Take back your right to choose

Under the bonnet of manufacturer’s warranties

Has a Dealer ever warned you about voiding warranty by servicing outside of their network? It is a fear that many new car owners have, yet it is essentially untrue. With the support of the ACCC, a groundswell of Australian consumers are calling out dealerships on this misinformation.

With a steep rise in complaints to the ACCC reported by the Sydney Morning Herald (Collett, 2017) and one of the largest penalties being handed down by the federal court to Ford in 2018 (ACCC, 2018), now is the time to understand your rights in regards to your new car.

Under Australian Consumer Law, you have statutory rights for your new car to work and do what you asked for. These are referred to as consumer guarantee rights. They stipulate that your vehicle must be of acceptable quality, be safe, durable and free from defects for a reasonable period of time. The vehicle must be fit for purpose, match the description and have spare parts and repair facilities. These consumer guarantees work in addition to any manufacturers warranties or extended warranties. They cannot be voided unless the reason for damage is abnormal consumer use. (ACCC, 2018)

It is these consumer guarantees that the ACCC is cracking down on at the moment. In the Ford case, the court described their conduct as ‘unconscionable’ and the penalty was $10 million.

“The ACCC found that many car manufacturers have not factored consumer guarantee rights into their complaints handling systems and new car buyers are losing out as a result. These rights provide remedies for consumers if their new car experiences a failure, including a right to a repair (without charge) for a minor failure, or a replacement of the car or a full refund for a major failure.” (ACCC, 2017)

In addition to your consumer guarantees, you also have a manufacturer’s warranty, which is a promise from the manufacturer for a specified time and what they will do if something goes wrong in that time frame. These warranties will typically allow you to choose your preferred repairer for service and repair.

Whilst the manufacturer’s warranty has a time or kilometre limit, consumer’s need to be aware that their consumer guarantees may outlast the manufacturers warranty, especially if the vehicle experiences a major failure.

The final type of warranties are ‘extended warranties’ or are sometimes pitched as ‘product care packages’.  These are usually available for purchase and come with more conditions, such as locking you into dealership service only. If undue pressure is put on you to get you to buy an extended warranty, or if you are misled into paying for the rights you already have under your consumer guarantees, then the supplier is breaking the law. Consumer advocate groups such as Choice (Cridland, 2017) and The Checkout (ABC1, 2013) warn consumers to really look at the value for money of these types of products. If you are not happy with the conditions that go with the extended warranty offered by the dealer, you can also purchase extended warranty products from third parties such as redbook.

“Before buying an extended warranty, always ask the supplier to list what it gives you over and above your automatic consumer guarantees.” (ACCC, Warranties).

By knowing your rights, and understanding the different types of warranties you can be assured that you will not void your manufacturer’s warranty by getting your car serviced by your choice of repairer. Qualified and competent repairers can and will stamp your log-book and this is good evidence of a well maintained vehicle.

Collett, J. 2017 ‘Consumer law trumps product warranties’ Sydney Morning Herald 22 May, online. [https://www.smh.com.au/money/insurance/consumer-law-trumps-product-warranties-20180411-p4z8xj.html]

ACCC, 2018 ‘Court orders Ford to pay $10 million penalty for unconscionable conduct’ Media release 26 Apr, Release 71/18. [https://www.accc.gov.au/media-release/court-orders-ford-to-pay-10-million-penalty-for-unconscionable-conduct]

ACCC, 2018 ‘Just bought a new car? Know your consumer rights’ Information brochure, 08/18_1387. [https://www.accc.gov.au/system/files/Just-bought-a-new-car.pdf]

ACCC, 2017 ‘New car industry put on notice’ Media release 10 Aug, Release MR 128/17 [https://www.accc.gov.au/media-release/new-car-industry-put-on-notice]

Cridland, M. 2017 ‘Peace of mind at a higher price’ Choice, 11 Apr, online. [https://www.choice.com.au/shopping/consumer-rights-and-advice/your-rights/buying-guides/do-you-need-an-extended-warranty]

ABC1, 2013 ‘Extended Warranties’ The Checkout, May 2, Television Segment, online. [https://www.youtube.com/watch?v=NrxxzsaBkC4]

Australian Automotive Aftermarket Association, Downloads [https://www.choiceofrepairer.com.au/]

Downloads

ACCC, Warranties [https://www.accc.gov.au/consumers/consumer-rights-guarantees/warranties] https://www.accc.gov.au/system/files/New%20Car%20Retailing%20Industry%20market%20study-consumers%20guide%20to%20the%20draft%20rep….pdf

New Car Retailing Industry market study: consumers’ guide to the draft report https://www.carsales.com.au/editorial/details/faqs-how-important-is-an-extended-warranty-111116

If you are ever unsatisfied with your warranty provider, the first port of call is with them. You can get advice from the ACCC or escalate the issue with the Financial Ombudsman Service (FOS) – 1800 367 287.