INFOGRAPHIC: Here's how much money dealerships make servicing your car

Photo by Matt Cardy/Getty Images

If you think the cost of getting your car serviced at the place where you bought seems a little pricey, you’re not alone.

Consumer watchdog the Australian Consumer and Competition Commission (ACCC) has been looking at car retailing and sees

The ACCC today released the draft report of its market study into Australia’s new car retailing industry and sees “widespread issues in the industry,” according to Chairman Rod Sims said.

“Complaints to the ACCC about new car manufacturers have risen to more than 10,000 over the past two years,” he said.

The organisation has just published a draft report into the sector that, while local car manufacturing is going through massive upheaval as it ends, is booming to record levels in terms of the number of new cars Australians buy.

The ACCC sees three key issues the retailers need to address. First up, when there is a problem – you’ve bought a “lemon” for example – then the way retailers deal with complaints and fix them don’t really stack up with Australian Consumer Law (ACL).

Sims says his organisation is “deeply concerned about the level of non-compliance” when it comes to ACL. He says a number of factors are involved, which we’ll list shortly.

Secondly, cars are now computers with tyres, so the ACCC wants to make it mandatory that manufacturers to share technical information with independent repairers to increase competition. The story most car buyers are told about needing to get the car serviced by the dealer or the warranty is voided is untrue Sims says.

The ACCC boss thinks that as profit margins on the actual sale of the car have been squeezed, servicing has become the new cash cow for dealers and the ACCC concluded the average profit margin on dealers servicing new cars is a whopping 64%. In a sector worth nearly $25 billion last financial year, that’s a massive windfall and the ACCC wants to try and share the love other mechanics to drive down costs.

Car manufacturers pledged in 2014 that they’d give independent repairers with the same information to repair and service new cars provided to authorised dealers.

But Sims believes there’s been some dragging of feet on that front.

“This lack of competition hurts new car buyers who have fewer options to get the best deal for repairs and servicing, and restricts independent repairers from competing on a level playing field,” he said.

The other issue annoying the watchdog are car fuel consumption and emissions claims. Of course Volkswagen and its subsidiaries are already in big trouble globally on that front and the ACCC has launched legal action locally over the emissions scandal, but the problem it finds with current fuel consumption claims is that they’re out by around 25% on actual real life use of a car.

“We’re concerned that what new car buyers are told their car will achieve is very different from practice,” Sims said.

But let’s go back to your new car playing up.

The ACCC found consumers struggle when it comes to getting things sorted in line with the law and lose out. It includes stuff such as a right to a repair (without charge) for a minor failure, or a replacement of the car or a full refund for a major failure.

A dominant “culture of repair” underpins how manufacturers deal with car defects and failures the ACCC say, but more alarming to the watchdog are the lack of effective independent dispute resolution options and “the widespread use of non-disclosure agreements by car manufacturers when resolving complaints”. That means that if you want your car fixed, you’d better keep quiet.

Sims says there needs to be clearer disclosure over warranties, especially when it comes to statements in logbooks and service manuals from manufacturers that “are likely to mislead new car buyers about their consumer guarantees when it comes to servicing and repairing their car”.

The ACCC is now seeking feedback on its draft report for the next month before releasing the final report in late 2017.

Here’s a little chart the ACCC produced on how they see the state of play in car retailing. The most interest bit is how much more technically complex the average car is, when it comes to lines of computer code, compared to the F-35 fights the Australian government is buying for about $120 million each.

Source: ACCC

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