Andrew Leigh

THE MECHANICS OF COMPETITION

The Daily Telegraph, Thursday 27 April

The neighbourhood where my office is located is changing fast. A generation ago, it was filled with car dealers and mechanics. Now, because it’s close to the city, the hipsters have moved in. Give it another generation, and the only sign of the suburb’s heritage will be bars with names like ‘Grease Monkey’.

The disappearance of independent mechanics from areas like Leichhardt, Bankstown and Rozelle illustrates how Australian cities are losing an iconic part of their light-industrial identity. It also means that competition in the car service sector is shrinking, to the detriment of car owners, as large car manufacturers centralise and corporatise their service businesses.

One of the key areas making it difficult for independent service and repair businesses to compete is the limited access they are given by manufacturers to standard servicing information.

A generation and a half ago, the point of reference for servicing a car was a spanner. Now it is an iPad. Cars in 2017 are basically driveable computers. If independent mechanics can’t access the information and download error reports, it’s hard for them to offer competitive car servicing prices.

Independent car service and repair businesses claim that most manufactures are restricting access to the standard service information. This is despite the Voluntary Code of Practice-Access to Service and Repair Information for Motor Vehicles, which was released by the Federal Chamber of Automotive Industries two years ago. That voluntary code was meant to establish an information portal like those in Europe, the USA and Canada.

Alas, the key word in the above sentence is “voluntary”. Car makers can choose whether to use the portal, and among the big manufacturers, only Holden has volunteered to do the right thing. With 18 million registered vehicles in Australia, less choice among car repairers hurts most of us.

Whether you own a Toyota Corolla or a Ford Ranger, everyone should be able to choose whether to get their car serviced by the dealership or an independent mechanic. 

According to Stuart Charity, executive director of the Australian Automotive Aftermarket Association, “If you want to choose who repairs your car – the dealer or a local repairer – you should buy a Holden, because every other brand finds a way to force you to go back to the dealer and this costs on average 25 per cent more than an independent repairer.”

Like most things in life, the behaviour of car manufacturers can be explained by economics. With car buyers having more information at their fingertips than ever before, the amount that dealers make on sales can be as low as $100. But parts and servicing can bring in steady revenue for years – particularly if you’re charging a quarter more than the independent mechanic down the road.

Yet while Australians overpay for their car services and local mechanics shut up shop, the Turnbull Government has been reluctant to act. Worse, government ministers have continually broken their promises to independent mechanics. First, they promised to review the voluntary code by September 2016, but failed to do so.

Next, the Turnbull Government promised to review the voluntary code by October 2016. Again, that deadline came and went. Although I’ve written directly to Treasurer Scott Morrison about this issue, getting the government going on it seems harder than starting a car without the spark plugs. Their latest wheeze has been to claim that the government doesn’t have to do anything, because the Australian Consumer and Competition Commission is looking into it.

While the government dithers, millions of Australia motorists continue to pay too much for servicing, while more and more of the nation’s 21,000 independent car repairers go to the wall. Our nation’s drivers and mechanics are rightly angry at a government that seems to be asleep at the wheel when it comes to getting them a fair deal.

If the government wants to do the right thing, it’s time to consider making it compulsory for car manufacturers to let everyone access the information on our cars’ onboard computers. That would create a level playing field for all mechanics, and fair competition for consumers. Then we can go back to enjoying those Grease Monkey burgers without feeling guilty.

This piece originally appeared in The Daily Telegraph on Thursday 27 April 2017