Tuesday, November 18, 2008
Posted by D. Daniel Sokol
Norman Hawker of Haworth College of Business, Western Michigan University writes on Under Threat: Competition in the Automotive Service Aftermarket.
ABSTRACT: This paper examines the access of independent service providers to the information, parts, and tools that automobile manufacturers make available to their authorized dealers. The increased use of information technology in automobiles has created opportunities for manufacturers to reduce competition faced by dealers in the market for automotive repair and maintenance. Manufacturers have economic incentives to reduce competition, including the ability to get dealers to purchase parts from the manufacturer. Independent service providers, unlike dealers, can purchase many parts from sources other than the automobile manufacturer. Reduction of competition in automotive service and repairs can be expected to result in higher prices, less convenience, and less innovation for consumers. The Motor Vehicle Right to Repair Act currently under consideration by Congress provides an imperfect solution to this problem.