ECN Brief

Sweden | A report from the Swedish Competition Authority, “The power over our cars”

Sweden | A report from the Swedish Competition Authority, “The power over our cars”

On the 12 of June 2019, the Swedish Competition Authority published a report entitled ‘Power over Our Cars – A Report on Auto Insurance and the Auto Repairs Market’. The report highlights a number of competition and consumer-related issues between car manufacturers, auto insurance and auto repair shops.

The ability of car owners to choose repair shops is reduced by the insurance companies that often decide which garages that may carry out the repairs. By steering the repairs towards authorised garages, the insurance companies hamper the ability of independent auto repair shops to compete.

The purchase of a new passenger car in Sweden always includes a pre-paid three-year so-called vehicle damage guarantee, an insurance policy that solely covers motor vehicle damage, and which the car manufacturer 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 for other parts of the auto insurance. The car buyer is not even informed about the car warranty´s cost, other than that the deductible is high.

The purchase or lease of a new car often includes a package of services such as insurance, servicing, and financing. The possibilities to choose for oneself are decreasing.

Cars are insured to a much further extent in Sweden than they are in other countries. In addition, 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.

The number of independent garages in the country has been decreasing for a long time. The terms and design of the vehicle damage guarantee, the insurance companies’ certification requirements and tendency to refer repairs to authorised repair shops, and an increased number of brand insurances have all contributed to making it more difficult for independent garages to compete with authorised garages. Fewer independent repair shops leads to poorer competition also in the car service market. Furthermore, a risk related to the development toward more connected cars is that gathered information and vehicle data will only be the proprietary knowledge of each respective car manufacturer and authorised brand garages. This can make it difficult for independent garages to compete in regards to many kinds of new, innovative services.

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