A death sentence for the automotive industry

The voluntary Automotive Code of Conduct allows unregulated parts to be fitted on vehicles, potentially compromising safety, without breaching the vehicle warranty at participating dealerships. MARISKA MORRIS investigates the impact this will have on the automotive industry

The National Automobile Dealers’ Association (NADA) believes that the voluntary Automotive Code of Conduct – which was implemented by the Competition Commission in October – will be catastrophic to the vehicle industry.

This code proposes that vehicle owners can service a vehicle at any workshop, using equivalent parts that have not been subjected to strict standards, without breaching their warranty at participating dealerships.

This puts vehicle owners at risk of sub-par parts being fitted by unskilled mechanics. Up to this point, only approved dealerships could supply and install parts that had been approved by the original equipment manufacturers (OEMs) as defined in the agreement for dealers to represent OEMs.

NADA says: “The approved dealer is obliged to perform all maintenance, repair and service work as prescribed by the OEM. This doesn’t cover any failures attributable to non-genuine parts.”

Dave van Graan, head of special sales projects at MAN Automotive South Africa, says that reputable OEMs need to conform to standards linked to the National Regulator for Compulsory Specifications (NRCS) and vehicle homologation requirements before their vehicles are sold, licensed and registered.

Parts supplied by OEMs might come at a premium price, but they go through rigorous testing to comply with very exacting quality standards. Van Graan notes: “Very often we find that customers use inferior parts that may ‘look’ similar, but have a much lower life expectancy and need to be replaced more frequently.”

NADA echoes Van Graan: “All OEM parts are required to meet exact design requirements. These parts undergo stringent testing to maintain the required durability and safety standards. It is unlikely that OEMs will wilfully lower standards, or put any customer at risk by approving components that have not been thoroughly tested.”

Quality parts give customers peace of mind, while the warranty ensures the vehicle is serviced to the exact standards of the OEM.

“During the warranty period, the customer has the assurance that the OEM stands behind the quality and safety of its vehicles and will repair defects at no additional cost to the customer. It ensures that vehicles are maintained in line with the standards,” NADA notes. The fitment of parts and servicing of the vehicle is just as important. A genuine part fitted incorrectly could cause great damage.

Van Graan points out: “OEMs make ongoing improvements to their products and the components. The professional technicians and engineers who work with these manufacturers are kept abreast of these technological innovations and are trained to specifically integrate these parts into the vehicles to exacting standards.”

A third-party technician might not have the necessary skills, resulting in an incorrectly fitted part that could cause the permanent failure of components, or more serious damage to the vehicle. If the market is flooded with non-genuine or equivalent parts, NADA warns that OEMs will not be able to back their vehicles.

Equivalent parts are not required to comply with standards set by the South African Bureau of Standards (SABS). There only needs to be a warranty on the part, of which the minimum period in South Africa is six months.

NADA states: “These parts may look the same, or similar, but the internal design, materials and performance can, and often does, differ vastly. Where such differences exist, these could impact on vehicle safety, durability and reliability.” Safety-critical parts must comply with standards, but non-critical parts can still have an impact on important areas of the vehicle.

“Vehicles are integrated devices with linked components. It is highly likely that a non-critical part can cause catastrophic failure or damage to critical areas. Non-critical, unregulated ‘equivalent’ parts pose a serious risk,” the Association points out.

It uses an example of poor adhesive used on windscreens, which could impact the windscreen’s ability to perform its function. Van Graan adds: “Failure of non-genuine parts of a non safety-critical nature could result in the ‘death’ of your vehicle – prematurely and at great cost.”

It is important for consumers to gain more knowledge and a better understanding of the potential impact of the Code. If a customer unknowingly fits a non-genuine part, they will most likely suffer the most.

“Ultimately, the OEM is responsible for the vehicle. In an effort to establish any problem, the OEM will have to appoint someone to inspect the vehicle if there is a dispute. There are bound to be numerous claims that will result in a situation that is unmanageable in terms of ensuring compliance,” NADA says.

OEMs will not agree to a warranty of a non-genuine part, which means the consumer might need to turn to the manufacturer of that part. NADA further notes that the manufacturer of the non-genuine part might not come forward.

“In the event of an accident or consequential damage, the manufacturers of these products may not voluntarily own up and take responsibility for their products,” it states. OEMs have invested a lot more in their customers, products and brands. It is important for them to keep their customers happy.

“Customers are exploited when unscrupulous individuals, who are not thinking about long-term consequences, claim to offer the same parts and service at a much cheaper price. Frustrated customers then often return to the manufacturers that have supported them over the long term, to plead for assistance,” he says.

Van Graan adds that if manufacturers are faced with the loss of customers in the short term and the cost of customer support or brand protection in the long term, they might be forced to withdraw from the market. He adds that this could impact on transport operators.

“The professional logistics operators who support the international brands will also re-look at their futures. This is very dangerous for any country that is serious about its long-term economic and employment outlook,” Van Graan notes. However, he believes that most transport operators will continue to service their vehicles with the OEMs.

“Professional transport operators set very high standards to ensure up-time and cost efficiency. These standards go in hand with making sure that legal and quality standards are conformed to throughout the life of the vehicle. MAN is confident that those professional companies are as serious about these matters as we are,” Van Graan says.

If ever the voluntary Code becomes law, customers will be able to protect themselves by sticking with dealers that stay committed to complying with the OEM standards. “One can look up the part code online and ask the OEM if the retailer is approved to sell those parts,” the Association says.