AM Online

Boom times are back. But are you prepared?

Fifteen years ago franchised dealers enjoyed 45% of the service and repair market, and independent garages had 35%. Six years later the franchise share fell to 35% and independent garages sat smugly on 45%.

So what did independents do to achieve this dramatic turnaround? Nothing. The market just came to them. Right now, nearly a decade later, the market is coming back to franchised dealers, and every service manager needs to cash in on the boom. Independents also need to know what's coming their way.

What we are talking about here is something we called the 'do nothing scenario' back in the early 1990s, and this is how it works: In 2002, Castrol Business Services and AM carried out an important consumer survey of servicing and repair. It highlighted how motorists who buy new cars tend to stick with the franchise for servicing – the switch to the independent sector occurs mainly when cars change hands to second and subsequent owners. This creates the split in the age groups of cars utilising the two servicing channels. Franchises major on cars up to four years old and independents on cars between four and eight years old.

Back in 1990 new car sales had been very strong for several years, and there was a record number of cars up to four years old. Then we had the recession of the early '90s and annual new car sales fell by half a million. New car sales struggled for several years, and by 1995 the four-year-old parc had dropped by 20% and franchised dealers experienced a huge fall in service and repair volume. At the same time, independent garages gained the previous record four-year car parc as it aged, and business surged for them.

This is the 'do nothing scenario'. It describes how motorists' buying habits, and the changing size of car parc age segments, inflict boom or bust swings on players in the service market. Of course, concerted marketing can influence the outcome for individual businesses. The lesson from history is that franchised dealers must do more to hang on to this gain, and not 'do nothing'. As for the independents, they will soon inherit a record car parc, and should be prepared to reap the benefits.

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