Another factor impacting on free and fair competition in the automotive aftermarket is the lack of understanding by the consumer on the differences between statutory and express warranties which is caused by the absence of any disclosure requirements on car dealers when offering these contracts at the point of sale. Despite attempts by the ACCC to outline consumers rights under the Trade Practices Act and clarify the differences between statutory and express warranties, significant confusion still exists with automotive parts and accessories manufacturers and distributors, vehicle repairers and the general public in relation to:
- where statutory warranties begin and end;
- how to differentiate between statutory and express warranties in documentation provided by the vehicle dealers at the point of sale; and
- exactly what additional benefits to the consumer are included in some express warranties offered.
Much of this confusion has been caused by the increased practice of motor vehicle dealers bundling express or “extended” warranties at the point of sale at no additional cost to the consumer which have restrictive provisions on the choice of repairer and parts used, contain ambiguous language and tie the consumer into a long term service schedule with a specific dealer or group of dealerships. It is our contention that many of these contracts provide little or no additional benefits over and above the consumer’s basic statutory rights. In addition, the widespread industry practice of using the term “warranty” generically rather than being specific about the type of warranty creates significant consumer confusion.
The lack of disclosure requirements on extended warranties at the point of sale forces the consumer to make a decision to potentially enter into a long term contract without all of information required to make an informed decision. It is our fear is that, if left unchecked, this trend could have a significant impact on competition in this sector and force up the price of vehicle ownership in Australia.
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