Autosafe News

Franchise dealers under threat from fleet switch to independents

The traditional franchised dealer network, which car manufacturers depend on as their key channel to market, is under strain as a result of a growing fall-off in aftersales business, according to the '2007 Business Car Perceptions Report' published by business and management consultants BearingPoint.

It reveals that fleet servicing business, which provides an important source of revenues for car manufacturers and franchised dealers alike, is being lost to non-franchised dealers.

The research, which was conducted by Professor Peter Cooke, the recently appointed Professor of Automotive Management at the University of Buckingham, shows that almost 39% of companies already use non-franchised dealers for routine servicing.

This number is set to grow, as nearly a fifth of those respondents still using franchised dealers expect to switch to non-franchised dealers in the future, says the report.

This switch has a dramatic impact as spare parts sales are an important source of profitability for the manufacturers, and a healthy aftersales business is vital for the viability of their franchisees. The fact then that it is the larger fleet operators that are most likely to make this switch in the future could have serious implications for manufacturers and their dealers as potentially large volumes of vehicles move outside of the franchised networks for servicing.

The switch away from franchise dealers is being made for a variety of reasons but includes:

Customer care levels lower than expected
A lack of best practice advice
The convenience and lower cost of independents

James Rodger, global automotive leader at BearingPoint, said:
"The shift from franchised to non-franchised dealers should give considerable cause for concern for vehicle manufacturers and dealers alike. Our research should serve as a serious wake up call to them that their aftersales business is under threat and that now is the time to address this situation."