle.
The release of South Africa’s guidelines follows global trends and has been driven by a lot of hard work from not-for-profit bodies like Right to Repair SA. The new stipulations mean that vehicle owners can now manage the maintenance and repair of their vehicles using a service provider of their choice, instead of being locked into purchasing services and parts from the Original Equipment Manufacturer (OEM). The guidelines create better competition and freedom of choice across the automotive market, effectively diluting what has been a highly concentrated and uncompetitive sector.
Crucially, owners can fit original or non-original spare parts during the in-warranty period without voiding the warranty, regardless of whether the provider is an OEM approved dealer, motor-body repairer or independent. OEMs must make technical information relating to their cars available to independent service providers (subject to OEMs’ intellectual property and data privacy rights and the independent operators meeting accreditation requirements). They are also required to provide training or access to training to independent repairers who request it, at a reasonable cost.
It is, however, important to note that in general expensive equipment is required to install OEM parts and carry out required functions like locking a part to the VIN to meet warranty terms and conditions. Given the capital outlay required, there are questions as to exactly how much the service market will actually be able to open up. Despite the good intentions, then, there’s a possibility we could see a scenario where the competitive playing field is still dominated by larger enterprises.
In addition, and given how stringent OEMs are about warranty terms and conditions, it’s easy to imagine a scenario where warranties are voided as a result of the wrong maintenance and repair protocols and materials being used by service providers somewhere in the vehicle’s past. The rights and wrongs of these scenarios are one factor, but the process and / or body required to govern the disputes that will inevitably emerge are another, possibly more important, consideration. If effective processes and systems aren’t in place, many consumers could end up in a bureaucratic nightmare, with their car caught in the middle of a process where ultimate accountability and responsibility is a murky, mysterious force.
Nonetheless, the new guidelines are empowering for consumers in several other important areas. For example, OEMs and independent third-party providers must transfer a service and/or maintenance plan to a replacement motor vehicle if the motor vehicle is written off by the insurer. And if a car is written off, the balance of the warranty or maintenance plan will now be paid back to consumers. Vehicle owners can also no longer be forced to use a vehicle manufacturer’s service centres, repair shops and parts through “embedded” motor and service plans. The price of a new vehicle has been unbundled from the price of the service and/or maintenance plan, and buyers can now choose whether to purchase the motor vehicle and service/maintenance plan separately or together.
Again, however, the reality might be more complex than the well-intentioned theory. There’s a risk that unbundling maintenance plans from vehicles will give consumers more initial buying power while reducing their financial capacity to manage the long term costs of maintaining the vehicle, ultimately hurting its value. The responsibility is very much on the consumer, of course, but the overall dynamic could impact valuations across the market.
In fact, unbundling could make the process we currently use to value vehicles pretty tricky, particularly with vehicles at the tail end of their original warranty and maintenance plan period. A lot of the value in vehicles at this stage is bound into their maintenance and service record. To forcibly remove these from the equation could make it difficult to come up with a consistently applicable valuation formula.
The guidelines cannot be considered as ‘law’ yet. There are still grey areas where the implementation is uncertain, and the legal framework will only really be fully established once consumers, businesses and other stakeholders start testing scenarios in court.
Ultimately, though, it looks like the big challenge will be turning an important and valid theory into a realistic operation reality. The regulatory environment (including the establishment of some kind of regulatory agency or mechanism) is going to be key, but this could well only take shape after we start seeing legal actions seeking to put the principles of the guidelines into action.
There is a lot to recommend an automotive environment where OEMs and after-market service providers compete against each other for business. But who will the referee be? And what system will they use? The answers to these questions could define whether the changes are truly beneficial to South Africa over the long term.

After-sales service at Citton Cars

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