Watchdog Launches Car Warranty Consultation

The Competition Commission on Monday launched a consultation on seven car distributors’ proposed undertakings to change their warranty policies in order to give vehicle owners more freedom in choosing repair and maintenance services.

The watchdog said in a press release that it had earlier found that the distributors had imposed warranty restrictions requiring car owners to use their “authorised” repair centres, regardless of whether the maintenance or repair items were covered by the warranty, and customers who did not follow could have their warranties revoked.

The commission said such restrictions may deter car owners from using independent garages, which would make it hard for them to compete with authorised repair centres.

“This may also reduce car owners’ choice of service and ultimately lead to higher prices for maintenance and repair services,” the commission said, adding that the restrictions are potentially in contravention of the First Conduct Rule of the Competition Ordinance.

But it said the seven distributors had since undertaken not to enforce the existing warranty restrictions and not to include them in new warranties.

The companies also offered to make corresponding amendments to their contracts and to inform customers of the changes within 90 days after the commitments enter into force.

The distributors concerned include Cartel Motors Limited, Dah Chong Hong Holdings Limited, Inchcape International Holdings Limited, Kam Lung Motor Group Limited, Motor Image (HK) Limited, Sime Darby Motor Group (HK) Limited, and Vang Iek Holdings Limited.

The vehicle brands covered by the warranty restrictions are: Audi, BMW, Citroen, Ford, Honda, Jaguar, KIA, Land Rover, Lexus, Mazda, MINI, Mitsubishi, Nissan, Subaru, Suzuki, Toyota and Volkswagen.

The commission said it’s inclined to accept the offer but will nonetheless hear views from interested parties. The deadline of the consultation is August 15.