April 23, 2014

The battle for car servicing business hots up

The debate around main dealer servicing continues with many in the trade insistent that the value of a car is directly affected by its provenance and will de-value if the service schedule is not from the franchise which represents the brand in question.

We have often put this topic out there for debate and as always there are differing opinions. There is no doubt that with prestige cars it’s different as they attract a premium price and the servicing is likely to be costly wherever the car goes. However there are differing factors which mean that there is really no definitive answer. For instance if the car is say a Porsche Boxster which is 7 years old, has 60k on the clock and has had main dealer history for the first 3 years and an independent history from them on, according to our contacts the difference in value of that car in the trade would be minimal. The interesting aspect is that our man says that if the same car had exclusive Porsche history it would be worth more in the retail market than the trade where customers can be more particular and exacting and are happy to pay more as a result.

The fact is that, on the face of it, the average customer trading in their car would see little or no difference in the value but could well have saved themselves thousands by using independent servicing outlets, using genuine parts and would therefore be far better off as a result.

This particular scenario would indicate that in today’s market, as quality stock becomes harder to source, dealers have to be far more flexible in their valuation criteria or run the risk of not buying the car at all and, as we all say, a profit of any kind is better than nothing at all! In other words, with sellers having access to more potential buyers through webuyanycar and the like, they are no longer completely in the dark about what their car might be worth and dealers will need to look for reasons why they should buy the car. They will really need to try not to de-value a trade-in because someone is trying to save money by exercising their choice to have the car looked at by a servicing agent without the brand name above the door.

According to our sources this is already happening as dealers representing many franchises are accepting that, as long as the car has been properly maintained using genuine parts, there is no reason to de-value the car, even more so because the next dealer along probably won’t.

It will be intriguing to see if this changes but I suspect that what will probably happen is that franchised dealers, if they are not already, will offer customers real incentives up front to continue using them for servicing and, in fact, we are already seeing many branded dealers offering 3 years free servicing up front to combat the threat of the independents, which for the customer can only be a good thing.


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    1. Lee Collins says:

      I must say this whole debate around servicing costs really frustrates me.

      As a main dealer (Land Rover) there is no facility out there franchise or otherwise that we cannot compete with on price on a like for like basis. So in the vast majority of cases there is absolutely no need for a customer to have their car serviced anywhere other than by their local or supplying main dealer.

      The problem arises because we are not competing on a like for like basis. A customer coming into our Dealership will demand (and rightly so) a higher level of service, more facilities, more TLC, more goodwill, more everything! When they depart these premises their expectations drop and they ultimately get what they pay for.

      That’s not to say there aren’t many great independent operators out there now because there are but we get cars in from them also that they sometimes don’t have the expertise or equipment to carry out the necessary repairs. There are also many more garages that don’t come under the guise of ‘Great Operators’ who cut service schedules at will and use spurious parts and oils but yet these are deemed to offer good value, well at least if nothing goes wrong.

      Either way and without exception, 99% of them won’t be operating out of premises costing many millions of pounds, nor will the be handing over loan cars costing in excess of £25k and the list goes on. I even notice now a trend for expensive Hotels to charge their guests for Wi-Fi access whilst we continue to allow our customers free and unlimited access, free coffee, free sandwiches, free wash and valet, free collection & delivery, free ,free, free……….but one has to wonder if these things are so irrelevant to the average consumer when choosing where to have their vehicle serviced, maybe the manufacturers have to wake up and accept that it is the £pound that drives the customers loyalty and not facilities and the quest for outstanding customer service. A stark thought in a UK were a Premium Dealership can cost anywhere between £5million and £20million to build these days before you purchase your loan car fleet, equipment and a top team of individuals to staff it.

      In short if a customer is prepared to look for parity in the service and facilities offered a Franchise Dealer can more than compete but in reality we are simply comparing apples with pears and you can’t stat at the Ritz and pay the rates of a Travelodge.

      Nothing wrong with the Travelodge you just get ultimately what you pay for and we would like to think it is more than just a stamp in the service book, as is it certainly the case here.

    2. thats the point though Lee i dont think people mind paying if the value of the experience matches the price,you hang in there low cost ultimately has to mean low value you only need look at ryanair and how they are perceived these days i heard that they ae even trying to charge passengers for a piss!!

    3. After everything you said here (of which most is very true) it is only when you get to the part about “comparing Apples with Pears and you can’t stay at the Ritz and pay Travelodge Prices” we see the fundamental problem, at both Hotels you still get a bed, a bathroom, and your own key etc: both facilitate you in your quest for a room, both achieve the same thing albeit with very different surroundings, much as an independent specialist working out of industrial premises on a retail park will never be able to compete with the glass cathedral marble floored franchised establishment, but in these very lean times, does it really matter who screws the filter on, drains the oil, tops up the washer fluid and stamps your service book? if the answer is no, and for many consumers it will be, you can never compete in the area that really matters most, the bill ! …………………………….

    4. Actually i can’t stand Ryanair either, however no matter how they are peceived for many thousands of people they forgive or put up with the service because of that old chestnut again…………………the price ! and let’s not forget their huge profits increased yet again last year, can the bigger, better airlines compete? it’s doubtful…………………

    5. Lee Collins says:

      This is exactly my point!!

      A main dealer can compete in everyway even from a Glass Cathedral if on the same basis – in otherwords if you take out all the frills and your happy to simple have the work required carried out then the lowest price can be acheived.

      I think the low cost Airlines are a good example. The difference is you can’t negotiate with a website and for some reason when it comes down to the purchase of a car or indeed its ongoing maintenance and repair, very very few customers or indeed garages deal with the facts.

      Whos kidding who – Its smoke and mirrors gone mad!!

    6. Why is our local Land Rover agent so much dearer for a 18,000 mile basic service than the local independent then? both offer the basic service, oil, filters, general check of lights etc with a stamp in the service book at the end, but the main agents wants £80.00 more ! the smoke and mirrors is all theirs?………….