The UK government’s Office of Fair Trading (OFT) is launching an investigation into new car warranties to determine how they affect the independent aftermarket servicing sector. Recently granted powers to the OFT mean that the outcome of the study could lead to a long-term shake-up of the aftermarket and the car maintenance industry as a whole.
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The UK car maintenance market is worth in excess of £1 billion annually and the OFT inquiry aims to discover to what extent the constraints of manufacturer warranties hinder vehicle owners from using independent servicing and aftermarket outlets.
Garages outside of the manufacturer’s dealership network may at present be effectively barred from servicing some new vehicles because of the conditions of manufacturer warranties. The inquiry will look at whether the terms of manufacturer warranties are anticompetitive and, as a result, keep independent providers out of the warranties market.
A similar look into warranties in the UK electrical goods market has led to a competition commission investigation and there is a definite possibility that this study of the car market may well lead to a similar outcome. If so, long-term fallout could potentially include new regulatory measures to reduce the hold manufacturer dealerships currently enjoy on customer options when it comes to servicing new and nearly new vehicles.
This OFT study follows an early investigation into the sales practices of the new car market, which highlighted the strong links between manufacturers and dealers in the UK and the extent to which they could be severed.
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By GlobalDataThe latest study’s outcome could well determine future market regulation in the UK, with the potential for long-term shake-ups of the aftermarket and the car maintenance industry as a whole.
The OFT has recently been granted government powers to impose stiff fines and jail sentences on directors who repeatedly and deliberately flout its rulings. With these new powers behind it, the findings of its study are unlikely to remain empty rhetoric.
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