The latest amendments to the automotive industry’s block exemption legislation came into effect in October and the changes have so far have been very low key. However, Toyota’s latest move to create a vehicle repair network of independent garages could prove to be a catalyst for future developments.
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Toyota, the world’s third largest vehicle manufacturer, appears to be the first of its peers to seize upon a key element of the new block exemption regulations by forming a vehicle repair network of independent garages. The company has created a network of 17 independently-owned garages in the UK, under the name “Official Toyota Service Outlets”, a move likely to cause ripples among the automotive aftermarket.
The block exemption legislation changes were designed to remove vehicle manufacturer’s stranglehold on certain key sectors and given that 30% or more of a vehicle manufacturers profits are derived from aftermarket parts sales, it was high on the list for change. The European Commission sought to give independent garages the chance to increase their share of the repair and servicing of newer vehicles, a market dominated by franchised dealers. The amendments allow independents to seek ‘authorised’ status from the vehicle manufacturers so that they can service and repair newer vehicles without invalidating any outstanding warranty.
Few garages have sought such status from the vehicle manufacturers, and as a result, inertia was expected to preserve the current status quo. Toyota has changed all that with its new network, and is said to be reviewing a further 35 or so applications.
For the Japanese manufacturers, this move could make sense. They are continually increasing their slice of the new car sales pie, and while new car buyers are happy to travel to buy the car, they are not so willing to travel for repairs or servicing. Creating this new network will enable Toyota to expand its geographical coverage at a lower cost than increasing its franchised dealer network, and do so more quickly.
No doubt the new repair sites will be under intense scrutiny from the competition, which will be interested in customers’ perceptions and, of course, the revenue the networks generate for Toyota. If successful, other independents may seek to join the network, whilst rival vehicle manufacturers ponder similar schemes.
