This pilot survey revealed a 20 percentage-point gap between the best and worst performers, and most importantly, indicated where each manufacturer is most in need of improving specific aspects of their sales training provision.

We hope to carry out a full-scale version of this initial survey during 2009, and will be inviting manufacturers' training departments to join a syndicate programme to fund the work. And then, we hope to be able to conduct a similar survey of aftersales staff training programmes. For those who pay more than lip service to the principle that competent people are the most valuable resource of a retail network, we believe this research should provide valuable insights that haven't so far been available to benchmark performance in the field.

You can download the Auto Retail Bulletin summary here.

Toby Procter
December 2008

Meanwhile, Wolk & Partner has developed a comprehensive database of 47,594 automotive service & repair businesses which are either franchised dealer workshops or belong to various independent garage networks. All are listed by name and address with mail, phone/fax and e-mail contact details, are mapped to show network densities throughout the German regions, and can be sorted by location and by manufacturer/franchise.
The data can be deployed for mailings, acquisition assessments and network planning, and Wolk is able to support clients' B2B marketing efforts with geo-marketing, applying mapping to the database at federal and regional levels. Wolk can also supply bespoke analyses of the database, analyzing workshops, for example, by number of productive staff. Ask Toby Procter for more information if you could use this data - call 0870 421 4350.

Wolk & Partner, a company which has kept tabs on the structure and size of the German light vehicle aftermarket since 1996, says there are currently some 1,050 trade aftermarket parts outlets serving over 1,950 workshops in the independent aftermarket. The trade is dominated by six major wholesalers (Stahlgruber, WM, Trost, Europart, PV, KSM) operating on a national scale, and 17 supra-regional wholesalers. Around 1,000 parts & accessories retailers serve a still-growing German B2C market.

A recent report from Wolk & Partner covers the German independent aftermarket for parts in two volumes, the first including data on the market size and structure, the second providing detailed information on the various players, with over 60 corporate profiles of aftermarket suppliers and their networks.

A second two-volume report from Wolk & Partner covers Germany's independent workshop networks. The first volume includes the results of a survey of workshops' opinions of their 'soft franchises', and gives contact details for 91 major 'soft franchise' businesses. The second volume compares 44 independent garage networks, each being analysed in 4-6 pages of comparative data for benchmarking purposes.

These reports, in German, are priced from €950 depending on a choice of optional formats and packages, but special UK prices will apply. Contact Toby Procter of Trend Tracker on 0870 421 4350 for more information.

Less disposable income will impact on motorists whether running a privately-owned or company-owned car. The most obvious effect is a reduction in travel, which clearly affects demand for servicing and repairs, and during the recession in the early 90s vehicle-kilometres levelled off after a period of substantial growth.

Another likely outcome is that motorists will keep their cars longer. Based on total new and used car sales as a percentage of the car parc - so called 'parc turn' - the current average length of ownership is around 3.1 years and it has been at this level for most of the decade. Surprisingly the average before the recession of the early 90s was shorter. Or perhaps it is not surprising given that cars are so much better built these days. As the recession took hold in the early 90s, the frequency of change increased by 15% and it was new cars that took the hit with sales falling 13% between 1989/1990, and 21% between 1990/1991. On the other hand, used car sales remained relatively stable throughout the period of the recession.

Overall the evidence from the early 90s suggests that although motorists kept their cars longer there could have been a switch to buying used rather than new when they did change. As far as we know there was no research at the time to prove that this was the case, but it seems entirely logical that motorists in reduced circumstances will opt for cheaper alternatives.

Of course franchised dealers already focus a huge amount of effort on used car sales, and this effort needs to be re-doubled if the new car market goes pear-shaped. Or, as the Americans might say: “Bet the farm on used cars!” But which used car market segment will prosper? Households with lower incomes are most likely to be affected by any downturn - the primary market for used cars costing under £6,000. The new to used switchers, and these could even include companies, will be looking for newer and more expensive used cars including 'nearly new'.

With approximately one-third of all independent used car dealers specialising in older used car sales and nearly 60% selling used cars at a retail price of £5,000 or less, any downturn could favour well-prepared franchised dealers over independents. The 'get out of jail card' for independents will be to specialise - prestige, nearly-new cars, performance, etc. For both dealers and independents betting on the used car market, the key issue will be sourcing the right used stock, which is good news for the auctions.

Trend Tracker director Chris Oakham contributed this topical advice for dealers in the credit crunch-afflicted car sales market in his column in the subscription monthly Auto Retail Bulletin (See www.auto-retail.com for subscription details.)

There has been no significant re-balancing of power between supplier and retailer. The consumer has benefited from more price competition, but thanks to oversupply, not regulation reform.

So why keep an automotive BER beyond 2010? Because franchised dealers prefer the devil they know is not a wholly convincing argument in favour. They enter franchise agreements voluntarily. The official argument for the original BER - that cars are dangerous, so safety needs the expertise of tied service and repair channels - wasn't even mentioned last time around, and has anyway been superseded by efforts to dilute these tied channels' monopolies.

This should be crux of the matter for the Eurocrats and ministers now considering the BER review report. CECRA and the other members of the European Right to Repair campaign have right on their side, because their members can offer consumer value which dealers' with their higher cost base can't usually match. Provided, that is, that independent repairers can access the requisite vehicle data and codes at a fair price as is assured (though not fully) by the current BER. Under current EU emissions regulations the 'right to repair' is only assured in respect of Euro 5 vehicles. That right must be extended to pre-Euro 5 vehicles if the BER is abolished, or the baby will be thrown out with the bathwater.

With independent repairers' rights to market access come responsibilities, which under the BER have been left to national regulations. Which brings me to the muted response to the new volntary Motor Industry Code of Practice (http://service.motorindustrycodes.co.uk/). To quote its sponsors, “It's a straightforward, cost effective scheme with no rigorous pre-entry audits or overblown costs … For garages who engage and comply with the code, nothing much changes.”

The same could be said for their customers. The code's low cost (£75 to join, £30 for the code itself and briefing material, and £175 for biennial inspection charges) may encourage more independent garages to apply than have done for the BSI's more costly PAS 80 Kitemark. But why the consumer bodies were ready to welcome so anodyne a proposition, given the weight of their previous verdicts on the misdemeanours of the garage trade, is not immediately clear. Maybe they couldn't face any more meetings on the subject.

Toby Procter
13 June

The severity of the fall in new car sales was the most surprising aspect of the recession of the early 90's with new car sales plummeting almost overnight. The result was a fall of over 400,000 in the annual new car market between 1990 and 1991, and it was 1996 before the market recovered. Partly because of this, almost one-fifth of franchised dealership sites disappeared in the six years from 1990 to 1996 - an attrition rate nearly twice as high as subsequent years.

We say “partly” because the damaging fall in new car sales (and used car sales) was, for franchised dealers, followed by a 'black hole' in aftersales. This was caused by falling new car sales knocking on to a decline in the four-year car parc - the traditional customer base for dealer aftersales. And with motorists seeking cheaper ways of getting their cars serviced and repaired during the recession, franchised dealers lost over ten per cent of the service and repair market to the independent sector. The body repair market was hit too as many motorists moved from fully comprehensive to third party insurance.

Today the retail motor industry could be in better shape than in the early 90's. The number of retail sites - franchised dealers, independent garages, bodyshops, etc - has fallen considerably since the early 90's, and this has benefited those which remain. Thinking about franchised dealers, the average dealer now sells one-third more new and used cars compared to 1996 with only 15% more staff. And while dealers have exited body repairs in great numbers, service and parts operations are reaching owners of older cars thanks mainly to three-year warranties.

The only question mark for dealers is the heavy reliance of new car sales on fleet and business users, which could be much higher than the SMMT data indicate; dealerships which endured in the recession of the early 90's were those with a spread of revenue streams.

Another difference between the early 90's and now is the domination of dealer groups with 70% of franchised dealers now in groups compared to just over 50% in 1996. Of course this is no guarantee of financial robustness in the face of recession, as recent group failures have demonstrated, but it could mean better financial controls and the ability to cut back quickly if and when problems arise.

(This first appeared in Chris Oakham's April 2008 column in Auto Retail Bulletin. For a FREE trial copy of Auto Retail Bulletin go to www.auto-retail.com or e-mail: francis@auto-retail.com.)

One example of unintended consequences was 'The Supply of New Cars Order 2000', which planned to create a level playing field for private and fleet buyers of new cars. However used car residual values over-reacted and the 'cost to change' actually increased so making all new car buyers worse off. Another example is how, between 1921 and 1948, Vehicle Excise Duty (VED) was based on RAC Horsepower. This encouraged inefficient engines with long strokes and held back technical progress.

A similar litany of unintended consequences could result from Chancellor Darling's recent budget with its selective increases in VED and increases in 'showroom tax' to be introduced in 2010/2011. In particular the Chancellor has set a VED trap for cars emitting more than 226g of CO2 per km, registered after 1st March 2001 but before 23rd March 2006. The Chancellor will also increase duty on fuel in October on top of the 20% increase in fuel prices over the past twelve months.

Another measure in the budget, which has received far less publicity, will be a write-down allowance of only 10% from next year for company cars emitting more than 160g/km of CO2 and 20% for emissions below 160g/km. The rules disallowing a proportion of car lease rental payments will also be reformed in line with the new capital allowances rules.

The budget changes over the next two years will probably affect the new and used car markets much sooner because business cars make up nearly 80% of new car purchases. Although DVLA figures say 50%, an investigation by the International Car Distribution Programme (ICDP) suggested that non-private new car sales should include company fleets of all sizes, Motability, public sector purchases, rental companies, franchised dealers, and vehicle manufacturers and their employee purchase schemes. On this basis ICDP calculated that the new car market in 2004 was split 22%/78% between private and non-private.

Clearly the Chancellor's measures will affect business users more than most and thus the new car market. And the effects might come to pass much sooner than the proposed dates of introduction because leasing and contract hire payments are sensitive to residual values, which are calculated far in advance when agreements commence. It would also be surprising if the trade market for used cars did not react quickly to the budget measures and the present economic uncertainties by marking down prices - especially for the most affected cars.

The unintended consequences could be a dampening down of the new and used car markets, and a complete change in the future shape of the car parc - the latter Alastair Darling's RAC Horsepower legacy.

(This first appeared in Chris Oakham's April 2008 column in Auto Retail Bulletin. For a FREE trial copy of Auto Retail Bulletin go to www.auto-retail.com or e-mail: francis@auto-retail.com.)

For the automotive industry, the world has changed in many ways since Trend Tracker last published a conventional newsletter. We've covered the startling rise of private equity in one of our white papers, but this first Trend Tracker blog provides a first opportunity to comment on what has surely become the biggest issue for anyone involved in making, selling or fixing cars: the cost of complying with greenhouse gas emissions limits while facing up to the likelihood that oil will never again be as cheap or plentiful as it has been.

It's not a done deal, but it seems more than likely that in four years' time, 130 g/km of tailpipe CO2 will be as much as any manufacturer's fleet will be permitted to emit without being fined in Europe. And on the basis that both the manufacturers' lobby and the anti-car green lobby have greeted the EC's proposals with a degree of simulated outrage, this policy is probably as good a political compromise as it could be. True, the fines envisaged by Brussels are apparently much more expensive per tonne of carbon than the 'market' value enshrined in the EU's Emissions Trading Scheme. But, at least in the early years of the regime, the fines for non-compliance with the EU limit - assuming they are passed on to buyers of high-emissions cars - are unlikely to be big enough to change the complexion of the car market overnight. Nor will the £5 gallon, or the UK's new showroom tax plans for high-emissions vehicles.

A deficit of 10 mpg alone costs the driver of a big petrol-fuelled car around £1,000 a year compared to the driver of a comparable diesel car - so another £500 in purchase tax on a large BMW or Mercedes using a present-generation powertrain, or another £2,000 to pay for a comparable hybrid, won't be enough to drive many large cars off the roads.

Since 2007 was the first year that the majority of the globe's population living in cities, it may be that urban congestion and scarce parking spaces will have a greater effect on consumers than the cost of their cars, or the mild incentives available to buy more abstemious models.

With its legislation on car CO2 the European Commission seems to have been as clever in balancing conflicting interests as it was in drafting its 2002 block exemption regulation. The result is horribly complex, and will still leave governments open to the temptation to levy taxes on bogus 'green' premises. One of the most egregious is the UK's tenacious grip on a duty premium on diesel fuel, which serves as a disincentive to make the most rational, environmentally-sensitive choice of powertrain currently available to most car buyers. Even more absurd than the premiums some manufacturers still exact for the diesel versions of their cars.

Toby Procter