Panel beaters seek competition law exemption as costs threaten survival - TimesLIVE

South Africa’s auto repairers have asked the Competition Commission to exempt the industry from certain provisions of the country’s antitrust rules and allow repairers to collectively negotiate prices with insurers and original equipment manufacturers (OEMs).

The application has been made by the Collision Repairers Association (CRA), which represents about 169 motor body repairers, structural repairers and panel beaters around the country. The association warns that the industry risks imploding if it is not granted the relief it seeks.

Specifically, CRA members want to be allowed to collectively discuss and agree on possible rates, discounts, pricing and mark-ups for the various services (such as labour, car parts and other related services) offered to insurers’ customers who want their vehicles repaired by auto body repairers.

Through this exemption, the CRA is seeking permission for its members to discuss and agree on rates, prices and terms that are sustainable for the industry.

As a starting point, CRA members would collectively identify insurers that already offer auto body repairers reasonable rates and terms.

The rates and terms offered by these insurers would then serve as “base rates and terms” for CRA members. After consultations with insurers, these would be applied across the industry.

The exemption sought by the CRA also aims to ensure that insurers and OEMs allocate work fairly among auto body repairers.

“It is submitted [by the CRA] that there has been an increasing number and variety of imported vehicles, particularly from Chinese OEMs in South Africa,” the commission said in a government notice.

“In order to remain compliant with OEM standards and industry safety requirements, repairers are increasingly required to invest in specialised tooling, diagnostic and advanced driver assistance systems calibration equipment, electric and hybrid vehicle repair capabilities, technician training, and access to proprietary repair information.”

The CRA stressed that certain imported vehicle brands also required specialised repair methodologies and enhanced quality control, further increasing the capital and operational cost of compliant collision repair facilities.

“This has increased the technical complexity of repairs due to differing construction methods, materials, electronic systems and proprietary repair technologies,” the CRA’s application reads.

These developments had imposed significant financial and operational pressures on collision repairers, particularly small businesses, many of which lacked the resources necessary to make substantial investments in new technologies and the capabilities required to service modern vehicles.

“The increased costs and investment requirements necessitate commercially sustainable repair frameworks that adequately compensate repairers for the costs associated with repairing increasingly sophisticated vehicles.”

Chinese and Indian car brands have won over a large chunk of South Africa’s consumers, with the country’s leading dealerships reporting a surge in sales of these vehicles.

South Africa’s largest motor retail group, Motus, reported in September this year a 200% year-on-year surge in its local sales of Chinese and Indian vehicle brands.

The increased costs and investment requirements necessitate commercially sustainable repair frameworks that adequately compensate repairers for the costs associated with repairing increasingly sophisticated vehicles.

Motus — which sells roughly one in every five new cars in South Africa — has actively expanded the number of Chinese brands across its dealership network to adapt to changing buyer habits.

The surge reflects a broader structural shift in South Africa’s motor industry, with financially pressured buyers increasingly gravitating towards competitively priced Asian brands rather than established Western and Japanese brands.

The reputation of Chinese brands took a knock this week when Chery Group SA issued a precautionary vehicle recall affecting 23,667 vehicles across the country because of potential safety defects.

South Africa’s automotive aftermarket and repair industry is a major economic pillar, estimated to be worth more than R106bn.

The CRA told the competition watchdog that balanced engagement with insurers was necessary to ensure that independent repairers remained financially viable, maintained industry capacity, upheld consumer safety standards and supported the long-term sustainability of both the collision repair industry and the insurance sector.

“The CRA submits that the current insurer procurement practices are materially skewing repair volumes, work allocation, and the commercial viability of collision repairers,” the commission said.

The CRA said access to insurer panels remained restricted for many independent accredited repairers, while panel admission criteria, direction of spend, and the rates and terms on which repairers were remunerated created bargaining imbalances that disproportionately affected smaller businesses.

It argued that repairers may be forced to accept commercial terms that failed to adequately reflect the costs of providing safe, OEM-compliant repairs simply to obtain or retain claims work.

“This may discourage or exclude accredited repairers from insurer panels, limit their access to claims work, and threaten the long-term sustainability of the independent collision repair sector.”