Automotive Aftermarket Conference report, 13-14 November 2003, Oxford
Michael Woodward, head of the automotive consultancy practice of IBM had sponsored two detailed and relevant analyses. The first was of customer attitude to BE and franchised dealers, which in overview at least confirmed what we already tacitly knew - that many new car customers are looking for reasons to leave highly priced dealer service departments and most of these are younger single people owning premium brands. The only hope of retaining them as franchise customers seems to be a 20% price reduction.
More importantly, the second survey was of fleet and leasing companies in which general discontent with the situation was measured. They believed the market would be pushed by the larger leasing companies whose professionalism is cost control, in either admitting more non-franchised repairers while the vehicle is under warranty, or by forcing down prices further. They believe that warranty restrictions could no longer be enforced and leasing companies would take advantage of that, leaving VM-owned leasing companies high and dry. The BE changes had created enough turbulence to facilitate basic change - instancing the way insurance companies had used their commanding influence to completely re-model the crash repair market.
IBM closed by suggesting the movement from independent motor traders to VM-authorised repairers, believing that most would come from franchised dealers giving up selling deeply unprofitable new cars. But where were they?
Peter Roberts of 'Thatcham' discussed Block Exemption and developments in the body market. Following many problems with fit and general quality of 'pattern' body parts. their current move into 'accreditation' of cosmetic body parts is to be expanded into chassis and common crash repair parts such as radiators and aircon. This has future implications as a range of non-original parts will be checked and verified for quality.
Keith Jones of Unipart Logistics told us that current franchised dealer sites are a poor compromise of high cost car retailing showrooms, with parts and service facilities bolted on and thus suffering high overhead. Service facilities need to be close to the owner's work/home, while parts operations can be run from an industrial estate.
Most were looking at ways of reducing their logistics and investment costs, while improving their service from more cheaply priced parts. This is mainly a reaction to competition from OE suppliers and parallel market parts suppliers - increasing exponentially. Keith finished with a very interesting scenario in which a number of VM's could get together to share wholesale processing and logistics to all dealers of their combined brands, thus saving considerable cost. Thus the day when we see a VM-branded parts van rushing round the streets with one oil filter, might finally disappear.
Philip Wylie of PwC Global mentioned the performance of motor dealer in the UK versus the stock market and VM's. Clearly in recent years the large dealer groups have been able to take advantage of the economies of scale and efficiency brought about by enlargement, without giving any opinion as to whether this might continue.
He also discussed the possible transition of independent motor traders to 'authorised repairer' status which infers the award of a service franchise and believed the sole motivation of such IMT's to become service specialist for one or more VM's might just be the legitimacy which a VM sign over the door brings. He repeated the thought that middle-sized dealers are the most vulnerable in the current changes, having neither depth of expertise to 'hang on' or the swiftness of movement to develop and win ahead of the general market.
Geraldine Tickle of Martineau Johnson gave us her usual incisive views on the current Block Exemption changes, which focussed upon the changes in the new regulations and the inclusion - at last - of parts. She highlighted many inconsistencies and 'curiosities' incorporated which seemingly defy logic and drew our attention to the DTI explanatory leaflet. She pointed out that no litigation had ever ensued directly from the previous regulations (except in price-fixing and market restrictions) and believed that if VM's and their dealers pay due regard to the general spirit of the new regulations, no problems should ensue. She believed that the process of 'self-certification' is fundamentally flawed and would like to see an end to it - and welcomed the possible extension of the 'Thatcham Accreditation' of body parts. This presentation was the highlight of the conference.
Congratulations to Insight Conventions for running a highly relevant conference with so many interesting and outspoken speakers.