While it’s a relatively small problem now, if customers supplying their own parts in order to save money becomes a trend, it has the potential to impact the business model and profitability of every auto workshop.

Capricorn’s State of the Nation survey, conducted in late 2019, found that 8% of customers are now supplying their own parts. The survey found 68% of workshops go ahead and fit these parts.

Here’s how they handle the situation:

There are some real problems with some of the above responses, as Capricorn Chairman Mark Cooper points out.

Why not doing anything differently is the wrong response

Mr Cooper said the 28% of workshop owners who don’t do anything differently when a customer supplies their own parts face two problems: a profitability hit and the taking on of risk.

“We lose profitability when someone supplies their own parts, because there’s profitability in both the labour and the part,” he said.

“Our labour is not priced correctly to allow for a competitive online parts’ space, so our margin gets squeezed because a customer rings up to say ‘how much to replace my brakes’, the business says ‘$100 labour and $200 for the parts’, and the customer says they’ll supply the parts, and all of a sudden you’ve lost half your profitability.”

Note: This article contains general information and should not be regarded as legal advice.

Why not offering a warranty is the wrong response

Then there’s the question of risk: what happens if something goes wrong with the part the customer supplied? Who is liable? Who pays?

As far as the law is concerned, liability is clear: while you are not liable for the warranty on a customer-supplied part, you DO have to provide a warranty on the services you provided fitting that part.

Where it quickly gets into murky territory is working out whether a fault is due to a part or to the services provided in fitting the part. The answer to that question may not be obvious or identifiable in most situations.

What happens if you’ve agreed to install a part that turns out not to be fit for purpose? Who pays for the labour if the part is fitted then has to be removed? Who pays if the customer’s car ends up taking up a bay in your garage for two weeks while a replacement part is supplied?

It is why many workshops are refusing to offer a warranty when it comes to installing customer-supplied parts.

Looking after yourself legally, as far as possible

As the repairer, before fitting a customer-supplied part it is incumbent on you to ensure:

• The part is fit for purpose (and to not fit it if it isn’t)
• The part comes with a warranty
• The part won’t cause problems for the vehicle if it is fitted
• The part is fitted with all due care and skill
• You have adequate insurance in case something goes wrong.

For more robust legal protection, some workshops are asking customers to sign a “release form” before work is started, confirming the business is not responsible for any warranties on the supplied part and indemnifying themselves against any loss or damage caused by the part.

Any release a workshop provides ought to be clear that:

• No warranties are made with respect to the part itself, if the part has not been supplied by the workshop
• The workshop still has obligations under consumer law, with respect to the services they provide in fitting the part
• The customer supplied the part
• The customer was informed of the potential risks of using the part and/or a part that does not meet the original equipment manufacturer’s standards
• The customer releases and indemnifies the repairer from any loss or damage caused by the customer-supplied part.

It’s a good idea to also put a notice to this effect up in your workshop.

But be warned: even this may not be enough to save you if the customer decides to pursue a legal case. Ultimately, the best protection is to avoid fitting customer-supplied parts if you possibly can.

Who is fitting customer-supplied parts?

The State of the Nation took a deep dive into the kinds of workshops are willing to fit customer-supplied parts. Here’s what it found:

The survey also found smaller businesses were the most likely to fit customer-supplied parts.

Customer-supplied parts: how should workshops respond?

Customer-supplied parts are just one more way workshops are feeling the financial squeeze. But Mr Cooper said there are some ways Members can fight back.

“Hourly rates for labour need to increase as parts’ margins reduce,” he said. “The new profit margins for the automotive industry will be in the labour. This will reduce the financial impact on the business when customers supply their own parts.

“Also, keeping parts’ prices competitive will mean the customer has less to gain by purchasing their parts online.”

Again, the best option is to avoid fitting customer-supplied parts altogether – and avoid potential headaches.

Find out about other ways customers are putting the squeeze on workshops in our special report, here. Also, read the full State of the Nation report for more insights.