Car Owners Are ‘Steered’ by Car Manufacturers and Insurance Companies

Press release

The ability of car owners to choose repair shops is reduced by the insurance companies that decide which garages that may carry out the repairs. The insurance companies steer the repairs towards authorised, brand-name shops. This hampers the ability of independent auto repair shops to compete. Car manufacturers and their dealerships are deciding more and more about what happens to cars after they are purchased. These are a few of the findings presented in a new report by the Swedish Competition Authority.

The purchase of a new passenger car in Sweden includes a pre-paid three-year  so-called vehicle damage guarantee, an insurance policy that solely covers motor vehicle damage, and which the dealership has drawn up with an insurance company. During this time, the car buyer cannot choose an insurance company for motor vehicle damage in the same way as she/he can for motor and partial coverage insurance, for example. The car buyer is not even informed about what the car warranty costs, other than that the deductible is high.

“Car buyers have no ability to independently select which insurance company they wish to provide the vehicle damage guarantee. This is contrary to the general social trend, where consumers are gaining more choice,” says Karin Lunning, Deputy Director General of the Swedish Competition Authority.

The Swedish Competition Authority has reviewed auto insurances in a new report entitled ‘Power Over Our Cars - A Report on Auto Insurance and the Auto Repairs Market’. The insurance is often tied to the make of the car. Moreover, in the event of damage, the insurance company determines which garages should repair the car – and at what cost.

“The purchase of a new car often includes a package of services such as insurance, servicing, and financing. The possibilities to choose for oneself are decreasing. This picture is also reinforced by the fact that an increasing number of people now lease their cars via private leasing contracts that include these services, rather than buying a car,” says Karin Lunning.

Swedish cars are insured to a greater extent than they are in other countries. As in other countries, in Sweden motor insurance is compulsory. However, the vehicle damage guarantee included in the purchase of a new car does not exist in other countries. The report examines how this affects competition and consumer choice.

For further Information please contact:
Jimmy Dominius, Press Officer, tel 076-542 15 80,
Stig-Arne Ankner, Competition Counsel, tel 08-700 1671

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