And without doing anything, we said the service market was coming back to franchised dealers because of record new car sales and consequently a record four-year car parc. A further piece of the ‘do nothing’ jigsaw has been three-year warranties, which have progressively transferred work away from the retail service market.
Now that we have the full-time results for 2003 and the half-time results for 2004, it is possible to get some idea of the trends in the retail service market. Our latest estimates confirm that the market peaked – in real terms – in 1992 or 1993 and has gradually fallen back since.
In fact, by the end of this year, it looks as if it will have fallen by 15% since 1992/93. Market value, too, could have peaked two years ago and will have fallen back to around £7bn annually by the end of 2004. At the present rate, the retail service market might fall a further 15% in real terms by 2010.
So what is driving all of this? Although the car parc has grown by 30% since 1992/93, it’s with younger cars, which do not require as much work. Logically, though, a 30% increase in the car parc should outweigh most things. And it does – except for the dramatic improvement in vehicle quality in the last decade. Better quality has led to longer service intervals and reduced content, and reduced the need for repairs.
As for the players in the retail service market – franchised dealers, independent garages and DIY – everything is going the way of franchised dealers. We estimate they currently have 41% of the market by value, and independents have 48%.
At the present rate, franchised dealers will overtake independents in 2008 and achieve 47% of the retail service market by 2010 - with the bonus of work from warranties. This should happen on a ‘do nothing’ basis, although many dealers will need to grow their facilities and resources to ensure they grab their share. If they don’t, authorised repairers will spring up and snatch away the business.