Africa Outlook talks to Grandmark International’s Steven Ongchin about how a landmark court ruling could pave the way for a more open and competitive motor industry.
Grandmark is a South African company that imports and sells automotive replacement parts. In July, it won a legal battle against BMW SA, one of the world’s largest motor manufacturers.
The decision, which centred on BMW’s claim that Grandmark infringed on its intellectual property rights by importing and selling spare parts that were fitted to BMW models, could pave the way for a more open and competitive motor industry.
“We won the case in the North Gauteng High Court which dismissed BMW’s claims,” Mr Ongchin, the firm’s chief operating officer, says.
He says the decision was significant.
“It is a landmark decision. The matter, which BMW have taken on appeal, revolves around body parts of the BMW vehicle. BMW believe we are infringing aspects of its design and other intellectual property rights by providing alternate replacement parts.”
Replacement parts are vehicle parts that aren’t manufactured by the original vehicle manufacturers but by independent companies. Many of the parts imported by Grandmark could be bought for less than half of the price charged by the OEMs such as BMW, Toyota and VW without compromise on quality.
For obvious reasons, OEMs aren’t fans, and there has been considerable legal skirmishing, with claims of both design and trademark infringement.
“BMW SA claimed that we had infringed four specific aesthetic designs, another 150 less clearly defined designs and certain of BMW’s trademark registrations. In a nutshell the judge ruled in our favour on all counts. Specifically on the design aspect, the judge ruled that BMW had not proved any aesthetic features of its parts that warranted protection in the aesthetic register under the Designs Act.
“This ruling has the potential to loosen the monopolistic stranglehold that OEMs have on the parts market, should it be upheld though the appeals process.
“This is about having choice in the marketplace, fair competition and free enterprise. We are only asking that the consumer has a choice and if the ruling is upheld it would open up the market as established parts distributors could stock a greater variety of replacement parts for various OEM brands and models.”
Ongchin says this would enable significant reductions in the cost of spare parts and increase availability and product offerings as both OEM and aftermarket parts would be suitable options for replacement parts.
“Our decision to continue with this legal battle has been driven by our desire to create a more competitive marketplace in the local motor industry. Following the judgement we feel vindicated in our decision to dispute the legality of the design rights and seek to have them revoked. We’re excited by what lies ahead, both for consumers and the local motor industry.”
Grandmark is a company on the up.
“We continue to grow in an economy that is somewhat tepid in its overall GDP growth” says Ongchin. “One important initiative is our expansion into the windscreen fitment market. In the past, the market has been predominately dominated by local manufacturers and we have, over the last year, started to penetrate that market. We have our own offering which has been approved by a number of insurers after extensive due diligence processes on the quality of our windscreens.. We effectively save the insurance companies almost 50 per cent off the current cost for windscreen fitments while ensuring windscreen safety. That means that in many cases the insurers are waving the excess to the end consumer and in the long run the less the insurers have to pay to repair peoples’ cars, the more positive the impact on insurance premiums.”
This is another example of why replacement parts manufacturers are great news for consumers. “Historically South Africa has been a market where consumers have been taken advantage of by the fact that there wasn’t a lot of competition. There were a lot of strong local players but not a lot of strong competition so now that there’s more competition in the market place, it is about these companies becoming more competitive in what they do.”
Grandmark has expanded over the last 24 months as a result. “We opened up a few branches within the last year. We are now in all of the major cities in SA and we’re currently the only company in SA that has a national footprint that offers what we do. Not only do we do automotive body parts, we also do automotive glass, automotive cooling products, mechanical and engine parts. We probably have the widest product range of any automotive supplier in SA.”
The firm is essentially a one-stop shop and the plan now is to consolidate and maximise the investments already made to service the South African market.