As everyone knows, warranties are very much part and parcel of new car ownership, and for good reason – they reassure a buyer that if there’s a technical issue or a defective component, there is a guarantee that the car manufacturer will rectify the defect or replace a faulty item wihout cost to the buyer.
Of course, to be able to honour that warranty, a car company will deem it necessary that the car be maintained and serviced at an authorised service centre for the duration of the warranty. Car companies say this is to determine that everything is above board, that the vehicle hasn’t been modified or had substandard parts replaced by an external source, which would void coverage.
The downside to this is that a consumer is effectively tied only to an authorised network for the duration of the warranty, not just for service but also for car accident repairs, something that the Malaysia Competition Commission (MyCC) finds contention with.
In its latest Market Review Under Competition Act 2010 for Selected Transportation Sectors, which was revealed yesterday, the commission said it identified competition issues, as well as market concerns or regulatory issues in relation to the warranty claims for motor vehicles. It said that warranty restrictions imposed by car manufacturers may possibly prevent or limit competition in the car repair and service industry.
In terms of servicing, the review said that the exclusionary clauses in new car warranties could potentially lead to the market being foreclosed only to franchise (3S/4S) or authorised workshops within the car manufacturers’ network, reducing consumers’ choices and preventing competition from independent workshops.
The situation is amplified when it comes to accident repairs. Due to warranty restrictions, independent repairers are likely to face barriers preventing them from repairing new cars that are still under warranty, leaving franchise workshops within the car manufacturers’ network as the only choice in these cases.
It cited PIAM Approved Repairers Scheme (PARS) as an example. For accident repairs, OEMs would allow car owners to send their vehicles to PARS workshops appointed by PIAM, where repair works are strictly meant for accident repairs. Workshops have to meet criteria such as standard of service, quality, professionalism, competency and skill that typically have considerable capital investment before qualifying for a PARS certificate.
Given that PARS workshops should be on par with franchise workshops in terms of skill, competency and equipment levels, customers should be free to choose between these workshops. However, this is not the case in practice, the commission said in its review.
The MyCC found that certain vehicle manufacturers and certain insurance companies have entered into agreements and partnerships stipulating a set of KPIs that insurance companies need to adhere to by directing a certain number of insured new cars to franchise workshops. The commission added that due to the KPIs of the agreement, insurance companies may expend efforts to encourage consumers to engage the services of franchise workshops.
In cases where consumers still choose to send their new cars to a PARS outlet (or an independent workshop), there have been instances where consumers were asked to sign indemnity letters. In these letters, it was stated that the vehicle owner was fully aware that he or she was engaging the services of an independent workshop, and that the entire manufacturer’s warranty would be voided as a result.
This, MyCC said, potentially creates pressure for the vehicle owner to engage only the services of workshops within the authorised network.
In light of all this, the commission has come up with eight provisional recommendations to address what it says are identified impediments in maintaining and promoting competition in the motor vehicle warranty market.
The main provisional recommendations include reviewing the current warranty clauses that restrict customer choices in the vehicle service and repair market as well as the unbundling of maintenance and service plans.
It added that it is looking to get relevant stakeholders to engage with car manufacturers to encourage them to remove restrictive warranty clauses and not make warranties conditional on the repair and servicing of a vehicle within their network.
The commission said that these interventions in the motor vehicle warranty market are likely to have far-reaching benefits, opening it up to more competition, thus benefiting consumers. How much actual change that will come about remains to be seen, but at least the intent has been stated.
What’s your view on vehicle warranties in Malaysia, and what other measures would you like to see being implemented? Share your thoughts with us in the comments section.
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5 years warranty is Free Gift for the Buyers who always go back to service center.
It depends on how consumer and 3rd party to compete.
Some Manufacturer even offer basic 2 years warranty only:
https://paultan.org/2021/01/15/bmw-malaysia-back-to-2-year-warranty-5-yr-coverage-servicing-to-cost-extra-would-you-still-pay-more/
We also have good 3rd party for 3rd party warranty and services – GoCar Garage
Can also offer Pickup and Delivery
https://paultan.org/2021/08/04/gocar-launches-gocar-garage-end-to-end-vehicle-maintenance-solution-with-pick-up-and-drop-off/
Nothing new la, they even deny customer’s warranty claims because they never service at official service centers.
Didn’t know cars has become so very fragile and sensitive.
This issue is long overdue and needs to be addressed ASAP. Besides the pack of healthy competition, consumers are also held ransom to pay hefty labor and parts at the service center to keep the warranty active.
Singapore have done it since last 3 years. You can service your car at unauthorised workshop. In Malaysia the main issue is integrity, human maa.
Right and then get their warranties voided as well. Car manufacturers will never agree to something they have no control over, more so when there is warranty involved. Not Singapore not Australia not anywhere else. Its the reason why new and 2nd hand car market exists.
In Singapore you only do that with parallel imports, those brought in officially still have to return back to authorised SC for servicing.
This will only work if workshops up their professionalism 1000X and no longer bawah pokok pomen. The problem is you stand a better chance of getting conned by shoddy workmanship, with SCs at least you are assured to a certain level of service. This gives car owners peace of mind and sometimes that is worth the money. Otoh, the way certain SCs threaten customers with warranty void tactic then shoving down all those unnecessary treatments and addons are not right as well.
There must be a common understanding that cars that unmodified should still be covered by warranty despite being serviced outside but everything is off the table for LalaBeng mod cars.
Most importantly, no matter if one chooses to service or repair cars either at SC or outside, important to get tow service from approved tow trucks like myself. Very important as using unapproved and unregistered tow trucks will void ur insurance coverage of any problems faced later on or even refusal for insurance to cover. Using approved tow services will give you all peace of mind.
very simple equation.
you want warranty, come back here to maintenance.
you want to go elsewhere for maintenance, then forgo warranty.
no one is stopping you to go either way.
..at last, the elephant in the room is being glanced
This is what keeping me from buying new car. Closest that I can get now is buying recond car with third party warranty that I can go to whichever shop that I like.
Last time ⌚, Proton has certified some 3rd party workshops as their authorized service centers and some of them offered better service than the 3S centers or EON back then. Maybe some car brands can follow this system as well.
I dont mind servicing at official service centres but the no modification part malaysia’s car brands practic really I cannot brain. Other countries ok je…
If you buy a Tesla, you are allowed to service it outside and not necessarily at Tesla.
tesla how many moving parts inside the car?
internal combustion engine got how many moving parts and components?
different level of complexity.
Understandable since Tesla has poor to nonexistent aftersales outside of USA.
MyCC maybe should look at drb-hicom owned puspakom. Why manufacturer’s service centre cannot issue road worthiness certificate where inspection can be done when vehicle is undergoing servicing saving time and money.
There is no anti-competition issue when it is representing the Government.
I have bought 2 new vehicles in Malaysia. Nissan in 2010 and Toyota in 2014. After abysmal attention to the Nissan on its first service I abandoned the Nissan dealers and went to a family workshop. When I bought the Toyota, it went straight to the same workshop. The personal service and expertise in all makes. They have also looked after other makes for me, Proton, and a 1989 Mercedes. If I buy another new car, that is where they will be maintained andcrepaured
We should address the same thing about how the manufacturer is abusing their dominant in warranty.
Manufacturers tend to find excuses to convict the car owners to have their warranty void. The cost at their SC is far exceeding reasonable prices compared to most of the third party workshops.
Believe it or not, SC depend on your own luck, you will have to gamble whether they could protect, to repair or to get rid of the mechanicals nor electronics failures inside your faulty car. The manufacturers are quite famous for denying the delivered car as having the faulty problems out from their factories.
In the end of the day, the customers are being the losers, manufacturers can harrass and abuse their customers with their bad after sales services via this Warranty issue.