Torque Precision Auto Business Plan — Market and Opportunity

What the Competition Commission aftermarket guidelines changed from 1 July 2021, the dealer pricing gap, and why competitors have not closed it.

Market and Opportunity

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2.1 What Right to Repair actually changed
2.2 The pricing gap
2.3 Why competitors have not closed the gap
2.4 Target customer mix

2.1 What Right to Repair actually changed

What changed	What it means for an independent workshop
In-warranty servicing opened	A motorist may service and maintain an in-warranty vehicle at an independent provider and retain the warranty. This is the single largest addressable pool the guidelines released
Technical information must be shared	Manufacturers must provide access to service books including electronic and cloud records, technical repair and service information, diagnostic codes, operational software and data records
Service plans unbundled	Manufacturers must disclose the price of any included service plan, maintenance plan or extended warranty, so a customer can compare the dealer’s price against an independent quote
Insurance work partly opened	Insurers must publish accreditation standards, approve repairers case by case and give preference to historically disadvantaged owners, and may not run exclusionary contracts beyond five years
The limit that remains	Insured accident repair on a vehicle still under warranty must be done by a manufacturer-approved motor body repairer. Mechanical service and repair is open; crash repair on warranty vehicles is not

The stated intent was consumer choice, fair competition and competitive pricing across a national fleet of roughly 12.7 million vehicles, all of which require servicing and repair through their lives. MIWA-accredited workshops report that the guidelines are having the desired effect: franchised dealerships have had to reduce parts and labour prices to compete with the rest of the market.

2.2 The pricing gap

Figure 4. Labour rates across the market. Indicative market rates.

Figure 5. The customer proposition on a four-hour job.

Torque Precision posts R795 an hour, positioned clearly below the dealer network and at the accessible end of the accredited independent band. The effective rate of R739 reflects a 7 per cent allowance for goodwill adjustments, quote variances and warranty rework. On a job booked at four book hours, the dealer charges roughly R4 400 in labour and Torque Precision charges R3 180 — a saving of about R1 220 before any difference in parts pricing, on work that does not affect the warranty.

2.3 Why competitors have not closed the gap

▪ Diagnostic capability. Modern vehicles require manufacturer-level scan tools and paid data subscriptions to read fault codes, perform resets and record service events. The guidelines require manufacturers to make this available, but the workshop still has to buy and maintain it, and keep technicians trained on it.

▪ Qualified technicians. Trade-tested motor mechanics are scarce and mobile. The average mechanic salary in South Africa runs around R306 000 a year, rising to roughly R352 000 for senior technicians, and a workshop that cannot retain them cannot hold a book of in-warranty work.

▪ Service-book discipline. Independents must record all work performed in the vehicle’s service book and disclose it. A workshop that cannot document a service to manufacturer standard exposes the customer’s warranty and will not be trusted with the work twice.

▪ Accreditation and insurance standing. RMI and MIWA membership, a star grading and appropriate liability cover are what allow a workshop to be considered for fleet and insurer-referred work at all.

2.4 Target customer mix

Figure 6. Target customer mix at maturity.

Segment	Share of work at maturity	Why they choose an independent
Retail out-of-warranty	About 45%	Price and trust. The traditional independent market, and the base load that fills bays
Retail in-warranty	About 25%	The segment the guidelines opened. Dealer pricing on a vehicle they must keep serviced to schedule
Fleet and corporate accounts	About 20%	Contracted rates, scheduled servicing, turnaround guarantees and consolidated invoicing
Insurer and warranty-administrator referrals	About 10%	Mechanical claims work referred on published accreditation standards

Figure 7. Porter's Five Forces intensity assessment.

Supplier power scores highest at 4.5, and it is the technicians rather than the parts suppliers who carry it: trade-tested mechanics are scarce, mobile and paid under a collective agreement, and a workshop that cannot retain them cannot hold in-warranty work. Rivalry scores 4.0 because the independent segment is crowded and price-competitive at the commodity end. The threat of new entrants sits at 3.0 — anyone can open a workshop, but the diagnostic capability and accreditation that unlock in-warranty and fleet work take capital and time that most entrants do not commit.

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