Capped-price servicing programs have become a popular marketing tactic employed by vehicle manufacturers, making it important to examine what the benefits and drawbacks of each brands programs are.
Capped-price servicing was first introduced in Australia by Toyota in 2008, since then the phrase “capped-price servicing” has become a hotly contested area among vehicle manufacturers, and has become a focal point of sales tactics.
This servicing plan allowed the vehicle manufacturers to stay close to their customers (vehicles must be serviced at an authorised dealership service centre to stay eligible for capped-price servicing) while allowing consumers to avoid nasty and unexpected surprises when they receive their bill.
With almost every vehicle brand offering some version of a capped-price servicing program, it is worth examining how comprehensive each program is, the guarantees each program provides, and how to make sure you don’t lose eligibility.
The following questions are important conversation starters when discussing the capped-price servicing agreement you have been offered. This article also provides some examples of what certain manufacturers offer in order to compare the value of the capped-price servicing plan that you have been offered.
Please note: every vehicle manufacturer offers different criteria for their capped-price servicing agreement. This is not supposed to be a thorough analysis of each manufacturer, but a discussion on the trends and common themes of each manufacturers program. Before purchasing any vehicle, ensure you read the companies terms and conditions related to the capped-price servicing.
Which vehicles are eligible?
Generally, most new vehicles that weren’t initially registered as a government or rental vehicle will be eligible for capped-price servicing. Some manufacturers, such as Holden and Hyundai, have offered capped-price servicing on every vehicle they have ever sold in Australia. Other manufacturers, such as Mitsubishi, have offered it on every vehicle with its factory warranty commencing after 1st October 2012.
While almost all vehicles are initially eligible for this program, many customers lose their eligibility without realising. Most capped-price service plans require the customer to routinely service their vehicle every 12 months, even if the vehicle has not been driven in this time. If your vehicle is not serviced as regularly as the vehicles service schedule dictates, you can disqualify yourself from the servicing program.
While some programs like Holden’s capped-price servicing will only make you ineligible for your next service, many programs will disqualify your vehicle from ever being eligible for capped-price servicing again if you delay servicing for too long.
Most capped-price servicing programs require vehicles to be serviced at their own authorised dealerships. While this is not an issue for the majority of customers, the location of your nearest authorised dealership may make servicing your vehicle very inconvenient.
It is worth considering the location of your closest authorised dealership when buying a vehicle and ensuring travelling to this location for frequent services will not be too large of a burden for the benefit.
This also means customers no longer have the option to take their vehicles to their own local mechanics if they wish to take advantage of the capped-price servicing arrangement.
How long do capped-price servicing agreements last?
All vehicle manufacturers have different lengths for their capped-price servicing agreements. As a general rule, most manufacturers servicing schedule mandates the vehicle is serviced at least once every 12 months. This means you can assume that a capped-price servicing that offers a four-year plan is essentially offering four capped-price services under this agreement.
As many people do much higher kilometres per year than the vehicles service schedule, the servicing arrangement lasts for a much shorter period than originally advertised. If a customer was doing 50’000km a year, and their servicing schedule mandates the vehicle is serviced every 12’500km, the customer would complete their capped-price servicing arrangement within one year.
Since 2014, some vehicle manufacturers in Australia have begun offering lifetime capped-price servicing on selected vehicles. Initially introduced in the beginning of 2014 by Mazda on new Mazda 3 purchases, it took less than 6 months before Subaru introduced a lifetime capped-price servicing plan for all vehicles back to the 2006 model year. Shortly after, Mazda followed suit and begun offering their lifetime service program to all new models, and selected used models back to 2009 (starting date varies by model).
Holden and Hyundai both offer lifetime capped-price servicing for all vehicles since the manufacturers were founded in Australia, being 1948 and 1986 respectively. However in order to be eligible, Hyundai’s must have been imported officially by Hyundai Australia. “Grey imports” or privately imported Hyundai’s will not be eligible for Hyundai’s capped-price servicing program.
Just how “capped” is capped-price servicing?
While the phrase “capped-price servicing” can lead to assumptions that future servicing costs are fixed, just how ‘fixed’ these future costs are varies significantly by vehicle manufacturer.
While a manufacturer like Mitsubishi offer a schedule that clearly defines the cost of every service over their 4-year capped-price plan for each model year, some manufacturers like Hyundai only guarantee a “maximum service price applicable” for 30 days at a time when you request an online service quote. Other manufacturers like Volkswagen publish a pricing schedule each year that mandates the servicing cost for the next 12 months.
As capped-price servicing has become more popular, vehicle manufacturers have integrated service quote calculators into their websites to ensure customers are equipped with the servicing costs of their vehicle before taking it to the mechanics. While some of these quotes are only valid for 30 days, it still ensures the consumer is aware of, and able to accurately budget for, their servicing costs.
The changes between eligibility, program length and future cost guarantees vary so wildly between different vehicle manufacturers. This shows the importance of determining exactly what servicing program you are receiving when you purchase your new vehicle.