Ford is looking at its aftermarket strategy as dealer workshop profits fall - but the good news is that its UK network is making money on the new cars it sells.
Aftermarket parts and service have always been a healthy profit centre for dealers, but cars are becoming more reliable and when they get older, owners now tend to turn to cheaper independent garages,
Ford of Britain chairman and managing director Mark Ovenden said: "Dealer profitability is being driven by new car sales but what is suffering is the return on aftermarket business. Profit in this area is declining and we are working on an older vehicle strategy to win back this business."
Part of this is the recently announced aftermarket brand along with lower service costs. Called Motorcraft 4+, the new package developed by Ford and its dealer network is aimed at customers' cars and commercial vehicles aged four years and older.
It offers national maximum price service options - GBP119 for a minor service, and GBP189 for a major service - as well as a maximum MOT [mandatory annual safety/emissions check] price of GBP35, reduced to GBP30 when combined with a Motorcraft service. These prices include all required parts, labour by Ford-trained technicians and VAT [sales tax].
Dealers are also being asked to review their total sales strategy. Ovenden added: "You can no longer have a cookbook or checklist approach to customers. You need to look at individual needs and the technologies now involved in new cars."
As technology and customer behaviour changes, so will the size of the network, he added. Consumers are becoming more savvy through the internet, their choice of vehicle is often already made when they enter dealerships and so network coverage will become less of a priority.
Ovenden said that the old Ford adage of 'if in doubt put a new dealer in' will become 'if in doubt take one out'. This will be achieved however through natural attrition rather than physically cutting back.
Ford currently has around 550 franchised sales and service outlets in the UK and Ovenden sees this being reduced by around 10% over the next three to four years.
He added: "We still need to satisfy local needs, however. If you take a dealership away customers are likely to move to another brand purely because it is local."
The Ford boss added that dealer profitability has been improving and the network is gradually upgrading showrooms to mirror how the brand is moving forward. He said: "The network is collectively investing some GBP8m which is a vote of confidence having shown dealers our model plans for the future.
"They know what we have coming and we will be giving them the next instalment of our Go Further strategy in Barcelona next month. Last year we announced that we would be launching 25 new models over the coming five years and we have done eight of those in the past 12 months. Next year we will see the new large Transit plus the new Focus and Mondeo."