Jul 032006

OFTServicing and repairing cars generates £14bn every year, yet the OFT (Office of Fair Trading) continues to overlook the warranty restrictions being applied to the dealer dominated used car market.

That’s the view of leading independent mechanical insurance provider, Warranty Direct, in response to the OFTs ‘pat on the back’ following its succesful intervention in the service restrictions applied to new car warranties.

“The original focus, whilst with good intentions, was wrong. New cars only account for around a tenth of all the vehicles on the road, but what about the 5m or so used cars bought from dealers every year with an extended warranty attached?”, says Duncan McClure Fisher, managing director of Warranty Direct.

Dealers, both franchised and independent, control over 90 percent of sales of the used vehicles aged 0-2 years, 80 percent of those aged 3-5 and somewhere close to 60 percent of 6-8 year old cars.

McClure Fisher believes the real issue facing the OFT is within the used car segment.

“People still prefer to buy a used car from a franchised dealer, which, in the majority of cases, is sold with a new 12 month warranty wrapped into the price.

“Some ‘approved schemes’ come complete with restrictions on where and when a car must be serviced in order to keep the policy valid. Surely that’s what the OFT has just congratulated itself on removing for new car buyers?”

McClure Fisher adds: “They [OFT] need to make sure the restrictions lifted on new cars, is repeated for the used segment, especially those in the franchised dealer controlled 3-5 year old market.”

Warranty Direct operates an unrestrictive policy on its claims. Motorists can choose to take their car to either a franchised or independent garage to carry out the repair work.