The UK aftermarket is about to be picked up, shaken by the scruff of the neck, and turned inside out over the next few years. Changing laws, new internet technology, and aggressive moves by motor manufacturers will see massive changes affecting everyone from car makers to parts distributors, and independents and franchised workshops to installers and factors.

Brian Spratt, chief executive of the Automotive Distribution Federation, says: "How vehicles are produced and distributed, how parts needed for servicing are made and distributed, the laws surrounding Block Exemption -these and other issues are going to have a tremendous impact on everyone involved in the aftermarket."

One significant indicator of the way the market is heading comes from Datamonitor whose research over the past 18 months shows that control of fast-fit outlets by vehicle manufacturers has grown from a fifth to a third. Renault is the latest entrant with the launch of its Minute (pronounced min-yoot) programme at 17 sites, using menu pricing on jobs taking under two hours such as exhaust replacements, and oil and air filter changes.

Minute joins other time-nomenclatured operations such Ford's Rapid Fit, Vauxhall's Master Fit, Peugeot's Express, Toyota's Autobase and Fiat's Autoclinics. Next addition is likely to be Volvo which is currently piloting its own fast-fit programme. "This is a trend which will also grow in terms of trade supply, with Vauxhall's Trade Club, for example, likely to be copied in some way by other manufacturers," commented Spratt.

With Block Exemption up for review in 2002, the Economist Intelligence Unit reports: "As a result of this potential threat (the scrapping of exemption) manufacturers are starting to build or acquire their own separately branded service and distribution chains to safeguard their aftermarket business."

Brian Taylor, author of the Castrol Trend Tracker, says an end to Block Exemption, or even a further relaxation of distribution restrictions, is likely to see a broadening of manufacturer-run fast-fit operations to cover all-makes. "BMW's Autotechnic, currently aimed at older BMWs, for example, could be widened to take in other German marques, like Porsche, Mercedes, and top-of-the-range VWs.

"Vehicle assemblers need to sell more parts and to hold on to parts business for older vehicles," Taylor added. "Whether they will do that by continuing to sell their own branded parts or sub-brand via other channels remains to be seen, but my money is on the sub-brand route.

"We will also see fewer franchised dealers -networks will be half the size they are at the moment - and more stand-alone service points. Some of these could be part of franchised dealers, with others being independents on programmes approved by the vehicle assemblers to do certain jobs. The independent garages linked to Ford's Parts Plus programme are a good example.

"Then there's the Vauxhall Trade Club which has grown really well through Vauxhall dealers. That could expand even quicker if it went through other channels, and after that why not a Vauxhall Service Club so that approved independents, as part of the club, could do some of the service jobs, giving a local service?"

The car makers will not be getting things all their own way, though. About to enter the fray is Visteon, following its devolution from the Ford empire, with executive vice president Daniel Coulson commenting: "Until a couple of years ago we did not take much notice of the aftermarket, but we have now made it a key focus. Last year our aftermarket sales revenue increased 27 per cent worldwide, and we plan to create new aftermarket brands."

Visteon intends to fast-track its aftermarket operation, following the pattern set by Delphi, previously part of General Motors. Delphi has just bought AP Distribution Services to form Delphi Lockheed Automotive, while Delphi's new aftermarket division plans to double its sales by the middle of the next decade. This year it's launching a range of remanufactured products including starters and alternators, and new products such as ignition cables, switches and suspension components.

Another notable consolidation was the £160m deal earlier this year between Finelist and ADL (Europe Auto Distribution). Finelist chairman Chris Swan said at the time it not only helped fulfil his company's pan-European expansion ambitions, but also gave it the necessary clout to remain competitive on the home market.

One striking example of that increased competition is the replacement tyre market where it's predicted that by 2003 the share taken by vehicle assemblers and manufacturers, either through their franchised networks or the fast-fit chains they own, will have grown from 15 per cent to 40 per cent.

That's unwelcome news for other fast-fits where around half the business is generated by tyres. There will also be greater competition from tyre makers who already own outright, or work in partnership with, almost 40 per cent of the 5,500 UK fast-fit outlets. Continental, under the Tyre Expert brand, has almost 600 outlets, Michelin nearly 550, Goodyear 390, Sumitomo 162 and Pirelli 117. That is likely to grow, largely through partnerships.

Commented Richard Edy, director of the National Tyre Distributors Association: "With so many partnership schemes available through tyre wholesalers and tyre manufacturers, franchised dealers and independents are looking to get back into tyre sales in a big way."

Mike Harrison of the NTDA added: "Independent tyre distributors with one to 10 outlets are being courted by the tyre manufacturers, so we see Pirelli linked with Driver, and Bridgestone with First Stop. Where there were 7,000 points of distribution for tyres, today there are 12,000."

As for the impact of the internet, Brian Taylor warns that dotcom trading could have a fatal effect on many High Street aftermarket operators. "Web sites are driving service business to particular operators. For example, Delphi are part of the Freeserve Motorist's Club, so Freeserve subscribers looking for help with a clutch or a brake problem get directed to their nearest Delphi clutch or brake centre."

The internet, together with the Euro, will also act to force down parts prices, according to the Economist Intelligence Unit. In Spain, for example, prices are typically 20-25 per cent cheaper than in the UK. As parts are priced in Euros, these differences will become increasingly transparent, especially as more internet electronic commerce makes national pricing policies clearer.

The EIU believes parts trade buyers in the UK, whether wholesale distributors, garages, chains or fast-fits, retailers or fleet operators, will use the 'net to compare prices offered by local UK suppliers with what is available on the continent, and use that knowledge to pressurise prices downwards, or even re-source their bulk requirements.


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