Motor Retailers to clean up their act

Retailers must clean up their act

Unscrupulous motor retailers will need to get their act together before the implementation of the Consumer Protection Act (CPA) which comes into force in April 2011. Decent and honest motor retailers will have very little to fear. It is those who have been giving the motor retail industry a bad name that will be weeded out by the CPA.

The CPA will drive more responsible motor retailing in South Africa. While I welcome the Act I believe it will take some time to implement properly and there will be some teething problems, however I am confident that it will be sorted out relatively quickly. Consumer Protection Acts in other countries has been mostly very effective. In Australia for example, retailers are very weary of the CPA and this has resulted in more responsible retailing.

Changes to contracts, point-of-sale, advertising content and sales processes will be required as well as education of staff from motor retailers but there shouldn’t be any excuses to comply.

A key component of the CPA for motor retailers is that the consumer has a right to return goods for a full refund. This is a general right and applies when the consumer receives the product and on examining it realises that the product is not that which was ordered or that which was, for example, advertised in a sales brochure.

The Act changes the way warranties and returns must be handled. If the goods are not suitable for the purpose for which they are intended, the consumer is entitled to return them at the suppliers risk and expense and without penalty and may obtain a full refund or have the item/s repaired. It provides for the right to return goods in certain circumstances. A consumer must be allowed a reasonable time to examine goods. This right means that goods can be returned to a supplier, for a full refund, in the following instances: – If the consumer could not examine the goods; – If the consumer is exercising the 5 day cooling off period provided to him for goods sold by way of direct marketing;

Deputy Manager of consumer affairs Desmond Pillay said when the Consumer Protection Act (CPA) comes into effect on 31 March 2011, “it is fair to say voetstoots would not apply in such a case”. This is thanks to the addition of an “implied warranty of quality” in the CPA, which means that any and all goods that fall within its scope must meet certain quality criteria.

In addition to common law warranties and contractual warranties, the CPA creates an implied warranty of quality for all goods.
• The producer, importer, distributor and retailer each warrant that the goods comply with the quality provisions and standards (“the requirements”) set out in the CPA.
• This is a minimum warranty for all new and used goods (excluding auctions).
• This means that within 6 months of delivery, the consumer can return goods which fail to comply with the requirements, without penalty and at the suppliers risk and expense.
• The supplier may repair or replace the goods or refund the purchase price (at the consumer’s choice).
• If the consumer opts for repair, and the defect occurs again within the next three months (or a new defect appears), then the supplier must replace the goods or refund the purchase price! This may have serious consequences for the motor industry.

And if there are any defects at all, these should be explicitly described to the buyer. If the customer in the example bought the car after the CPA came into effect, the car dealer would have to take the car back and repair any defects or give the customer his money back.

When purchasing a motor vehicle, here are some tips to watch out for:

• Make sure you understand what the total cost of the vehicle is to you. This way you will not be surprised when you have to pay.

• If it’s a used vehicle, make sure you buy it from a reputable dealer. If you are concerned about the history of the vehicle have it checked out by the AA or the like. Buy from a dealer registered at the RMI (Retail Motor Industry

• Make sure the vehicle has a full service history. Check the service book for all the stamps before taking delivery of the vehicle.

• If you are financing the purchase, make sure you read the contract and understand how the payments are going to work. Make sure you can afford the payments.

• Ask questions. Make sure you understand what you are getting. Don’t be afraid to ask questions.

In conclusion, the CPA is good news for consumers in that they have recourse should they not receive the goods originally agreed upon or advertised, as well as for the motor retailing industry as it will force unscrupulous dealers to clean up their act.

Face of motor retail industry set to change

The face of consumerism in the motor retail industry is set to change dramatically in the next ten to twenty years and the driver for the changes is none other than-technology.

Image by Enjith Krishnan. Just as other retail industries have been affected by advances in technology, the motor retail industry is in no way exempt from these advances and what has been standard practice in the industry from manufacture to retail practice for the last century or so, will see drastic changes in no less than the next decade.

Just look at the concept of “cocooning”, that is, the increasing trend whereby people opt to remain at home in the comfort of their homes where all their needs can be met, is a reality and one that the motor retail industry will have to adapt to.

I see a future where consumers will be able to visit a dealership, look at the exterior and interior of vehicles and even test drive vehicles without stepping out of the living room. Consumers will be able to enjoy a fully immersive retail experience at home powered by developments in 3D TV and Heads-Up Displays. The days of large luxurious dealerships may become a thing of the past in the next few decades.

What’s more the South African motor retail industry will benefit from these technological advances. Consumers will no longer be paying for “Taj-Mahal” dealerships and the concomitant expensive building and operating costs. The future will see us driving electric, fully recyclable and disposable vehicles that will not need to be serviced and will cost a fraction of the price of a petrol or diesel vehicle.

The past five years has seen the dramatic evolution of manufacturing in that vehicles are being made to order. In the future consumers will order their vehicle from the retailer and the vehicle will be manufactured on demand.
It is essential that retailers adapt to these changes since the manner in which they deal with consumers will change. Consumers will always be “owned” by retailers as retailers are their point of call (since they cannot talk to factories) however the interaction between consumer and retailer will be different due to consumers being able to “personalise” the manufacture of their purchase. The change required by retailers is a mindset change – an industry that has remained much the same for the past century or so will require retailers to accept and adapt to an ever changing world enhanced by technology.

The South African motor retail industry does not fare particularly well with regards to technological infrastructure and this is mainly due to Telkom’s monopoly which has largely cost the South African economy. South Africa may be behind technologically but the outlook for the future is a positive one if retailers and the industry are amenable to embracing the technological advances. Retailers can look forward to a cheaper, more personalised and efficient retail experience.

Ignorance is bliss

Henry Ford sold his first car called a “Quadracycle” in 1896. That marked the beginning of the motor retail industry and for the past 114 years the motor retail industry has remained largely unchanged. The only really significant innovation in the retail motor trade has been the Internet and the changes that it brought to the way we interact with customers. Outside of that, everything has basically stayed the same. The engine has improved and the bodywork and designs have changed over time, but the basics of the industry has remained constant. Until now…

In the next 20 years we are going to see changes that’s going to revolutionize the industry. In the same way that the DVD changed the video industry and the way that the digital camera has changed the film industry, we are going to see radical changes over a short period of time that is going to shock the industry to it’s core. Kodac ignored the impending changes and a giant was reduced to scrap in less than 12 months. The same is going to happen to many of the traditional manufacturers and retailers of motor vehicles globally.

I can see them sitting in their boardrooms, shaking their grey heads and saying; “Wir haben gehört, dass vor”. (We have heard that before)

The reality is that no matter the protestations and denials. No matter the counter arguments, change is inevitable and there is no industry on this planet that is more ripe for change than the automotive industry. It has been the monster driving the oil industry and the destroyer of entire eco systems for too long. The time is right for change. And it’s not just me saying so.

“We know what the dangers are here. We know that our oil addiction is jeopardizing our national security – that we fuel our energy needs by sending $800 million a day to countries that include some of the most despotic, volatile regimes in the world. We know that oil money funds everything from the madrassas that plant the seeds of terror in young minds to the Sunni insurgents that attack our troops in Iraq. It corrupts budding democracies, and gives dictators from Venezuela to Iran the power to freely defy and threaten the international community. It even presents a target for Osama bin Laden, who has told al Qaeda to, “focus your operations on oil, especially in Iraq and the Gulf area, since this will cause [the Americans] to die off on their own.

We know that our oil dependency is jeopardizing our planet as well – that the fossil fuels we burn are setting off a chain of dangerous weather patterns that could condemn future generations to global catastrophe. We see the effects of global climate change in our communities and around the world in record drought, famine, and forest fires. Hurricanes and typhoons are growing in intensity, and rapidly melting ice sheets in Antarctica and Greenland could raise global sea levels high enough to swallow up large portions of every coastal city and town.

And this city knows better than any what our oil addiction is doing to our economy. We are held hostage to the spot oil market – forced to watch our fortunes rise and fall with the changing price of every barrel. Gas prices have risen to record levels, and could hit $4 a gallon in some cities this summer. Here in Detroit, three giants of American industry are hemorrhaging jobs and profits as foreign competitors answer the rising global demand for fuel-efficient cars.

America simply cannot continue on this path. The need to drastically change our energy policy is no longer a debatable proposition. It is not a question of whether, but how; not a question of if, but when. For the sake of our security, our economy, our jobs and our planet, the age of oil must end in our time.” Barack Obama – 7 May 2007

So what’s the revolution I am talking about? It’s electric cars of course. In the next few years they are going to completely replace combustion engines and the days of monster trucks and v8’s will be over.

Tata's $2,500, 59-mpg offering described as "eco-car," on display in January

Welcome to the world’s cheapest car at only $2450, yes the car called the Tata Tiny will be replacing the Tata Nano. The price is amazing at 99,000 Indian Rupees ($ 2,500) and runs on electricity.

This car was developed by Tata International and some of the features on the car are pretty basic but  what do you want for the price? a Rolls Royce? The Tata Tiny can seat 2 people and can be recharged daily at 220 volts through 15 amp sockets, a 8 hour charge enables the cars to travel 80 – 100 kilometers. It may be basic but at that price there is no question that it’s going to become very popular, very fast.

The impact of cars such as the Tiny will have on the motor industry will be fundamental. Today’s large auto manufacturers will not be able to compete with the Chinese and Indian companies. The traditionally dominating manufacturers will go out of business. The cars of the future will be sold from any location, not from the traditional Taj Mahal dealerships. You will be able to buy one at your local grocery store. The cars will be disposable, mass produced and environmentally friendly. The entire motor industry will be re-engineered through this revolution.

So, the grey heads in the swanky boardrooms can shake their heads as much as they like. They are about to become extinct. They are as much aware of that fact as the dinosaurs were.

The future of online car buying

The Future of Interactive Mobile Computing

There is no question that the car buying process and experience will change dramatically in the next few years too. Technically, today it is possible to do the entire transaction online, but the problem lies with the user experience – the lack of “touch and feel”. The speed with which technology is developing, the availability of bandwidth, the development of practical mobility solutions and the increase in processing power will lead to technologies that we can only imagine today. One of the best examples is the iPad from Apple. It is a truly practical mobility solution that brings a full multimedia experience to the user.

Publications such as Wired Magazine and Popular Mechanics have embraced the technology to produce online reading experiences that were only seen in science fiction movies a year ago. One can read an article about a car and see interactive videos and high definition interactive 3D models of cars. Another technology that is developing at the speed of light is 3D computing. Combining the interactive, multimedia experience of the iPad with a 3D experience (a precursor to holograms) will revolutionize the way we interact with our environment. Imagine browsing a website in 3D and looking at fully interactive and 3D models of cars, being able to look inside the car and under the hood. You will even be able to virtually “kick the tires”.

The idea that consumers want to touch and feel before they buy is true only for today. As the consumer immersion experience improves they will be much more amenable to online purchasing of high ticket items such as cars. All of this is obviously much more true for new cars, especially the strong and well recognized brands. Pranav Mistry from MIT developed a technology called ‘SixthSense’ that allows the user to have a totally mobile interactive integration with the physical world. There is no doubt that the car buying experience is going to change dramatically in the next five years and the obstacles that exist today preventing consumers from buying online will all but disappear.