Fleet News

OFT to get tough on car warranties

THE Office of Fair Trading (OFT) could save fleets millions of pounds after calling on car manufacturers and dealers to lift restrictions on where new cars can be serviced while under warranty.

In a report, it claims that motorists could be paying up to £500 million a year for car warranties which stipulate franchised dealers must be used instead of potentially cheaper alternatives.

And it has stressed that if servicing restrictions remain, it could launch a 'formal investigation' under European competition law. OFT chairman John Vickers said: 'Competition and consumer value in the aftersales sector are inhibited by restrictions on the car servicing choice of owners.

'The car industry now has the opportunity to address the concerns in our report and we welcome the recent moves by some manufacturers to remove servicing restrictions.'

Its call follows last year's changes to the car distribution Block Exemption that requires manufacturers and their franchised dealers to open themselves up to greater potential competition for after-sales services from garages outside their network.

The Society of Motor Manufacturers and Traders (SMMT) said it was continuing to work with the OFT to clarify the details in a New Car Code of Practice to be launched this year.

SMMT chief executive Christopher Macgowan said: 'SMMT fully welcomes the findings of the investigation and is keen to work with the OFT, to ensure its recommendations are met. Changes to Block Exemption will see an increasing number of authorised repairers appearing across the country, giving consumers a greater choice of service and repair sites.

'Combined with the New Car Code of Practice, the motor industry remains committed to offering consumers high value warranties for what is fundamentally a complex mechanical product needing regular specialist servicing and maintenance,' he added.

Retail Motor Industry Federation (RMI) chief executive Matthew Carrington said: 'Consumers, franchised dealers, and independent garages could all benefit from new recommendations on car warranties. For consumers, it could mean greater choice too. Not only would they be able to choose the type of garage used for servicing, they could see greater choice on how far they travel for servicing.'

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