Removing deathtraps from the used-car market – This needs to happen

The South African Motor Body Repairer’s Association (Sambra) has once again called for an open and transparent Vehicle Salvage Database (VSD) to be made available to the public, believing that this is the only way consumers will be protected from buying dangerous pre-owned vehicles.

This follows an announcement by the South African Insurance Association (SAIA) that it would not release this data as it would allegedly “compromise” dealers who buy accident-damaged vehicles and safely undertake repairs before reselling them.

SAIA launched its VIN-Lookup website on 1 September 2023, enabling potential buyers of pre-owned vehicles to check whether the particular car they are interested in was written off previously.

However, the website only covers vehicles that have been classified as Code 3 (rebuilt), 3A (spare parts only), and 4 (permanently demolished) by one of the SAIA members – which includes the majority, but not all, of South Africa’s top insurers.

SAIA initially said it would be making Code 2 vehicles available at a later date, but it reneged on this promise earlier this year.

In a letter to Sambra, SAIA said that after “extensive internal engagements by the relevant SAIA Committee structures” it would no longer provide Code 2 information to the public as this would “compromise [dealers] who buy these vehicles and safely undertake repairs to the manufacturer’s specifications.”

Sambra believes that SAIA’s motivation for not declaring Code 2 information is misguided.

“We are concerned that efforts to resolve the problem are only focusing on one element of the value chain. Efforts should be focused closer to the source so informed decisions can be made and a full life history of a vehicle can be checked,” said Dev Moodley, Chairman of Sambra.

“Adding legislation to define and legislate the Code status of vehicles which can then be uploaded and housed on the existing electronic national traffic information system (eNatis) is potentially the only way to manage the historical record of a vehicle and open up this information to the entire car parc, and not just the 30% insured segment of the vehicle population.”

He said the current VIN-Lookup tool created by SAIA is a good start but without all vehicle data, is not as effective as it could otherwise be, nor are the eNatis records complete.

Learning from international best practices

Moodley said the critical problem facing South African consumers and motor body repairers is that cars that are still classified as Code 2 (Used) on the eNatis documentation can certainly have been severely accident damaged or declared uneconomical to repair, or “written-off” as commonly referred to, by their insurer.

Yet, most of these vehicles end up on online sales portals once again and are sold to unsuspecting customers.

To protect consumers from ending up in rolling deathtraps, Moodley said South Africa has the opportunity to tailor its systems according to what’s working best around the world.

Brandon Cohen, chairperson of the National Automobile Dealers’ Association (NADA), notes that creating legislation specifically targeted at vehicle salvage codes may be the most effective way of ensuring consumer safety.

From an implementation perspective, Cohen said one could look at following the UK model where the vehicle codes are legislated from new to used to insurance write-offs to irreparable.

Write-off categories are also legislated for vehicles, for example:

• Code A – Cannot be repaired, and the entire vehicle needs to be crushed
• Code B – Cannot be repaired, the body shell has to be crushed but you can salvage other parts
• Code N – Where the vehicle can be repaired following non-structural damage, rendering it usable once again after being subjected to a roadworthy inspection

“Not only is this approach transparent but it will ensure information is available at the correct time to the relevant body in the value chain – whether that be a bank, insurer, motor body repairer, dealer, and/or end customer,” said Moodley.

“It will prevent the current scenario where written-off cars that have been poorly repaired are being refinanced and re-insured in many cases, and consumers are ultimately being sold these vehicles without the correct information.”

Consumers will be the biggest beneficiaries of the proposed approach which is relatively easy and cost-effective to implement. As Cohen points out, the “infrastructure is already there, we just need to legislate the codes.”

Should such laws be implemented, South Africans will finally have access to vehicles with the appropriate history allowing transparent asset and kilometre validation, from “Cradle to Grave,” he said.

From a trade perspective, it opens up the opportunity for insurance companies and banks to expand their offering to include “approved” Code 3 vehicles that have been safely repaired.

Further along the value chain it also positively impacts repairers, vehicle testers, parts suppliers and vehicle maintenance workshops.

“Over the next couple of months, it is envisaged more robust conversation will be held to discuss this approach with all relevant stakeholders,” concluded Moodley.