Q&A and explanation of the R2R guidelines.
Please note, that the following is only an explanation of the R2R guidelines and is not legal advice. If an OEM or the distribution network of an OEM does not follow the guidelines published by the Competitions Commission, we advise that this is reported to the competition commission in the form of a complaint. A complaint form can be found on the Commission website www.compcom.co.za.
The final decision on the implementation of the guidelines lies solely with the Competitions Commission.
The first point to note is that the guidelines are exactly that, guidelines as to how the Commission will approach any matter in terms of the Competitions Act. The underlying legal basis is the Competition Act, and it is the principles of this Act that will form the basis of enforcing the guidelines.
Another important aspect to keep in mind is that other existing laws, acts, and regulations remain relevant and do not change e.g., the Consumer Protection Act which specifically addresses consumer rights against parts failure and/or faulty workmanship.
The Guidelines are now in force and came into effect on 1 July 2021.
Who can service cars under warranty?
Independent Service Providers (“ISPs”) are already allowed to service cars under warranty. Car owners are, however, now empowered to choose where they service their vehicles without risk of voiding the warranty. Previously, motor manufacturers would void the warranty if a vehicle was not serviced at the dealership during the warranty period. The Commission has now declared this practice as incompatible with the Competition Act. Independent service providers can now service cars under warranty and the practice of voiding warranties is now unlawful. This includes cars that were sold prior to 1 July 2021 which were sold without an embedded maintenance and/or service plan.
Do ISPs have to be registered with an organization such as the RMI to service in-warranty vehicles?
No. ISPs do not need to be registered with any industry specific organization to service an in-warranty vehicle.
When can a Manufacturer lawfully decline a warranty?
If a manufacturer finds that a warranty related failure is due to inferior quality parts, incorrect service procedures or faulty workmanship they are within their rights to decline the warranty. As stipulated in the Consumer Protection Act 68 of 2008 (“the CPA”), the liability in such an instance will lie with the ISP and/or the parts supplier/importer.
In a case like this, can the whole warranty of the vehicle be voided?
No. The guidelines maintain that those provisions of the warranty that relate to unaffected parts remain severable and enforceable. In other words, only the section/s of the warranty that relate to the failure/damage may be voided, the remainder of the warranty must be honoured by the manufacturer.
How is a consumer covered in a warranty dispute if the ISP uses inferior parts or if the ISP’s workmanship is at fault?
As mentioned above the consumer is protected under the provisions of the CPA. If there is a warranty dispute, the consumer should refer the claim to his/her service provider and the service provider, which claim should be covered by the service provider’s insurance provider. The guidelines in fact, specify that ISPs must disclose to consumers whether they have adequate commercial insurance cover. We strongly recommend that consumers use only those ISPs who can provide proof of adequate commercial insurance.
Do ISPs need to use specific parts for servicing vehicles under warranty?
No, but as mentioned above if a manufacturer finds that a warranty related failure is due to inferior quality parts, they are within their rights to decline the warranty. It is therefore important that ISPs procure parts from reputable suppliers and use only recognized, quality parts when servicing a vehicle.
What are your recommendations for ISPs to avoid liability?
To avoid the risk of a manufacture refusing to honour a warranty, we recommend that all services be carried out in accordance with the manufacturer’s specifications:
Fluids used should conform to manufacturer’s specifications.
Parts manufacturers and suppliers (especially for filters) should confirm that their parts perform at the same or a higher standard than the original parts.
It is recommended that ISPs purchase parts from manufacturers that manufacture on behalf of the manufacturer as well as the independent aftermarket. Good examples of these types of brands include Mahle, Bosch, NGK, GUD, Hella, Temot, Fram, Safeline, Monroe, Mann and Hummel, amongst others.
ISPs should only use parts from suppliers that provide indemnity for damages (including consequential damages) should their parts be found to be at fault.
Are there any other requirements for ISPs?
ISPs are required to record the service history in the service book or in the electronic service record of the vehicle to allow traceability should there be a warranty issue at a later stage. A caveat to this is that the ISP must also be given access to previous service history.
ISPs are also required by the Guidelines to disclose to consumers, in clear and explicit terms, the risk of damage that could arise from the ISP’s work, including consequential damage to the consumer’s vehicle, which may potentially void certain obligations of the manufacture in terms of the warranty.
Can ISP’s carry out warranty work?
No. Warranty repairs must always be referred to the manufacturer’s approved dealer.
What about extended warranties, motor plans, service plans or insurance work, where should these repairs/services be performed?
In very simple terms, whoever pays, decides where the work can be carried out.
If a consumer has chosen to purchase an extended warranty and the repair falls under the warranty, then the repair will be undertaken by a repairer approved by the provider of the extended warranty.
Motor plans/Service plans:
The consumer may now choose to purchase a service plan from whoever is offering one, that consumer will then have their vehicle serviced by the workshop specified in the plan.
Where a repair is not covered by insurance the consumer may choose whom will repair the vehicle, while a repair that is covered by insurance will be attended to by a repairer on the insurance company’s panel.
What if a vehicle is in an accident during the in-warranty period? Who can repair it?
If the consumer is insured, the vehicle must be referred by the consumer’s insurer to a manufacturer approved repairer to ensure that the integrity of the consumer’s warranty is protected while the accident-related repairs are being attended to.
If the consumer is not insured, it is up to the consumer which service provider he/she choses to repair the vehicle, however, we strongly recommend that consumers refer their vehicles to a reputable ISP, who holds adequate commercial insurance to ensure that they are covered should they need to make a warranty claim at a later stage.
What are some of the other important changes put forward by these new guidelines?
First and foremost, the consumer when purchasing a new vehicle, is now armed with the choice of whether they want to include the service plan. Put another way, service plans can no longer be embedded into the metal. This means that other independent providers can also price service plans, making for a more competitive market.
Secondly, the Competition Commission has given guidance around the appointment of motor-body repairers by insurance companies and manufacturers, with the objective of “lowering barriers to entry and ensuring that a greater number of firms, especially firms owned and operated by historically disadvantaged individuals and small to medium enterprises have the opportunity to undertake service, maintenance and repair work of motor vehicles within the period covered by a motor vehicle’s warranty.” For insurance companies, this revolves around a fair appointment process and a fair allocation of work. Similar principles will be applied to the appointment of dealerships which criteria must be reasonable.
What technical information will be made available to independent service providers?
Similar to the EU and US, all technical information required to assess, service and repair vehicles must be made available by the manufacturers to the ISPs. The exact methodology needs to be established but will likely take guidance from current practices in both the EU and the US.