18 July 2011

The European Commission is ‘rattling its sabre’ again over the issue of access to vehicle technical information and, more specifically, the ability of independent repairers to identify and order spare parts.

It’s all pretty technical stuff relating to Euro 5 emissions regulations but operators of franchised workshops – and their manufacturer partners – would be pretty stupid to ignore it. Make no mistake: this is one area where the Commission is determined to create one of those famous level playing fields. It is actively promoting “fair competition” in the car repair market.

Franchised dealerships cannot afford to allow more service and repair work to bleed away to the competition: it’s as simple as that. The latest Trend Tracker research shows 80% retention in the first year of ownership but, by the end of the third year, that has fallen to around 50%.

And customer perceptions about warranty are still a major driver. Some 38% of new car owners will use their franchised retailer because their car is still under warranty. Just wait till they realise they no longer have to do that!

What to do about it? First and foremost: make it a focus of the business. The best 10% of dealerships are currently achieving 107% overhead absorption from their aftersales trade; the worst 10% are achieving just 33% – that’s a massive differentiator.

Second, understand your competition. Here are some thought provoking statements from the latest Halfords year-end report:

“Car aftercare is a large and highly attractive market with a value of £9bn. In the medium term we believe there is an opportunity to open up to 600 Autocentres centres nationally. Further growth opportunities exist from fleet customers and accelerating tyre sales”.

“Our wefit service has seen another year of strong growth. We now fit 23.5% of the bulbs, blades and batteries we sell, as more customers look to Halfords for expert help with basic car maintenance”.

So, if the European Commission doesn’t get you, then Halfords will. The fightback should start now.

Rupert Saunders

Remember, if you have a story for us, or just some idle gossip: rupert@auto-retail.com