Conditioning people to costly car servicing

IT MUST be difficult to be in the car business these days. The latest Morgan poll out this week shows a 10 per cent fall in intention to buy a new car in the next year. And the first mass-produced fully electric car was launched on to the Australian market.

So people in the business will use every endeavour to keep as much of it as possible. The European manufacturers, particularly the Germans, have found quite a clever way to keep the service business after sales.

For a long time manufacturers attempted to keep this business by suggesting that warranties would be voided unless servicing was done by the authorised dealer using genuine parts.

They also advertised suggesting that only the authorised dealer could do a totally satisfactory job.

Many consumers dutifully take their cars to the authorised dealer for servicing, either from apathy or from fear that independent operators – like K-Mart and others – are dodgy, or untrained, or don’t have the right equipment or use inferior parts.

Independent operators had a victory in 2002 when the ACCC said manufacturers could not insist the authorised dealer did the service using only the manufacturer’s parts. They could only insist that the service be done by qualified people using parts that are fit for the purpose.

The “genuine” or manufacturers’ parts and the authorised dealer’s labour are invariably much more expensive than generic parts and independent labour – eye-wateringly so.

Since 2002, the way has been open for independent operators to get into the business of servicing relatively new cars. They have had to overcome a fair amount of prejudice. Often in the market, the best way to overcome prejudice is by word of mouth. So when someone you know tells you about a cheaper but equally good service, prejudice falls away.

Until about five years ago there was no way I would take my Subaru to K-mart. K-Mart, as far I was concerned, sold cheap inferior goods, until I was told otherwise by a satisfied customer.

They have been servicing my Subaru for five years quite satisfactorily for, on my estimate, less than half the cost of the authorised dealer. But that is only the experience of one person. Similarly for my wife’s Audi.

Then she bought a new BMW. Magnificent car, especially on fuel efficiency.

Now, the German and other European Governments, unlike profligate, laissez-faire Anglo-Saxons, have introduced ever more strict environmental rules – especially on fuel efficiency and emissions.

In response, the manufacturers, have tried to reduce the number of services (especially oil changes). BMW has an extraordinarily engineered computer system that monitors oil quality by constantly measuring hot and cold starts, speed, distance and so on. It’s a bit like my on-the-wrist scuba diving computer which does thousands of calculations of air intake and at what depth to tell me how long I can stay at my present depth without risk.

The BMW computer monitors everything else as well, and when you need an oil, brake-fluid or air-filter change it flashes a SERVICE warning light on the dash. You only service when you have to. It is called condition-based servicing.

Sounds good, but there is a catch. It does not flash “Engine Oil Change” or “Brake Fluid Change” – just “SERVICE”. To find out exactly what is needed you have to put the big black ignition key into a special BMW-created reader attached to a computer.

And the only way to remove the service-warning light is with BMW-created software. Eat your heart out, Bill Gates.

When the BMW service light went on I rang and asked for a back-of-the-envelope estimate for a first service and was told up to $1300. (Sounds of jaws dropping and gulps of breath.)

The K-mart people said they could do all of the work, but only on a standard schedule. It did not have the special BMW key reader and it could not turn out the SERVICE light.

I then thought I should put on my journalist’s hat and put inquiries into the Motor Trades Association, the Australian Competition and Consumer Commission and some other independent operators and go back to BMW.

The MTAA said BMW was not denying independent operators access to information or equipment.

“It is available to K Mart should they choose to make the investment,” the executive Director of MTAA of the ACT said.

Given that it was unreasonable to do a price comparison. All authorised dealership franchises had to have the equipment.

BMW did the key scan and I got a printout of the work needed. The quote came to $820.55. K-Mart quoted under $300, but could not turn out the light. After some searching here and interstate I found an independent operator who had the equipment to turn out the service light. He quoted between $300 and $450 for the work. All use the top synthetic oil.

The real question is whether BMW or other manufacturers charge so highly for their condition-based-servicing equipment that it in effect precludes all or all but a few independent operators access. MTAA said the cost was “multiple thousands of dollars”. A further question is whether it gives independents access at the same price as its own franchise dealerships. And further whether there are any trade-practices implications.

It may well be that the manufacturers charge reasonable prices for their equipment and that K-Mart won’t stump up the price because its market is for older cars.

Alas, the ACCC have not responded to my queries.

Incidentally, some of the mechanics I spoke to point out that condition-based servicing may not be all it is cracked up to be. They say you should change the oil every 10,000kms anyway. Stretching it out is false economy if you want the car to last, but the manufacturers are only interested in it lasting the warranty period and you buying another one shortly thereafter.

Further, they say, condition-based serving has another downside: you don’t want to be running in to service the car every time one item is due. You would want to collect items and do them together at one time. In other words, according to a service schedule.

Ah, but then you would not need special equipment to turn out the service light. Of course, you could always buy an electric car.
CRISPIN HULL
This article first appeared in The Canberra Times on 5 June 2010.