23 May 2011

Auto retailers could be forgiven for feeling under siege. But when was it ever any different. You could argue it’s the natural state of working in the industry – there’s always somebody trying to nibble away at the margins.

In the last few weeks we’ve had Tesco enter the used car business, Kwik-Fit announce it is planning to open 20 new workshop centres over the next two years and now Halfords is stepping up investment in its Autocentres.

You could argue that none of these competes directly with the core franchised retail business but that’s just burying your head in the sand. Older and wiser heads still regret the loss of tyre and exhaust business when fast-fit chains, such as Kwik-Fit, came into the industry.

And we all know that core franchised new car retailing is not where the money is made.

Auto Retail Network managing editor, Tristan Young, has just had an exclusive interview with the management team running Tesco Cars. Key question: “why did you go into used cars, rather than new?” Their answer: “there’s more value to be had in used cars.”

(Incidentally, you can read the full interview in the next issue of Auto Retail Bulletin.)

The $64,000 question is how to react. You could adopt a siege mentality, pull up the drawbridge and hope the enemy get bored and go away. On balance, that seems unlikely to happen.

Or you could go on the attack and surprise the enemy before they’ve had a chance to fully get their troops in position. The plain truth is that most franchised retailers need to get better at servicing older cars and selling more used.

Kwik-Fit’s investment comes after a 43% rise in MoTs carried out in the first quarter of this year versus the same period in 2010 and a 35% rise in vehicle servicing over the same period. They must have won that business from somewhere. I do hope it wasn’t you.

Have a good week, in or out of the showroom. If you’ve got any news or gossip, do let us know: rupert@auto-retail.com

Rupert Saunders