Taken for a ride?
Bought a new car? Then you may wonder if you have to get it serviced at an authorised dealership to keep your manufacturer's warranty intact. If so, you're not alone.
Our quick survey of 300 back in March 2016 people found:
- just under 50% thought they had to return their car to the dealer to maintain their warranty or were unsure
- of the 105 people who had bought a new car, 90% serviced their vehicle at the dealer.
But despite what your dealer may say, or the impression you get reading the logbook or warranty terms, you're legally entitled to shop around for the best servicing deal without voiding your manufacturer's warranty (the rules are different for extended warranties), as we explain below.
Do I need to service my car at the dealer?
The Australian Competition and Consumer Commission (ACCC) says "a manufacturer's warranty is a promise to the consumer that the vehicle will be free from defects for a certain period of time". While a manufacturer can have certain requirements in its warranty terms – such as ensuring any servicing is carried out by qualified staff, according to the manufacturer's specification, and that appropriate quality parts are used where required – it can't require you to service your vehicle through an authorised dealer to keep your warranty intact.
"Provided you service the vehicle in accordance with any such requirements, the warranty will remain valid. If the manufacturer's warranty states that the vehicle can only be serviced by an authorised dealer, this may raise concerns under the Competition and Consumer Act," the ACCC has said in written guidance to the automotive industry.
But that message doesn't always seem to be getting across: we've come across examples of dealers flouting the ACCC guidelines and saying you should service your car at an authorised dealer. We also found language in logbooks that strongly implies you'll be voiding the warranty if you don't take it back to the dealer for servicing.
Dealers rely on car servicing to make profit
Given that car dealers don't make profits on car sales alone according to industry research, it's not surprising that they attempt to lure buyers back after the sale to pay for servicing and expensive "original" parts.
In fact, dealers depend on servicing, parts, car finance and insurance to make their profit margins. A 2014 motor industry report from Deloitte found on average, nearly 30% of car dealer's profits came from servicing, while dealers lost money on new car sales.
One lobby group for some major dealerships explained in a submission to government how their business model works. "By generating sales volumes, dealers create opportunities to build customer relationships which result in a future stream of revenue. Such revenue includes adding and installing aftermarket accessories on the new vehicle sale, dealership finance and insurance, and servicing the customer's vehicle throughout the life of the car."
What the dealers say
We called 24 Toyota, Mazda and Holden dealerships across Australia in April 2016 to get an idea of what consumers are being told about their rights in relation to servicing and warranties. Three dealers gave us completely incorrect advice, saying we had to return the vehicle to a dealer to maintain the warranty. A number of others gave us questionable advice, or only told us we could go to an independent mechanic after we pushed them on it.
While most dealers generally said the right thing about warranties and servicing once pushed, many didn't offer this information upfront and resorted to sales tactics to promote dealer servicing, such as capped price service deals and extended warranties, both of which usually lock you into servicing your vehicle at the dealer. Many used terms such as "advisable", "recommended" and "preferred" in relation to dealer servicing, which could further add to the impression that using an independent mechanic may result in problems.
Are genuine parts needed?
Many dealers also angled for dealer servicing by saying genuine parts were either required or highly recommended in order to keep the warranty intact. The problem here is that genuine car parts can be much more expensive than their aftermarket counterparts. In fact, when we looked at this issue back in 2014, we found details of the mark-up being as much as 60% even though the parts are often identical.
What's the law?
But you don't have to pay the price premium on parts to be covered. The ACCC's guidance says that provided you use quality parts, your car manufacturer's warranty won't be voided. If a non-genuine part is used it won't be covered under the manufacturer's warranty, but it would be covered under the warranty of the part's supplier and/or Australian Consumer Law. To be fair, despite the initial response of dealers, when pushed many did clarify that it'd only be the actual part that wouldn't be covered rather than the whole warranty being voided.
Can independent mechanics do software updates?
Another common dealer lock-in tactic was to say that independent service agents won't be able to offer all the software updates that are required. One dealer told us: "Legally you don't have to [bring it back to the dealer] … but independents can't update the car which needs to be done pretty much every service". Executive director of the Australian Automobile Aftermarket Association (AAAA) Stuart Charity says independent mechanics generally have enough information available to be able to do a scheduled service. But cars are becoming increasingly computerised and car manufacturers aren't sharing enough information when it comes to repairs and software updates, he says. This is despite car industry bodies signing a voluntary agreement on access to service and repair information in December 2014, which said they would make available to independent repair shops all the necessary information.
Logbooks and dealer stamps
We took a look at a number of logbooks in April 2016 to see what messages were being conveyed to consumers. The upshot? We won't blame you if you've been led to believe you have to take your vehicle back to the dealer for servicing.
A number of brands include a space on the service pages indicating that it should either be stamped and/or signed by an authorised dealer. For example, one Ford logbook we looked at has a space for an "Authorised Ford Dealer Log Book Service Verification Stamp" and also has a checklist asking the mechanic to tick that they are an Authorised Ford Dealer Service Department. Mazda's logbook asks for a dealer validation stamp and Hyundai's asks for a dealer's signature. None of these things are required to keep your warranty intact, but the logbooks certainly make it look that way.
What's the law?
The ACCC has clearly said: "Even if the service page boxes in the logbook are labelled in this way, an independent repairer may sign or stamp the relevant page of the customer's service logbook (once they have completed the service) without it affecting the manufacturer's warranty provided any other requirements are met (i.e. the service is carried about by qualified staff etc.)."
Capped price servicing
A number of car manufacturers offer capped price service deals when purchasing a new car. Locking in a set servicing price may sound like an appealing offer, but check what you're getting before you sign on the dotted line.
In early 2015, the ACCC took action against Kia over its capped price servicing program. The ACCC said that the car manufacturer had made representations on its website that "the capped price applicable for each service is the maximum you will pay for your scheduled service". All the while, Kia's terms and conditions had allowed scheduled service prices to be amended at any time, and service prices had in fact been changed by Kia four times since 2012.
We took a look at a few servicing deals to find out what was going on and found it hard to see the benefit in some cases. The offer of Hyundai's Lifetime Service Plan, for example, is fairly ambiguous. One of Hyundai's explanations says it "allows the reassurance of knowing in advance the maximum cost for each scheduled service". Hyundai specifies the maximum price applicable when you request a service quote online. But these quotes may change without notice and are only valid for an effective period. When we got a quote, it was only valid for 30 days. So we were left wondering what the "Lifetime" in Hyundai's Lifetime Service Plan actually means. Hyundai's terms explain that the entitlement to receive the scheduled service for a price not exceeding the published price "applies for the lifetime of the vehicle".
So what is Hyundai actually offering? When we asked Hyundai for more details one of their spokespeople told us that prior to these types of programs being introduced, service costs weren't standardised and they varied markedly across their dealerships in Australia. "Our Lifetime Service Plan fixes that issue, and gives customers a very clear picture of what the prices will be going forward for servicing. Yes, prices may increase slightly due to inflation and that needs to be explained in the T&Cs," the spokesperson says.
A number of the dealers we spoke to said cars needed to be serviced at the dealer the whole time in order to keep the extended warranty. The ACCC guidance says that extended warranties usually kick in at the completion of the manufacturer's warranty. "A common requirement of these warranties is that the vehicle must be serviced by the dealer offering the warranty. Imposing this requirement on the owner is permissible," the ACCC says in its guidance.
How to keep your car manufacturer's warranty intact
- Shop around for the best servicing deal and stick with a trusted mechanic. You don't have to go to an authorised dealer to keep the manufacturer's warranty intact.
- Service your car in line with the schedule and specifications in the owner's manual or warranty logbook.
- Ask that quality parts be used for servicing (the parts don't have to be genuine to keep the warranty intact). Ask for an itemised account for the labour conducted and parts installed. If there's a problem with the parts used, the repairer or part manufacturer will be responsible.
- Ask the mechanic to fill in your logbook – they don't need an authorised dealer stamp for the warranty to be valid.
- If you're choosing not to service your car through the dealership, ensure your service centre is reputable. NSW and WA have repairers' licensing schemes, and elsewhere, you can check to see if they're a member of the Victorian Automobile Chamber of Commerce (VACC, in Victoria) or the Motor Traders Association in the other states.