As the Competition Commission finalises its inquest into alleged vehicle price fixing in the motor industry, an RMI survey has found that there was no “collusion between manufacturers or dealers”, the organisation’s chief executive, Jeff Osborne, said.
As the Competition Commission finalises its inquest into alleged vehicle price fixing in the motor industry, a Retail Motor Industry organisation (RMI) survey has found that there was no “collusion between manufacturers or dealers”, the organisation’s chief executive, Jeff Osborne, said.
CARtoday.com reported in September that the Competition Commission's investigations into vehicle pricing could take some time since the commission had warned consumers that certain allegations could be harder to prove than others.
The commission is investigating the issues of alleged collusion, excessive pricing and minimum resale price maintenance. Investigations were triggered after allegations were made against Toyota, which in May was fined R12 million by the commission when it admitted to the latter practice.
Commission spokesman Zodwa Ntuli said more manufacturers would be called upon soon to comment on minimum resale price maintenance, but she pointed out that there might be no collusion or excessive pricing practices within the industry. Ntuli added the information uncovered in the Toyota and other probes provided enough grounds to launch an official investigation.
The RMI is convinced that there was no collusion: “A detailed analysis of vehicle price increases over the last decade proves there’s no collusion now, nor has there ever been,” said Osborne. “Our survey satisfies ourselves on the issue, and should be conclusive to anyone who looks at the facts.”
He said the study showed a close correlation in vehicle prices to the rise and fall of South Africa’s CPIX statistics.
“Historically, vehicle price changes have run at less than CPIX except for a relatively short period (1999 to 2000) when there was both a market crisis and the dramatic weakening of the rand. In real terms since 2002, vehicle prices have actually reduced.
“If you look at the numbers you can also see there is absolutely no pattern or common trend followed by the different manufacturers or distributors, or their dealers. Indeed, there are vast differences in individual pricing strategies.”
With the very wide range of model options available to the consumer, it was just not feasible for manufacturers or dealers to collude on the issue in what he termed as “… the frenzy to compete amongst each other.” Also, newcomers were constantly entering the market and being offered vehicles at very keen prices – an atmosphere which made it almost impossible to raise prices, or to do so in collusion. He referred to the arrival in South Africa of two new brands, both from India (Mahindra and Tata).
Osborne said he would far rather see consumer focus swinging to the generally one-sided dealer agreements that exist between manufacturers and importers and their franchisors, an issue which was also raised by Nada chairman Ray Nethercott at last month’s CAR Conference at Auto Africa.
“These contracts are very restrictive in some instances, and RMI believes this is sometimes against the interest of the customer, quite apart from the damage that it can do to a retail motor business outlet.
“These situations are not new. Recently, the European Commission stepped in and introduced what is known as the “block exemptions” that forces manufacturers to remove restrictive practices and allows for much more freedom of competition to the benefit of the motoring customer,” Osborne said.
He said RMI had repeatedly raised its concerns about these one-sided agreements with the DTI and the Competitions Commission. “We have been asking for the retail motor sector to be designated along the lines of the European model,” he added.