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Lack of differentiation

Last month a German consultancy asked us for a detailed breakdown of the suppliers to the UK market for servicing and repairs. They wanted to know about independent garage workshops, fast-fits, tyre company owned sites, authorised repairers, autocentres, franchised workshops – you name it, they wanted exact data. Unfortunately we could not provide this information, because changes in business models are blurring the lines between providers.

Fast-fits now look more like independent garages. Then there is a cohort of independent garages emulating franchised workshops in terms of technical expertise, systems, marketing and training. More franchised workshops have fast-fit bays, on-demand MOT testing and tyres. Autocentre numbers haven’t grown to the extent predicted by some pundits, and neither have mobile mechanics.

These changing business models first came to our attention five years ago when analysing our monthly survey of motorists and their purchases of servicing and repairs. We started to find that ever more interviewees were selecting ‘other’ from our multiple-choice list of servicing and repair providers, and then entering descriptions like: Kwik-fit garage, Volkswagen specialist, or dealer workshop.

Provider shares of servicing and repairs by volume, 2005 to 2015

As the number of ‘other’ responses increased, we temporarily added some questions to sort out this anomaly. The outcome backed up empirical observations: motorists could only clearly differentiate between franchised workshop, independent and DIY because offers and formats were converging.

We have continued to list the results of our motorists’ survey broken down by: franchised dealer for make and other make; independent garage; fast-fit; DIY/friend; and other providers (mainly mobiles). We take interviewee’s multiple-choice selections as read, and manually categorise the verbatim ‘other’ contributions.

Looking at the data which highlights the trends in provider shares of servicing and repairs from 2005 to 2015, based on the method used in 2013, although there is some variance apparent that year, it is not significant. However, the one-off questions about differentiation in 2012 indicated that the fast-fit share was heading towards 11% in 2015, which is three points up on the 8% derived from interviews and manual categorisation.

So the share of what we traditionally understand as fast-fits could be understated, and the share for independent garage workshops (which includes autocentres) could be overstated by a similar amount. This looks like splitting hairs, and perhaps it is, but it highlights motorists’ changing perceptions as business models converge. The problem for providers is, of course, that a lack of differentiation leads to undesirable effects like falling real prices.

But one bit of good news for franchised workshops is clear from the graph; their share of servicing and repairs is increasing, which is thanks to booming new sales and a growing four-year parc.
Written by Trend Tracker director Chris Oakham, this piece first appeared in the subscription monthly Auto Retail Bulletin.(See for subscription details.)


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