Application of code of conduct requires ‘extensive' review, says auto industry body

The National Association of Automobile Manufacturers of South Africa (Naamsa) on Monday voiced its support for the Competition Commission’s proposed voluntary Code of Conduct (CoC) for the South African vehicle repair, service and parts supply sectors.

However, the association emphasised that it was important that the code should be developed and rolled out in “an orderly, structured manner, taking into account legitimate commercial interests, international best practices and the viability of franchise dealers and automotive companies in the South African automotive value chain”.

Naamsa represents the interests of vehicle manufacturers, importers and distributors in South Africa.

National Automobile Dealers’ Association chairperson Mark Dommisse last week warned that implementing the proposed CoC in its current form would have a “catastrophic effect on the economy as it undermines investment, employment and consumer welfare in this important sector of our economy”.

Naamsa said in a statement that automotive companies accepted most of the principles in the draft CoC, but noted that the code’s “proposed operational application” required “extensive consideration and review”.

The association said it was preparing a response regarding, among other issues, in-warranty work, training and other elements, for submission to the Competition Commission by the end of October.

“Naamsa envisages an evolving process that will involve further discussions with the competition authorities. Naamsa also intends to engage the [Department] of Economic Development on matters relating to transformation and competition in the automotive value chain.”

The industry body said any proposed code should take into account the intensely competitive nature of the industry, the legal agreements governing the relationship between automotive companies, dealers and service providers, intellectual property provisions and related factors, as well as the rights of consumers to product safety and quality of service.

Naamsa said automotive companies were the custodians of their respective brands and remained responsible for the safety and operation of their products whether purchased, serviced or repaired.

“There can be no compromise on customer safety and quality of service. Brand and reputational protection comprises singular focus on the interests of consumers and their safety, particularly in respect of quality of parts, safety critical repairs and servicing.”

In launching the CoC in 2017, the Competition 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.