The General Authority for Competition conducted a study that included a comparison between the profit margins of local car distributors in the Kingdom and their counterparts in other countries.
She explained, during a study conducted by the authority entitled “Studying the structure of the car sales sector, following-sales services and auto spare parts, and the impact of the behavior of establishments operating in it on competition”, that the profit margins of distributors in the local market are higher than their counterparts in other countries, and that following-sales services in The Kingdom achieves higher profit margins from car sales.
The study concluded a number of indicators, most notably the distributors owning several competing brands; This creates the potential for increased market power, fleet bid rigging that may adversely affect competition conditions, as well as indications of potential abuse of a dominant position by OEMs or distributors by voiding vehicle warranty when repaired by independent workshops.
It dealt with some indicators to assess the competitive situation in the relevant markets, most notably the high number of customer complaints once morest local distributors over the past three years, and the low average of their satisfaction with the solution and management of those complaints; Which represents indirect evidence that the competition conditions in the value chain of the local distributor may not work optimally.
The study reached a set of results that lead to a high probability of the existence of some anti-fair competition monopolistic practices in the auto sector and related markets, and made recommendations to fix the sector’s behavioral or regulatory imbalances.
The study included its recommendations in this regard in 3 main categories: strengthening the enforcement of the competition system by focusing on anti-competitive behaviors, supporting policies by addressing overlaps or conflicts in the policies and regulations of sector regulators and secondary markets, and preparing for the future by providing a set of guidelines supporting the role of the General Authority To compete in promoting fair competition in the automotive sector.
