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Last Updated: Wednesday, 17 December, 2003, 10:10 GMT
New car drivers lose 500m a year
Cars for sale
Motorists should be free to choose their mechanic, not their dealer
Consumers could be losing up to 500m a year because of unfair warranty deals, the UK trading watchdog has warned.

The Office of Fair Trading wants car makers to lift restrictions on where new cars may be serviced, while under warranty.

If they fail to do so, it might launch a formal investigation under European competition law.

About half of all new cars sold have warranties with service restrictions.

Over 2.5m new cars are sold in the UK every year.

After-sales care

All new cars come with a manufacturer's warranty, which generally runs for one to three years.

In addition, many manufacturers also offer, at no additional charge, "dealer-based extended warranties" that take the total period of cover to three years.

Competition and consumer value in the after-sales market are inhibited
John Vickers, OFT chairman

Under the terms of many of these extended warranties, and some manufacturers' warranties, the car must be serviced at a garage belonging to the manufacturers' franchised dealer network.

But servicing a car at a franchised dealers is typically 83 more expensive than at an independent garage, the OFT said.

John Vickers, OFT chairman, said: "Competition and consumer value in the after-sales market are inhibited by restrictions on car servicing choices of car owners.

"The car industry now has the opportunity to address the concerns in our report, and we welcome the recent moves by some manufacturers to remove servicing restrictions."


SEE ALSO:
Probe into new car warranties
30 Jun 03  |  Business
Car warranty crackdown
23 Jun 03  |  Business
Car dealer costs 'nearly double'
27 May 03  |  Business
Warranties face 'radical shake-up'
20 May 03  |  Business
Competition inquiry into warranties
28 Feb 03  |  Business


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