New car offer a ‘game changer’ for Aussie motorists

A popular manufacturer in Australia has broken ranks with rivals to offer a controversial warranty for people considering a new car.

MOTORISTS could benefit from much longer automotive warranties under a bold proposal to discourage customers from visiting independent repairers.

The ACCC is weighing up whether to approve a controversial deal described as a “game-changer” by those convinced will eliminate competition in the automotive service sector.

Mitsubishi says customers who buy a new car from October 1 will benefit from a 10-year, 200,000-kilometre warranty if they pay to have annual services completed by official dealers. If owners visit an independent mechanic, or a third-party service such as Midas, Mycar or Ultra Tune, their warranty halves to five-year coverage. The proposal comes as manufacturers such as Volkswagen try to lock owners of new and used cars into servicing plans at official dealers.

And treasury is proposing a mandatory scheme for the sharing of motor vehicle service and repair information, making it easier for third-party workshops to service new vehicles.

Manufacturers are opposed to proposals to open access to key technical information.

Rob Nazzari, director of marketing and operations for Mitsubishi, said the 10-year warranty “puts owners in control”.

“Every Mitsubishi already has at least a five-year warranty,” he said.

“Now, with our 10-year Diamond Advantage program, owners that complete their scheduled capped-price services with an authorised Mitsubishi Dealer will enjoy a 10-year warranty, 10-year capped price servicing and up to 4 years of roadside assistance.”

While Mitsubishi is promoting the program as a done deal, it has not passed scrutiny at the ACCC.

Mitsubishi wants to incentivise customers to stay within its dealer network.

The consumer watchdog is accepting submissions surrounding the proposal until October 9, and will rule whether to allow the deal to take place later this month.

Australian Automotive Aftermarket Association chief executive Stuart Charity said many independent workshops and parts suppliers object to the exclusive service arrangement core to Mitsubishi’s 10-year warranty offer.

Independent repair outlets such as Midas stand to lose business from manufacturer service plans.

“Essentially this is a way for the car industry to eliminate competition,” he said.

“There’s a lot of concern out there about this. It could be a game-changer for the industry if it is approved.

“Car companies are well within their rights to offer extended warranties. The difference here is that none of those warranties are conditioned on servicing through the dealerships from day one.

“If Mitsubishi’s application is waved through, you’ll find other car companies will follow suit.

“If you get a decent cohort of manufacturers offering 10-year warranties, that has to have a decent impact on independent repairers, and that industry provides competition and choice.”

Most manufacturers offer capped-price servicing costs for new cars which allow customers to budget for maintenance ahead of time. Servicing for Mitsubishi’s popular ASX costs $299 per year for the first five years.

MyCar, formerly K-Mart Tyre and Auto, offers scheduled servicing for new and used cars at 260 workshops.

Some brands offer prepaid service plans at the time of purchase – Volkswagen charges $990 for a three-year maintenance plan for its Polo small car, and now offers four-year maintenance plans for cars up to 15 years old which cost about $300 per service.

An ACCC report into the Australian car industry published in 2017 found manufacturers and car dealers “generally earn higher profit margins from aftermarket services than from new car sales”, with around 49 per cent of profits emerging from the service department.

Until now, Kia’s seven-year, unlimited-kilometre warranty with seven years of roadside assistance and capped-price servicing was the strongest consumer guarantee. Kia chief operating officer Damien Meredith said the brand is looking into its response to Mitsubishi’s changing warranty offering right now.

Mazda spokesman Adam Davis said the manufacturer is “comfortable with our current warranty and five year roadside assist offers”, while Hyundai marketing director Bill Thomas said it is not considering an extension to its five-year guarantee.

Originally published as New car offer a ‘game changer’ for Aussie motorists