Non-main dealer service stamps could greatly affect residual values

Now that Tesco’s have entered the aftersales arena the competition for customers is set to get even tougher and inevitably the likely losers will be franchised dealers.

Scratch the surface however and we’re left wondering whether this really is best for the customer in the long run? At MTI we are all for companies providing value for money to customers, we encourage choice and transparency and promote best practices and therefore the fact that drivers can have their cars serviced at non-franchised dealers and not invalidate their manufacturer’s warranty (subject to those independent repairers using genuine parts) on the face of it means cheaper servicing, especially now the kings of value with deep, deep pockets have flexed their muscles. However is this too good to be true?

We canvassed at least a dozen professional trade buyers who collectively buy about 5,000 cars per year for a mixture of main dealers representing franchises such as jaguar, BMW, Ford, VW and Mercedes. We asked a simple question; if you were asked to bid on a 3 year old variant of one of your models with average mileage and spec would you value it any less if it had 3 Kwik Fit / Halfords / Tesco etc stamps against 3 stamps from the franchise representing by the car? The results in some cases were staggering the ford and VW buyers said they would value a car like this between £800-1,000 less and much more for the top end of the range, the Jaguar buyer said it would need to be £1,500 to £2,000 less and amazingly the BMW and Mercedes boys said they probably just wouldn’t want to buy it!

When asked why they said that the customers they sell their cars to expect everything to be just right from the showroom facilities and overall sales experience to the pedigree of the car. They just didn’t think their customers would feel confident about buying a higher end vehicle without the comfort of knowing it had been looked after by the franchises own technicians, even though the servicing costs may be quite a lot more.

Of course this is not totally representative and we would welcome any contrary opinions but from our snapshot the saving customers may make over 3 years worth of service and maintenance may not be a saving at all if the car is to be devalued substantially at the point of re-sale.

It appears to us that it becomes cost-effective at the more budget end of the industry. The less expensive the car the lower the impact on residual values, and this does, of course represent the majority of buyers, but I guess the best barometer is as a car buyer would you be happy to buy a car from a main dealer forecourt without any main dealer servicing and would you expect it to be cheaper than a similar model which had been?

Example:
BMW 320d SE average servicing cost over three years approx £1,019 at main dealer compared to £495 at Kwik Fit. This car would be de-valued by as much as £2,000 at 3 years and 36,000 miles without main dealer service stamps.


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2 Responses to Non-main dealer service stamps could greatly affect residual values

  1. Mark R May 16, 2011 at 8:53 am #

    I think this is correct to a degree, however three year old premium brands on say 09 plates very rarely have servicing stamps outside of the dealership anyway, not one BMW or Mercedes we have bought has had non main agent stamps, and to be honest i have never had to ask otherwise as yet, even a three year old Ford is usually straight from fleet and providing it has a full print out sheet we have never seen this as a problem?

    It really depends on the car but honestly, who would put their 10 plate Mercedes or Jaguar top of the range into Halfords or Kwik Fit just to save a few pounds? no fleet director we know?

  2. Nick S May 16, 2011 at 8:22 pm #

    Parts don’t have to be genuine, just of equal quality.

    Always a better service at an Indy, just looks better in the book if main dealer smudge.

    Am I a bitter garage owner, yes :)

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