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Last Updated: Monday, 30 June, 2003, 13:25 GMT 14:25 UK
Probe into new car warranties
A driver
The study will look at consumer choice

The UK's trading watchdog has launched a study into new car warranties, an industry thought to be worth more than 1bn a year.

The Office of Fair Trading (OFT) will examine the extent to which garages outside a manufacturers' network are prevented from servicing new cars.

It will also seek to establish if these linked service agreements are barring competition from independent warranty providers.

The study will also investigate whether the restrictions on where vehicles can be serviced means motorists are losing out.

Extended deals

The investigation will look at both manufacturer guarantees and extended warranties.

Manufacturers' warranties are typically valid for one or two years after purchase and do not usually specify where a car must be serviced.

However, in practice, the extended warranty will normally be invalidated if the car is not serviced, by an authorised repairer.

Dealer extended warranties normally increase the warranty to three years. They are normally valid only if the car is serviced by garages within the manufacturer's network.

John Vickers, OFT Chairman, said: "Our study will look at how the car servicing market is affected by the warranties offered with new cars, particularly when servicing is tied to a franchised network.

"It will examine the pros and cons for purchasers of new cars of these warranties."

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