Major car dealers scrap warranty repair restrictions

Seven car dealers selling 17 brands including Audi, BMW and Land Rover have scrapped long-standing warranty terms for owners on repairing their vehicles.

The announcement came from the Competition Commission as it commenced a public consultation on warranty commitments yesterday.

A commission investigation revealed the seven had imposed restrictions requiring maintenance and repair services to be carried out at authorized repair centers regardless of whether the maintenance or repair item was covered by a warranty.

Owners who did not follow that direction risk invalidating their warranties.

The seven distributors are Cartel Motors, Dah Chong Hong, Inchcape International, Kam Lung Motor Group, Motor Image (HK), Sime Darby Motor Group (HK) and Vang Iek.

It was said that the commission "considers the restrictions may deter passenger car owners from using independent car repair workshops during the warranty period."

So the practice would limit the ability of independent car garages from competing with the authorized auto shops.

"This may also reduce car owners' choice of service and ultimately lead to higher prices for maintenance and repair services," the commission added.

The commission also approached car owners and found warranty restrictions may have a lock-in effect, discouraging owners from visiting independent workshops during the warranty period.

Besides reducing an owners' choice of service it could ultimately lead to higher prices for maintenance and repairs.

Most car owners approached by the commission said they would be willing to send their cars to independent repair shops during the warranty period if they had the choice.

The commission said the seven distributors promised not to enforce the existing warranty restrictions and not to include them in new warranties.

The commission launched a two-week public consultation yesterday inviting people to submit opinions by e-mail, fax or post.

"If the commitments are accepted following the consultation passenger car owners will have greater freedom of choice in relation to the providers of repair and maintenance services of their vehicles," it said.

Hong Kong Automobile Association president Ringo Lee Yiu-pui told The Standard that the new arrangement could "give independent car repair workshops breathing space" as car owners could send new cars there for repair and maintenance within the warranty period.

Lee added that fewer people are buying new cars after the social unrest in 2019 and the Covid-19 pandemic.

"In the past there were 40,000 to 50,000 new cars every year, but the number dropped to less than 30,000 last year," he said.

"The electric car one-for-one replacement schemes also hit roadside garages hard as 70 to 80 percent of electric car owners used their old vehicles to trade in for an electric car. As a result there are fewer old and second-hand vehicles in need of maintenance at independent workshops."

Lee also said parts sold at authorized repair centers are original items from car manufacturers and more expensive than unbranded ones sold at independent shops.

"The price difference varies among different car brands," he said

"The price of car parts for European vehicles at authorized workshops is more than 30 percent higher than at roadside garages, while for Japanese and Korean-made vehicles the price difference is 20 percent and 10 percent respectively."

Lee also said the price difference between designated and independent workshops was much higher 10 years ago, but it has narrowed as fewer people are buying new cars and designated workshops hoped to attract more customers for repair services by lowering prices.

But a car owner told The Standard the car dealers' position does not affect him so much as he always has his vehicle repaired by original manufacturers.

"I once sent my car to a roadside garage," he said, "but my car's condition was even worse after being handled by the workers there. "So I would rather spend more money and send my car back to its original manufacturer."