A growing number of automotive businesses in Europe are already applying to manufacturers for service-only contracts, saving themselves the massive investment necessary to open retail operations, and allowing them to operate a number of smaller repair locations.
Industry analyst Professor Jonathan Brown, of automotive consultancy HWB, believes block exemption rules which separate the sales and service contracts are likely to lead to a growth in the proportion of franchised service outlets compared with retailers.
“The number of separate service contracts is going up quite rapidly in the rest of Europe, and in the UK some manufacturers, such as Ford and Citroen, have been actively seeking to recruit for service-only outlets,” he explains.
“I expect dealers across the Channel to become organised so that a main dealer selling new cars has a relationship with two or three separate businesses looking after servicing. This is likely to make commercial sense, which is why I expect it also to happen in the UK.”
Figures provided by the GMAP European Car Distribution Handbook show that the number of UK franchised service outlets has fallen by 258 from 6,287 to 6,026 since 1991, while the number of car retail sites dropped 408 from 6,185 to 5,777 in the same period.