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Dealers' high prices help servicing rivals

Car owners can cut servicing costs by up to 35% by using independent garages instead of franchised dealers due to lower labour rates and cheaper non-original parts, according to a new report.

The UK car service and repair market, by independent automotive analyst Market Facts & Business Information (MFBI), reveals that dealer labour rates are nationally 56% higher than independents.

Several manufacturers have recently cut prices on fast-moving products in a bid to take more business in the £4bn parts market. But MFBI reports there is “still a large differential” in the cost of less commonly fitted parts, which makes servicing at the franchised dealer more expensive.

It warns that demand for aftersales services has fallen by 4% due to improving car reliability and longer servicing schedules. But market value has risen by 7% to £7.1bn last year as the average repair and service costs grow.

Franchised dealers enjoy a monopoly on car servicing during the warranty period – usually three years – but lose business on older cars. They took 35% of the 51.5m services and mechanical repairs carried out this year.

Independents continue to dominate the market for older vehicles because customers perceive them to be “providing better value for money and higher levels of customer care”, said MFBI.

It expects most carmakers to operate five-year warranties by 2005, but forecasts that Block Exemption changes would mean independents competing with franchised dealers as approved garages during the warranty period.

“The appointment of independent garages as manufacturer-approved outlets will enable carmakers to increase their penetration of the replacement parts market,” said MFBI. Manufacturers' attempts to capture this market through fast-fit networks had found “limited success” because many dealers viewed them as too expensive to operate.

Ford's acquisition of Kwik-Fit could be seen as proof of its dealers' failure to retain a greater share of the aftersales market.

Their failure was encouraging carmakers to develop closer ties with customers by “developing alternative distribution structures for parts, service and repairs”, said MFBI.

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