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Long warranties hit dealers

Franchised dealers are losing vital servicing work in the new car sector because of manufacturers' extended warranties, according to new research. But garages have seen service retention increase.

The Castrol Business Services Trend Tracker survey shows the proportion of respondents owning cars less than four years old stating 'not yet serviced' has more than doubled. In January 1994, the number of cars in this vehicle parc that had not been serviced was just 14% but as of January this year this figure had doubled to 33%.

As well as the growth in extended warranties, Brian Taylor, report author, suggests another reason for the increasing number of new cars that haven't been serviced. “One explanation could be that enthusiastic salespeople are persuading drivers to change cars after two years rather than three to help meet registration targets,” says Taylor.

But the report also shows that across the total car parc for all marques, the service retention performance by franchised retailers is gradually increasing. Service penetration by independent garages has fallen but is still higher than it was 10 years ago.

Dealers' all-marque service retention of cars four years or older has also improved and remains at much higher levels than the service penetration achieved by independents.

“The recent gains by franchised dealers are likely to be at the expense of independents, maybe as a result of extended warranties dictating franchised dealer servicing,” says the report.

The news supports another piece of research that suggests retailers have increased their share of service work following the introduction of manufacturers' three-year warranties. Sewells' consultant Chris Oakham says dealers' penetration of the mechanical servicing and repair market has risen by several percentage points to more than 40% in the space of three years.

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