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AFTER WARRANTY RUNS OUT

What drives car owners away from their dealers?

/ 02:54 AM September 12, 2012

There is that formal Spanish greeting that warmly says, “Mi casa es su casa,” which translates to English as “My house is your house.” Filipino car owners certainly feel that way when they buy a brand-new car from their friendly neighborhood dealership. They feel welcomed. And as long as the warranties are effective, the car owners regularly bring in their cars for routine checkups, top-ups, tune-ups and repairs.

But then, after the warranties expire, say after three to five years, a strange thing happens. The visits by the car owners abruptly stop. What gives?

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Admittedly, car owners have always had delicate relationships with their dealerships. It has always been one where each has had to watch their backs, the general overriding perception being that consumer protection agencies here are all bark but no bite. Consumers—and these are the car owners—end up griping about lousy service, botched repairs and procedures on their cars in online forums. Netizens share such horror stories, and whether these are true or not, they sure deserve some thought and further investigation.

Case in point: Real estate developer Eduardo Sanchez, 48, has been driving for 30 years and has owned his fair share of vehicles of various brands. He had established good relationships with two dealers of Japanese brands, and by that he means that he still brings his cars to the casa even after their warranties had expired. “They have given me no reason to doubt them,” he stressed.

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But it was not the same with a non-Japanese brand he owned recently. He said the incident involved “a very small item” that would have been taken for granted: the third brake light, which was conspicuously absent from his high-end model 2011 pickup. Sanchez explained that the third brake light should have been standard in his model.

“I thought to myself, big deal, I’ll buy one in any legitimate auto shop and get it installed in 30 minutes. Imagine my surprise, then, when I was informed by my dealer that doing so would void the electrical systems warranty. So I say, you do it then. And they say, sure—then named a price four times higher than the German and Japanese aftermarket alternatives.”

In the end, Sanchez never did get the third brake light installed in his pickup. What he did get from the dealership was bad vibes, and a vow to never again buy from this manufacturer.

Sanchez isn’t alone; his experience is replicated up to 70 percent of the time.

Inquirer Motoring talked to car experts and found out from them that up to 70 percent of car owners didn’t return their cars to the casa after the warranty ran out (in certain countries, car manufacturers estimate that only 30 percent of car buyers return to dealers for service after their warranty runs out. Auto expert Mark Eskeldson noted that poor service, high prices, and callous service people are often given as reasons for people to take their cars to other shops. And some told they were offered unnecessary repairs).

Arnel Doria, founder of Safe T Ryders Training Center and former marketing head of one of the biggest car companies in the Philippines, said that with the escalation of the cost of casa repairs and increasing availability of replacement parts from importers, “this behavior has hardly changed to this day.”

The behavior Doria refers to has been illustrated into a diagram (shown here) wherein majority of the car owners don’t return to their casa for services after warranty runs out.

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Doria, who used to supervise after-sales service and spare parts operation in his capacity as marketing head, said that most manufacturers nowadays offer a 100,000-km or three-year warranty (whichever comes first), but because most owners just travel within Metro Manila every day for an average of 20,000 km per year, the three-year warranty lapses before owners reach the 100,000-km limit.

“From this point on, it would be a continuous downward trend until it reaches almost zero (except for some loyal customers who still bring their cars to the casa). The 30-percent coverage is a very optimistic figure,” quipped Doria.

Ferman Lao, Car Awards Group Inc. president and Top Gear Philippines technical editor, said that though he doesn’t have anything to base his estimates on, he guesses “at least half of the total number of new car buyers would not return to the dealerships after their warranty runs out.” Lao, who maintains his own car performance tuning shop, based this figure on what he has heard from new car owners, who more often than not said that the only reason they were taking their cars back to the casa was because of the warranty.

Niky Tamayo-Ortiz, test-drive editor for several publications, said, “In the United States, the percentage (of owners maintaining their cars outside of the casa even within the warranty period) is much higher than in the Philippines, because ASE certification and laws in the States force manufacturers to honor warranty claims on cars maintained by certified mechanics outside the dealerships. Here, (because of the lack of such laws) I’d say maybe 70 to 80 percent stay with the dealer for the first three years, and likely that drops to 30 percent after five years.”

So why do customers run to the nearest exits once the dealers’ warranty runs out? Sources’ reasons range from overpricing of many areas of periodic maintenance procedures and parts replacements, to the quality of the workmanship/labor performed, to that general perception of owners that they had been “cheated” by the casa.

Doria stressed that the main reason would still be the cost.

“High-quality replacement parts have found their way into the local market; some of them are even genuine parts imported by enterprising traders. There is a wide perception that because of huge overhead costs (rent, labor and marketing), casa charges are overly expensive. In contrast, alternative shops have improved their appearance and level of expertise (by hiring former casa technicians). Nowadays, even Shell, Caltex, Total and Petron are engaged in motorcar servicing; with their great-looking shops and reputable names, many owners would not mind bringing their vehicles to them, at lower cost.”

Doria added that “rude and cheating employees of casas worsen the problem. But they are not the main reason. Garage shops have their own share of rude and cheating technicians.”

Leslie Sy of Kotse.com said he would even estimate that 75 percent would not return to the casa. Sy cited the major booboos of car dealerships contributing to this “diaspora”: high prices in labor and parts; mechanics with little experience diagnosing car problems or who are more than willing to recommend expensive repairs and parts replacement but do not guarantee the problem will be fixed; and long lines to get the car serviced, even for basic periodic tune-ups.

Lao offered his own observations: Premium prices without perceived commensurate value offered; Failure of service technicians to solve vehicle problems that vehicle owners view as simple problems or should not take as long as they should; Poor quality control on work performed on vehicles; and slow turnaround time.

“I don’t know about now, but when I still used to go to dealerships for simple service work such as an oil change, a job that’s performed in 15 minutes would take practically a whole day to get done because of long wait times,” quipped Lao.

Tamayo enumerated: “High prices, poor service, unneeded repairs and general dissatisfaction with difficult warranty claims. Most customers stick with the dealer only until they have a denied warranty issue.”

Lower the cost

Doria said that manufacturers must develop new and cheaper source of spare parts locally or within the Asia/Asean region to lower the cost of maintenance. “The government can help by reducing the import duty of spare parts to that of CKD parts, especially the critical parts. Moreover, they should also develop a new network of service/parts shops, independent from the casas or full-service dealerships, located nearer to the residential areas.”

Counter-sales of selected preventive maintenance parts will also draw out-of-warranty owners back to the dealerships. But this is a tricky approach to the problem, as it may potentially encourage DIY [do-it-yourself] repairs.

Sy said that in order for car owners to return to their casas, the latter must offer: more realistic parts prices and labor fees; faster turnaround time for simple jobs (such as periodic oil-change tune-ups); and better diagnostics, which would keep customers from paying unnecessary labor fees and unnecessary parts changes.

Lao said better quality of service would be key. “If you treat your clients right, then there should be no reason for them to not come back to you, unless they moved out of the area so that it would no longer be practical to go back to you,” he said.

Tamayo-Ortiz said an “aggressive after-service follow-up program, wherein customers receive calls to remind them of preventive maintenance schedules and to ask about service issues can help retain customers who would otherwise jump ship.”

Asked to cite notorious dealerships, Tamayo-Ortiz said: “Not to name names, but there are those infamous for charging for platinum spark plugs at every other oil change (location of dealership: somewhere along Shaw Boulevard) or denying warranty work on even the most obvious warranty defects (location of dealership: somewhere in Bonifacio Global City).

Tamayo-Ortiz mentioned a dealership in Alabang, which has made a series of embarrassing blunders, such as sending home cars with the wrong wheels. “You’d think they would notice when a car goes out of their garage with three aftermarket 18-inch wheels and one stock mag! But again, the service advisor himself makes all the difference, as I often go to the same dealership and have no issues.”

Doria related that when he brought his car (not of the brand that he used to manage) a couple of times to the dealership, he said “I got very disappointed at their cost and quality of service. Now, my car is serviced by my friendly neighborhood shop. Not as clean and good-looking as the casa, but I get what I pay for.”

So, readers, what have been your good and bad experiences with casas/dealerships? Share only if you’re willing to back it up. Please e-mail [email protected]

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TAGS: auto, car maintenance, Motoring
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