Document jB0wrJ5DMg3Nw2J7qEede0rnp

(Editor's note: This article original ly appeared in the November 1980 edition of "Automotive Service Reports." It is reprinted here with the permission of Automotive Ser vice Councils, Incorporated, pro ducer of the "Automotive Service Reports" publication.) Ever since automobiles have been a part of American life, its in dustry has been subjected to severe criticism. The first major governmental criticism -- a 1935 FTC report -- blamed the auto manufacturers for their domina tion of dealers. The FTC found the car companies, then numbering over 11 manufacturers, forced their dealers to do warranty work. It also found that dealers were compelled to buy only the manufacturers' original equipment parts. A Chronicle of Public Dissatisfaction From 1967 to 1969, the U.S. Senate Subcommittee on Antitrust and Monopoly held investigative hearings. It amassed data that showed the 1939 practices were substantially unchanged in 1969. In 1970, the FTC found that car companies paid lower compensa tion on warranty work than dealers charged their regular cash custom ers. As a result, dealers were reluc tant to do warranty work. The then chairman of the FTC proposed se vere remedies to cope with the problem, but the Commission failed to act or propose legislation. In 1980, the University of Wisconsin sponsored the "Con ference on Approaches to Making Auto Repair Credible." It published the National Science Foundation Study on Warranty Protection in the Automotive Industry which stated dealers received a lower hourly rate and earned less profit on warranty work and that new car purchasers receive unsatisfactory warranty repairs. The report found, "There is an extremely inconsis tent pattern of warranty protection, creating public distrust in the auto mobile industry." The public's frustration varies even among dealers of the same manufacturer. I do not recite these critical find ings simply to air the automotive industry's dirty linen. I point this out so that you independent auto repair shop owners can turn to state and federal officials who contemplate or are actually pro posing regulations or laws. I assert that the motoring public's dissatis faction with this industry starts at the doorsteps of the auto manufac- Such an arrangement will give (automobile) dealers the exclusive right to sell car company parts and sell labor under terms the car companies specify. turers and their franchised new car dealers! Sure, the independents have some problems. But the real blame lies with the new car dealers and their failure to satisfy warranty complaints. To enact regulations that force motorists to return to the new car dealers for service under manda tory warranties is ridiculous. Forcing motorists to pay several hundred dollars for a federally mandated warranty on the emis sion system -- in the face of this prolonged history of poor perfor mance or nonperformance by the dealers -- will be a travesty on millions of American motorists. To compel almost ten million new car dealers annually to buy a federally mandated warranty -- which in fact is simply a com pulsory service contract -- is economic nonsense. Moreover, it invites the car companies and their franchised dealers to extract monopoly prices. Forty Years' Poor Service The forty-year documented record of poor warranty service alone would seem enough to dis suade proponents of this manda tory warranty. But if not, the flood of consumer complaints against the new car dealers' general auto motive service performance during the past ten years should be a con vincing argument against the man datory warranty. Consumer com plaints about dealer service con stitute the largest volume of con sumer complaints about auto repairs. Top GM and Ford manage ment have acknowledged that over 25 percent of their customers are dissatisfied with repair service. An Unthinkable Act How would any governmental of ficial find any rational basis to force new car purchasers to buy -- and pay for at the time of purchase -- a mandatory service contract (warranty)? Why would any official force new car buyers to return ex clusively to car companies' fran chised dealers for the inevitable repairs to their emission systems? During the past ten years alone, manufacturers have recalled more than 90 million new cars for safety and emission defects, or needed corrections. That is, every occa sion where our government has ex amined it officially over the past fourteen years. Despite this prolonged agony, American motorists are about to be compelled, by the very political people who profess to be con sumer protectionists, to pay several hundred dollars for man datory federally required service contracts. Then, by federal and State of California regulation, to have to obtain satisfactory service only from franchised new car deal ers. Outrageous! When the public realizes the true costs, they will rebel. Such an arrangement will give (continued on next page) 5