ACCC Investigates KIA’s Fixed Price Servicing

In the November issue of AWM our expert contributor Rachel Sheldrick suggested that Fixed Priced Servicing was bad for business. Many may have been shocked by her statement in her article.

In short, Rachel stated that many workshops had changed to the Fixed Price concept but she (and many others) felt that it educated customers to become more price sensitive. I think she was right on the money. She added that if you found additional work to be performed (outside normal servicing) that it could leave you with an upset customer, even if you had all the right intentions with the additional repairs.

Recently, Kia Australia was investigated by the ACCC after complaints from customers stating that their Fixed Prices had changed.

The ACCC’s investigation found that Kia’s advertising of its capped-price servicing offer was likely to amount to a misleading representation to consumers that the price of having their vehicle serviced was fixed at the maximum amount specified, contravening Australian Consumer Law.

Kia is in the process of contacting its existing customers setting out the price of capped price services that will apply to their vehicle. Any customer who believes that they may have been overcharged for a capped price service will be entitled to claim a refund.

As a result of the steps that Kia has agreed to take, the ACCC has decided not to take any further action against Kia.

On hearing this Rachel said, “I believe this is confirmation for the independent mechanic that we should continue to offer our fair prices based on a variable priced service model. We should continue to educate our customers as to the benefits of using our expertise and superior quality workmanship, and enjoy the extra value we give, rather than being wooed by a cheap fixed price that is obviously leading to higher than expected charges when it comes time to pay the bill.”