New EU legislation means a shake-up for car servicing

From today new legistration means that car makers will have to provide independent repair garages with technical data or spare parts. In a wider context this means that the arrangements on spare parts and warranty repairs that bind franchised dealers and car makers will be no longer be lawful.

According to the EU, repair and maintenance accounts for 40% of the expense of running a vehicle. Joaquín Almunia, EU Competition Commissioner, stated the new antitrust regulations provide consumers with very real benefits. “[It will] bring down the cost of repairs and maintenance that represent an excessive share of the total cost of a car over its lifetime,” he said.

The Commission hopes to open up the repair market to far better competition and prevent car makers from stipulating in warranties that the work need to be carried out in its dealer network.

“Car manufacturers will no longer be able to make the warranty conditional on having the oil changed or other car services only in authorised garages,” the Commission said. However, service agreements struck with individual dealers will still be valid where specific work is provided free under the warranty, the Commission said.

The Commission announced it was targeting 3 methods enforced by manufacturers: constraints on the sale of parts by authorised dealers to independents; the ability of independent manufacturers to provide parts directly to repair garages; and spare-part manufacturers’ ability to place their trademark on the parts.

The motor industry has previously identified that more money is made repairing and servicing old vehicles and selling parts than in the actual selling of new cars. In uncertain times, dealers could see new car sales as a loss leader for the more money-making business of annual servicing and repairs.

The repair business is so lucrative that car makers are starting to venture into the market directly with their own chains of repair garages. In Germany for example, VW has launched a chain directed at the low-cost end of the repair market.