A NEW TRANSPARENCY DRIVE FOR VEHICLE SALVAGE

what's hot

December 1, 2023

A NEW TRANSPARENCY DRIVE FOR VEHICLE SALVAGE

The demand for changes to the vehicle write-off process was enacted by a cross-industry conference from the collision repair industry and other parties in vehicle salvage outcomes recently.

Various stakeholders met to form a collaborative approach to the rampant increases being seen in vehicle salvage rates across South Africa. There is a current lack of an open salvage data base available from the South African Insurance Association (SAIA), the umbrella association of the vast majority of local short-term insurers. 

The Insurers were tasked to come out with a definitive outcome to the problem that currently surrounds the practices of code 2 vehicles being commonly employed by insurers in accident damage at this time, where a vehicle is declared uneconomical to repair. At present SAIA are saying that they will only be able to comply once discussions and trade demands are completed, to answer the pertinent question of code 2 vehicles in the second quarter of 2024. This is after a period of two years in which discussion had already been had and results not delivered.  

There is great dissatisfaction from both consumers and the major associations in collision repair such as the RMI, South African Motor Body Repair Association (SAMBRA) and the Collision Repair Association of South Africa (CRA). The fact that these poorly rebuilt salvage vehicles continue to impact with higher fatality numbers and a vast increase in vehicle hi-jacking, amongst other developments. People endure further physical damage and financial loss, which quite, is frankly just is not good enough.

The demand for robust intervention also came from National Automobile Dealer’s Association (NADA). They represent over 1450 franchise dealers, independent car dealers, vehicle finance houses and many more attendees with a vested interest to resolve the various grievances that surround the code of practice for the categorisation of motor vehicle salvage. 

The ABI codes is a voluntary control document that has been amended in the United Kingdom twice in recent years, as insurers don’t seem to like any legislations and the document lacks definition. There appear to be no standards laid down to give this cosy relationship between salvage companies and various short term vehicle insurers any structure at all. The same ABI voluntary code of practice remains the masthead document of salvage being dispersed locally. 

“The current classification error is significant,” said Charles Canning Chairman of SAMBRA. The amount of cash is now huge in this commercial revenue stream for insurers. Consequential pressure is frequently brought to bear, which bypasses the independence of the process to create a salvage vehicle at almost any level all too often.” 

“The salvage system enjoyed on a global basis has now become so slick that third party salvage companies take charge of an insured vehicle without the insurance company having the title deeds, in some cases. The insurer will, in some cases, already get the cash from the auction sale in their pockets. The insurer is pleased that they have the cash for the loss of the vehicle to offset the payout of the payment to the policy holder,” said Chris Viljoen an Independent Forensic Motor Assessor. Chris came to showcase a number of death trap vehicles that had been put back on the roads in South Africa with tragic results to the unsuspecting consumer. 

In hindsight of it all, in the UK, Thatcham Research have in their testing facility conducted a suite of tests on several types of salvage vehicles which clearly demonstrated that salvage repair of code 2 units was in all cases sub-standard on the original quality of the vehicles crash testing results.

The call came in that the SAIA salvage code is not fit for purpose in South African conditions. In other nations they have a 100% insurance driver cover, while in South Africa approximately only 14% of drivers carry any type of insurance cover. 

“The lack of customer transparency is huge! In some cases, some members are being forced to give back to unsuspecting customers of rebuilt code 2 vehicle and refund them an adjustment fee of over R100 000 in some cases for diminished resale value.” Said Brandon Cohen National Chairperson NADA.

It was further resolved that SAMBRA and the CRA would put pressure on local insurance salvage and insurers who continue to carry on with these short-term gains for their own balance sheets. The long-term interest of the vehicle owner and his salvage outcome remains unclear. Insurers are busy diminishing their business by destroying the collision repair industry by passing them in this current salvage mandate of operations. 

A long-term resolution would be to synchronise the salvage codes with the NATIS system, but who would update the NATIS system and how would it remain up-to-date? If you’re buying a second-hand vehicle, an inspection by an independent and skilled expert is definitely a must, and we have to educate the public about what they are being exposed to, as most find this out when it’s too late. 

The wider base of consumers suffers ever more dodgy vehicle repairs that often bring a consequential financial loss after being passed off as a “one owner vehicle driven to church every Sunday”. The truth is however that the vehicle has become a mobile death trap.

It emerged from the conference that the salvage companies can expect the formalised intervention of government in the long term to oversee a change for the better of all consumers in terms of a new transparency drive on this contentious trade practice.

Story by: Stuart Johnston

Pics by: Jay Groat

Classic COrner & REStoration

Classic cars are the next big investment. As such the sector of restoration is growing in the realms of collision repair and it’s definitely the “sexier” side of the business. There are many opportunities to create exotic special-builds as well as keep timeless beauties in mint condition.

DRIVEN

With three motoring-journalists on our staff, we are able to test drive and review some of the latest models available on our roads as well as attend the latest model launches.

TRAINING

Knowledge is power. Training is key to up-skilling repairers as models launch onto our local roads faster than we can count. We also need to grow new talent into the collision repair industry. Courses are available to help and organisations are in place to train – this information is in Industry Index.

classic corner & resoration

Classic cars are the next big investment. As such the sector of restoration is growing in the realms of collision repair and it’s definitely the “sexier” side of the business. There are many opportunities to create exotic special-builds as well as keep timeless beauties in mint condition.

Driven

With three motoring-journalists on our staff, we are able to test drive and review some of the latest models available on our roads as well as attend the latest model launches.

TRAINING

Knowledge is power. Training is key to up-skilling repairers as models launch onto our local roads faster than we can count. We also need to grow new talent into the collision repair industry. Courses are available to help and organisations are in place to train – this information is in Industry Index.

Browse our other content

Future Tech

what’s hot

NEW PRODUCTS