Doing this is called consumer advocacy. CarAdvice is for consumers (which is why it’s not called ‘CarDealerPropaganda.com.au’), and I’m all for consumers playing the automotive game with their eyes open, fully cognizant of the rules of engagement. Despite merely offering this advice, I was labelled “anti-dealer”, and accused of referring to factory-based dealers as “thieves”, “incompetent” and “liars” – when in fact I alleged no such thing. And I’m not anti-dealer.
The fact is, consumers have a choice in selecting a service technician, and many are erroneously of the view that if they want to protect their warranties they are locked into getting their car serviced at a factory-based dealership, as if the warranty is a set of golden handcuffs for service. They are not – and this isn’t my view, it’s the ACCC’s.
Frankly there are advantages and disadvantages to both servicing arrangements – and both are highly dependent on the individual car owner’s priorities and the underlying culture at play in the business providing the service.
One reader of that last report said that the new car sales divisions of most dealerships operate at a loss or just break even, and that it’s the service and parts departments that generate the profitability. I suspect that’s not actually the case, but even if it is, it is not a valid argument to suggest that consumers get their car serviced inside the factory network just so the dealer can turn a profit.
Consumers are generally (rightly) focussed on ‘what’s in it for me?’ and car dealers are hardly charities. Consumers simply have the right to reduce their operating costs, and as much as car dealers hate hearing it, using the warranty as a lever to mandate the service of a car by the factory dealer network would be an anti-competitive practise, and therefore and illegal one.
So, if car dealers want to enjoy the profit that can be enjoyed from servicing new cars then they need to compete with privateers – by offering a better (not necessarily cheaper) service experience. Some are already doing that, and some clearly aren’t. There is a lot of variation in the market.
It’s very frustrating for car companies (as opposed to dealers) that they can’t control the quality of service being offered in some of their franchised dealerships.
Which brings me to another hate mail-inducing topic: spare parts. And I might as well drop the bombshell early: your new vehicle warranty is not dependent on you using only genuine (factory) replacement parts. More on that in a sec.
As car owners, we all dread dropping our cars in for a service and expecting a typical $300 (or something) bill, only to receive the dreaded phone call about lunchtime. You know what I’m talking about – ‘we were just checking X, and we discovered your [insert important mechanical widget name here] is shot to pieces, and it’s going to cost you $2k – so should we go ahead with it?’.
Scary stuff. At this time of year in particular a call like this can certainly put a dent in those family Christmas holiday plans.
Here’s what you should do:
First up, you should ask for a breakdown of the price. This is so you can know exactly which parts are required, what they cost, and what the labour to fit them costs. And then you should shop around.
The bottom line here is that if you want to fit genuine parts, this is of course fine. You can generally buy genuine parts only at factory-based dealers. However, this does not mean the price of those parts will be the same at each and every dealer.
Dealers are generally independent businesses (ie independent of the car company whose brand’s livery they display). This means it would be a breach of Australia’s anti-competitive legislation for parent car companies to fix the price of spare parts at dealerships – in other words dealers are free to sell spare parts at whatever price they think the market will bear.
The upshot is that it really pays to price the parts at three or four dealerships before just agreeing blindly to a single price quoted over the telephone. There is sometimes a large variation from dealer to dealer. I’ve had three different conversations with senior executives in car companies on the spare parts wholesaling side of the business who tell me – off the record – that there is a tidy profit margin for the retailer built into the recommended retail price of genuine spare parts. However, these same senior executives are often amazed at how much higher, above the rrp, some dealers manage to push the price of some parts, and still get away with it.
I can only presume this is the case because some consumers feel as if there is a monopoly at play, and if they want their cars back on the road then the price quoted is the price that must be paid. In fact nothing could be further from the truth. There are also warranty-preserving options outside of genuine parts.
The use of genuine parts is actually not a condition of maintaining your warranty. Aftermarket parts are perfectly acceptable – provided the quality is right. Please don’t take my word alone for it; the ACC and the RAC agree. According to the ACCC, as quoted on the RAC’s website: “The issue here is not who manufactured the part/s, it is whether the part/s are fit or appropriate for the purpose intended.”
The ACCC goes on: “If a part is non-genuine, but is interchangeable with the genuine part, it could be seen as being fit or appropriate for the purpose and would therefore not void the manufacturer’s warranty. However, it must also be noted that should the part/s installed fail or not perform satisfactorily, the consumer then has rights against the fitter and/or manufacturer of those replacement parts. If the non-genuine part fails, and causes some other damage to the vehicle, the dealer and vehicle manufacturer will not be liable for damage caused by the failure of that part.”
That basically spells out the rules of the game – and they do seem very reasonable – the most sensible application of those rules being that high-quality OEM-specification (‘original equipment manufacturer’) non-genuine spare parts sourced from the aftermarket industry could well save you money as well as not being an impediment to your warranty. You should also be aware that there are some aftermarket parts, often sold at rock-bottom prices, which really are sub-standard in quality, and which you would be a mug to consider using.
For example there are plenty of quality aftermarket hoses, belts, brake components, springs, dampers, bushes, electrical parts, filters, clutches, gasket kits, timing belt kits, automotive glass, etc., which are equal in quality to the genuine parts and sometimes sold more cheaply because they’re not subject to the same overheads – in some de-facto sense helping to pay for the coffee machine, the imported marble tiles and the two-storey floor-to-ceiling architectural glass in the foyer.
Look at it like this: it’s doubtful a local manufacturer like Holden manufactures its own brake rotors or brake pads for the Commodore. These, and dozens of other parts, are sourced from local component suppliers. Those suppliers doubtless sell the same parts (effectively) or essentially similar ones into the aftermarket industry – in different packaging perhaps, and perhaps at a cheaper price than the same parts in branded packaging in the dealership.
One thing’s for sure, however. At a factory-backed dealership this option (to shop around) is not generally spelled out. So, in the lead-up to Christmas, if you get hit by one of those can’t-jump-over-it service bills, don’t forget to press ‘pause’ on the whole operation and shop around – you could save a significant amount of dough. And if you decide to go with quality aftermarket parts instead of genuine ones, don’t assume you’re blowing your warranty – because that’s absolutely not the case.