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Franchised dealers are on to a winner

The new block exemption regulations include the concept of 'authorised repairer', which basically means that any service workshop can become an official service point for any franchise from October 1 this year – provided they meet the vehicle manufacturer's standards. Back in May, I speculated about how much an independent garage might have to invest to become an authorised repairer for a single marque.

Rumours at the time suggested £35,000. At this level, I concluded it was simply not worth it for the average independent. Since then, Castrol Business Services commissioned Sewells to find out more about the practical implications of the new regulations.To do this, it surveyed vehicle manufacturers and AM100 dealer groups and explored motorists' views on the single issue of authorised repairers – see pages 8 and 9. So, have the results changed my mind on the appeal of authorised repairers? The answer is “no” and “yes”. No, independent garages are certainly better off staying independent. And yes, the authorised repairer concept could represent an opportunity. The opportunity I refer to is for franchised dealers, and particularly groups, and not independent garages.

Most franchised dealers are already equipped and resourced to a level that will meet most of the standards of another franchise. Sure, there will be some investment requirement, but franchised dealers are in a better position financially than the average independent. The survey revealed that AM100 groups are not put off by the prospect of investing £25,000 for each authorised service point – the likely set-up cost. And nearly half of the AM100 groups responding said they have applied. Another upside is the possibility of becoming authorised repairers for other marques owned by their principal manufacturer. However the most logical reason why franchised dealers and groups must and will grasp the authorised repairer opportunity is because they have to. Aftersales contributes 80 per cent of a dealer's profits – it's a good revenue stream because the four-year car parc stands at an all time high. But the switched-on dealers and know this might not last, so multi-franchising workshops is an opportunity not to be missed.

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