Franchised car dealers now trying to stem the flow of departing service business

There is no doubting the scrappage scheme provided a welcome boost to the UK automotive industry at a time when it was most needed but, as we have recently highlighted, the long term effects for that short term shot in the arm may prove to be more far reaching than perhaps anyone in the industry anticipated.

We have accepted the fact that the demographic of the scrappage buyer is such that the franchised dealer network is unlikely to see many of the buyers in their showrooms again for quite some time, and that inexperienced sales staff have watched the gravy train go and are now struggling to come to terms with having to ‘sell’ cars.

We have also to accept that the profits made as a result of scrappage were at the expense of a lack of used cars in future in an already shrinking car parc.

What has not been quite so apparent is the effect it has had on independent car dealers who could neither benefit from new car sales nor continue to offer servicing facilities to a majority of these types of buyers and are unlikely to see them again for many years to come. This is even more of an issue as car makers are starting to offer extended warranties on new cars in a bid to combat the cheaper prices offered by independent repairers.

There is still probably room for everybody however but there are likely to be many small ‘Fred in the shed’ type businesses closing over the next few years as the competition for a slice of the aftersales market hots up.

We have already seen profitability severely eroded in franchised aftersales businesses and to combat this and win back these customers they are heavily investing in training and marketing as well as offering an enhanced service to arrest the decline.

It is no secret that franchised car dealers have arrogantly assumed that drivers would blindly continue to use the dealer they bought the new car from for their service and maintenance and this arrogance has cost dealers in lost revenue. It is only now that car dealerships are they taking steps to win back those consumers, who are going down the independent route almost the second the warranty expires.

Realistically, sending your car to a dealership for servicing should be a “no brainer” because dealers, on the surface, hold all the cars. But its price that stands out as the biggest advantage that the non-franchised sector has over dealerships.

The good news is this competition between manufacturer backed franchised dealers, large independent servicing chains and small local garages will only help drivers get a better deal and a better service to boot.

Whoever the consumer ends up using it is the duty of the business to ensure they offer value for money in everything they do or risk seeing the business slip through their fingers.