According to a market research survey carried out by NOP, car servicing in the UK may drift away from franchise dealers in the future. New European competition rules will likely underpin the trend, as consumers move away from using the franchise dealer ‘under duress’ as their apparent monopoly is eroded.
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NOP says that currently, car servicing in UK is dominated by franchise dealers and independent garages, who account for over 70% of the car servicing market. The remainder is accounted for by the use of private individuals, DIY or recognised service outlets (eg Halfords, Lex etc).
Not surprisingly NOP says there is high correlation between the age of car and choice of service outlet; the newer the car, the more likely it is to be serviced at a franchise dealer.
All this could alter with the changes in legislation that will open up the UK car retailing and servicing industry. Where historically customers have been obliged to return to a franchise dealer for servicing in order to not invalidate manufacturer warranties, they are now theoretically free to use any (approved) outlet.
NOP points out that whether people will change their behaviour will depend firstly on customers being aware they have a choice and most importantly on whether they are content with their current servicing outlet.
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By GlobalDataResearch carried out by NOP Automotive among 1000 car drivers suggests there may soon be a drifting away from franchise dealers.
There are clearly differences in the profile of users of franchise dealers and independent garages according to the research.
In tangible terms franchise dealers are currently reliant on cars purchased new that are still within the terms of their service/warranty package. Attitudinally these customers appear to use the franchised dealer ‘under duress’ rather than from a true desire to use that particular outlet.
According to NOP, this does not bode well for these dealers as their apparent monopoly is eroded through the changes in legislation.
NOP says that franchise dealers will need to motivate their customers to remain with them for quality of service, reliability and value for money if they are to retain them into the future.
NOP adds that there are few obvious routes currently for franchise dealers to develop alternative revenue streams through current users of independent garages. NOP says that customers of these outlets are happy with the service they receive and use these outlets out of free choice (convenience, quality, value etc.).
NOP concludes that it will take time for changes to happen. Non-franchise dealers will need to satisfy manufacturer standards in terms of parts and processes before being an acceptable alternative. This will take time and investment.
But NOP also points out an opportunity for franchise dealers. They will be able to go elsewhere, other than the manufacturer, to source alternative (cheaper) parts, thus allowing them to become more price competitive.
NOP says customers will need convincing that the independent alternative does have the technical knowledge and, perhaps more importantly, the accreditation and reputation necessary to not affect residual values or invalidate warranties and full service history records.
However, NOP asserts that change will happen and both franchise dealers and independent garages must prepare for that change if they are to prosper from the changes to the legislation.
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