Get to know the proposed automotive industry code of conduct

South Africa’s Automotive Industry Code of Conduct has been designed to regulate relationships between persons in the Automotive Industry and their consumers, but also to provide for a scheme of alternative dispute resolution between consumers and participants in the industry and to provide alternative dispute resolution services. In order to make this Code even more effective, in 2017 the Competition Commission of South Africa published a historic first draft of a new Code of Conduct. The commission called for final comments on August 1 2018, and the deadline for input was September 11 2018. Here are some important points in the draft you need to know.

  • The Code of Conduct will empower car owners with the right to repair or service their vehicles at a provider of their own choice, without voiding their warranties. Currently car owners in South Africa are typically locked into using a vehicle manufacturer’s repair shops and parts because of embedded motor or service plans.
  • The Code is transformational as it pushes for historically disadvantaged individuals to own more dealerships and other business in the local automotive sector.
  • Original Equipment Manufacturers (OEMs) will have to promote the entry of historically disadvantaged individuals into their networks of service by, for instance, subsidising of capital, facilities, tools, equipment and training.

  • The code stipulates that there should be no unfair restrictions on the sale or distribution of original spare parts; allowing greater consumer choice in choosing suitable spare parts for repairs and maintenance of their motor vehicles.
  • The Code seeks to widen the pool of approved service providers who can undertake in-warranty service and maintenance work, in-warranty mechanical repairs, and in-warranty motor-body repairs.
  • Insurers shall not withhold payment to independent service providers who effect repair and maintenance work on a motor vehicle whilst the motor vehicle is under a Maintenance Plan, Service Plan, Warranty or Extended Warranty.

The Automotive Industry Code of Conduct is voluntary in nature but once adopted will tremendously impact the automotive sector. Once an industry player becomes a signatory, it will impose binding obligations that can be relied on by third parties, including service providers and consumers.

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