Finweek English Edition - - Focus On -

UN­LESS YOU HAVE a full ve­hi­cle main­te­nance or ser­vice plan – the cost of which is in any case built into the cost of the ve­hi­cle – hav­ing only a war­ranty can be an ex­pen­sive ben­e­fit. Michelle Elk­ing­ton, of Mo­tol­ube’s MoTo-Main­te­nance Plan, says the war­ranty com­pels the mo­torist to have the car ser­viced at the deal­er­ship net­work. What’s cov­ered in the ser­vice by the war­ranty may be neg­li­gi­ble com­pared to the R3 000 av­er­age cost of the ser­vice it­self.

The war­ranty comes stan­dard with all new mo­tor ve­hi­cles, but a main­te­nance or ser­vice plan is typ­i­cally an add-on – and paid for. She says if any car buyer looks at the fi­nal cost be­ing fi­nanced it’s quite dif­fer­ent from the price listed in the show­room – the dif­fer­ence is all the add-ons, such as the main­te­nance plan.

Some war­ranties also have some odd­i­ties, she claims: when she took her own car for a ser­vice she found the war­ranty cov­ered only the right wheel bear­ings and not the left. And some war­ranties only cover about one-third of the dam­age to a ra­di­a­tor.

“It ap­pears to be free, so peo­ple don’t take much note of the fine print. How­ever, in re­al­ity the R20 000 or so that a plan costs is added on to the cost of the ve­hi­cle and blended into the monthly cost, which is all most peo­ple look at,” she says. When you buy ad­di­tional ben­e­fits, such as a main­te­nance plan or in­sur­ance, the bank gives a pref­er­en­tial rate, blur­ring the cost even fur­ther.

“Most peo­ple don’t even know what cover they have and what they can claim for,” says Elk­ing­ton. She says the in­dus­try is so in­ces­tu­ous be­tween mo­tor man­u­fac­tur­ers, mo­tor plan ad­min­is­tra­tors, deal­er­ships and banks that it’s vir­tu­ally im­pos­si­ble for new play­ers such as Mo­tol­ube to en­ter the mar­ket. Ul­ti­mately, the con­sumer loses out be­cause the sec­tor is look­ing out for each other’s in­ter­ests rather than the mo­torist’s. “We’ve been try­ing to pen­e­trate this mar­ket for the past year and have found it highly rigid, with kick­backs from main­te­nance plan ad­min­is­tra­tors to deal­ers block­ing out new en­trants.”

Play­ers such as Mo­tol­ube cover all ve­hi­cles and per­mit them to go to any RMIaf­fil­i­ated work­shop.

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