Video: Capped price servicing

THE Australian Competition & Consumer Commission (ACCC) has again turned its attention to and identified a range of concerns with capped price servicing offers, according to the Australian Automotive Aftermarket Association (AAAA).

Sweeping changes to capped price servicing programs have been recommended by the watchdog (which took action against Kia Motors in February) to ensure compliance with the Australian Consumer Law.

Capped price servicing plans are designed to keep consumers coming back to main dealerships for vehicle maintenance and are used as a sales tool by manufacturers to allay customer concerns about running costs. Of course customers returning to the dealership for maintenance are also more exposed to the temptation of upgrading to a newer model.

Anecdotal evidence from VASA member workshops is that capped price servicing helps only the manufacturer. Dealership workshops are forced into a less profitable charging structure that results in them doing the bare minimum of maintenance. While this may not be a problem during the usual three-year warranty period, VASA members have seen late-model cars just out of warranty full of stored-up maintenance issues caused by this do-the-minimum approach.

And who can blame the service managers who are under pressure to continue returning the majority of a dealership’s profit when only a fraction comes from the sales floor?

Capped price servicing, especially schemes claiming to cover the lifetime of a vehicle, could also be construed an anti-competitive measure designed to scupper independent workshops. The AAAA certainly thinks so.

Last month the ABC’s The Checkout TV show featured a light-hearted but hard-hitting segment about capped price servicing offers from Subaru and Holden, which you can watch below.