Dealer-based extended warranties can mean that cars must be serviced at a garage belonging to the manufacturer.

The OFT is concerned that this leaves consumers having to pay far more to have their car serviced.

Last December, the OFT said car makers should lift these restrictions or face a full investigation.

Invalidation worries

More than 2.5 million cars are sold each year in the UK, which all come with a manufacturer's warranty.

Manufacturers' warranties are typically valid for one or two years after purchase and do not usually specify where a car must be serviced.

However, in practice, the extended warranty will normally be invalidated if the car is not serviced by an authorised repairer.

Dealer extended warranties normally increase the warranty to three years. They are normally valid only if the car is serviced by garages within the manufacturer's network.

Extra cost

The OFT said that since it conducted its study into the car warranty market several car makers had lifted their servicing restrictions.

Franchised dealers carry out about 90% of servicing of cars up to three years old.

On average a service carried out by a dealer costs �199 compared with �116 for an independent garage.

"Servicing restrictions, combined with confusion about warranty terms and conditions, restrict competition between garages, driving up prices and reducing choice and convenience for the customer," said Penny Boy, OFT executive director.