Availability of motor vehicle parts: current impact

29 July 2022 Aon

The purpose of this communication is to make you aware of the possible delays in sourcing motor vehicle parts in the event of a loss or accident.

We have been operating in anything but normal times for the past two years, and for the foreseeable short to medium term, our supply chains, economy, and exchange rates are being heavily impacted by a multitude of global and local factors. This has significant implications for all industries, but notably so for the automotive sector.

Supply and demand of motor vehicles (both new and used), spares/parts and services have all been affected by the impact of the pandemic on supply chains across the globe. Related logistics services of bringing goods into South Africa have also faced heavy constraints and massive cost increases of over 500% in the last two years. Beyond the pandemic hangover and supply chain backlogs, South Africa also faces an additional burden of market shocks - the war between Ukraine and Russia and the floods in KwaZulu-Natal caused significant damage to major vehicle manufacturing plants as well as vehicle stocks. Renewed lockdowns in China and Taiwan due to a resurgence in COVID-19 infections means that supply from two major vehicle component manufacturing countries is heavily curtailed. These combined factors continue to put pressure on the stock holding of all vehicle brands.

While there has been some improvement in parts availability, there remains significant volatility in the markets and supply chains which affects all vehicle brands. There are two important implications to consider:

• A decline in parts availability means that motor vehicle repairs will take longer - expect delays on this front. The costs of parts and repairs are also under-pressure. With the shortage of motor vehicle parts, check when parts will be available for any required repairs and plan your way around this in terms of how long your vehicle will be out of action.
• Hire vehicles are in short supply: Car rental benefits are common in many motor insurance policies – both for individual and business covers – to cover you for transportation while your vehicle is in for repair. If you are planning on doing any non-essential repairs to your vehicle such as fixing minor dents and scratches, first check whether a rental vehicle is available before booking your vehicle in for the repair. If you have selected car hire cover on your policy, this is usually limited to a maximum of 30 days so if your vehicle pending repair is still safely driveable and roadworthy, it would be best to attempt to make up front arrangements with the repairer to wait until the parts arrive prior to booking the vehicle in for the actual repair, versus having your vehicle standing in the repair shop waiting for parts to arrive, and your car hire period running out before your car is repaired.

As a Santam policyholder, we wish to re-assure you that Santam is working closely with various industry stakeholders including vehicle OEMs, OEM parts dealerships, certified aftermarket parts suppliers, green (second hand) part suppliers and MBR associations to find solutions to assist clients. Santam is also onboarding more certified aftermarket parts and green parts suppliers, as well as increasing the rollout of its PartSmart solution which provides access to a wider pool of parts suppliers and enables greater efficiencies in parts procurement for Santam client repairs.

At Aon, we remain in constant contact with insurers, we will provide the support and market insights to manage claims processes as smoothly as possible for you. Remember that regardless of delays in parts availability, any claim should continue to be lodged within the required policy notification period.

Our role is to provide you with the clarity and confidence to make better decisions.

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