NCR Stuart Charity
Published on October 19th 2020 in

Mitsubishi’s plan for 10-year conditional warranty

As many as 150 submissions have been lodged with the Australian Competition and Consumer Commission (ACCC) strenuously objecting to Mitsubishi’s bid to seek approval to offer a 10-year warranty on the condition that the purchaser exclusively acquires servicing from a Mitsubishi dealership.

Large scale responses to Exclusive Dealing Notifications are rare, but the ACCC has been inundated with opposition from a large number of automotive parts suppliers, industry associations and small independent repairers.

The Australian Automotive Aftermarket Association (AAAA) is vehemently opposed to Mitsubishi’s bid. Chief Executive Officer Stuart Charity said Mitsubishi intends to engage in exclusive dealing for the extended warranty – the car owners’ warranty is reduced to five years if the purchaser goes outside the Dealer network. “This type of commercial arrangement is contrary to the Competition Act and must be approved by the ACCC to for Mitsubishi to avoid prosecution,” he said. “Mitsubishi’s application constitutes a deliberate attempt to exclude Australian owned businesses from supplying safe and legitimate products and services to consumers and should be revoked.”

Charity added that extended warranties promised by car manufacturers are designed to encourage consumers to purchase a vehicle with ‘peace of mind’, although it was very concerning that car companies feel they can use conflict-free warranty repairs as a marketing tool. ““The reality is that most car owners are unsure or unaware of their consumer rights and fear legitimate warranty claims will not be honoured. They are inappropriately misled and feel they need to accept the conditions of an extended warranty, just to ensure they have a safety net should their new vehicle fail.”

“Mitsubishi’s 10-year conditional warranty essentially encourages consumers to trade away their statutory rights to avoid any potential future issues. It is a blatant attempt to reinforce the myth promulgated by car companies that the only protection a consumer has on their vehicle is under the manufacturer’s warranty.” Charity said there was also real concern that by approving this application the ACCC will set a precedent that other car companies will follow, and likely result in 10-year conditional warranties being offered by many of the car companies operating in Australia.

“Given the average age of registered vehicles in Australia is just over 10 years, the widespread adoption of these conditional warranties would have a detrimental impact on the 30,000 predominately family-owned mechanical repair businesses in Australia as well as the globally recognised $5 billion Australian automotive parts manufacturing sector. This will result in reduced competition and choice and drive up the cost of vehicle ownership for all Australians.”

As ACCC Chairman Rod Sims has already been quoted in the industry as saying: “The ACCC has seen numerous examples of practices by a number of car manufacturers that raise concerns. We found that there is a dominant “culture of repair” underpinning systems and policies across the industry based mainly around the manufacturer’s warranties, when enhanced remedies may be available under Australian Consumer Law.”

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