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Aftermarket market value rises, despite fall in service and repair volumes

The value of the service, maintenance and repair (SMR) market in the UK rose by 6.3% last year.

Evidence from the 2012 Castrol Professional Car Servicing & Repair Trend Tracker report suggests that the market’s value has risen from £8.43 billion in 2010 to £8.97bn in 2011 (excluding MoTs and VAT), with further growth anticipated over the coming 12 months.

This growth in market value comes in spite of falling volumes across the sector, with 6.3 million fewer services and repairs (excluding MoTs) compared with a decade ago.

The number of services and mechanical repairs carried out declined by 12% from 53.5m in 2001 to 47.2m in 2011.
By contrast, the average annual spend on SMR per car has risen from £242 in 2006 to £286 in 2011.

Trend Tracker analyst Chris Oakham believes this is a symptom of an underperforming new car market: “While new car sales have shown tentative signs of recovery of late, consumers are still unwilling to invest large amounts of money to secure the latest model, so more people are holding on to their current cars for longer.

“The consequence of this is that more people are becoming liable for ongoing work on their cars, resulting in an overall increased annual spend on servicing, maintenance and repair work.”

The market has been able to expand in real terms purely because new car sales continue to stutter, but decreasing service and repair volumes present a challenge to every business involved in SMR.

Nigel Head, Castrol OEM & franchised workshop marketing manager – UK & Ireland, said: “While there appears to be a trend emerging of motorists making fewer workshop visits for scheduled maintenance and mechanical repairs, franchised dealers have the opportunity to make the value growth in the aftersales sector work for them.

“Motorists are spending more on car repairs than in previous years, and that presents an opportunity to the franchised sector. Workshops can demonstrate the value of manufacturer-approved servicing to consumers to capture that increased revenue.

“In particular, it is critical that franchised workshops capture work among those customers who benefited from the UK’s scrappage scheme, and outlets must differentiate themselves from the independent sector.”

Head believes franchised dealers have a greater potential to offer optional extras that independents can’t compete with – like courtesy cars, car collection and delivery, or even something as simple as a free coffee in the waiting area.
He said: “Some of the earliest cars sold under the scrappage scheme may be approaching the end of their warranty period, and dealers must deliver a high quality, professional and hassle-free customer experience, differentiating themselves from the independent and fast-fit sector.
“This really is a once-in-a-generation chance for dealerships to secure the custom – and, crucially, the long-term loyalty – of greater numbers of motorists in the franchised sector for servicing and repairs.”

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