Trend Tracker :: Blog Articles about "aftersales" http://www.trendtracker.co.uk/blog/ Thu, 19 Jan 2012 20:57:50 +0000 en Our crystal ball http://www.trendtracker.co.uk/blog/2012/01/our-crystal-ball Thu, 19 Jan 2012 20:57:50 +0000 office@trendtracker.co.uk (Trend Tracker) An important feature of our reports – we are launching three new reports this year - is the forecast section where we look into our crystal ball and project future market trends. In the past, this has proved relatively easy and it was just a matter of plugging key data into a computer model. But the current situation has us scratching our heads.

In the ‘real world’ economy of average earnings, inflation, unemployment and consumer confidence there is every indication that the UK economy will struggle in the short-term. Economic growth will be flat and there is a chance of the UK dipping back into recession in 2012.

The year on year increase in average earnings has been around 2% for the last three months, and apart from January and June 2011, it has barely exceeded 3%. On the other hand, inflation as measured by RPI has run at around 5% during 2011. Clearly this disparity makes people poorer.

Unemployment increased substantially during the recent recession and has stayed stubbornly high since the middle of 2009, reaching 8.3% in October 2011 - the highest since 1994.

Predictably consumer confidence is extremely low. The Nationwide Consumer Confidence Index stood at 36 points in October, which is the lowest since its inception in April 2004. As we have pointed out here before, new car sales correlate strongly with consumer confidence.

These and other economic trends, suggest that 2012/2013 will be a re-run of 2011. After that, the return of economic growth depends on the success of government policies and what happens in the global economy and Euroland in particular.

It seems to us that the coalition government is on the right track with its aim of reducing government spending as a proportion of the economy. But, so far the coalition has failed to get a grip and will probably have ended up taxing, borrowing and spending more in 2011 than recent years.

The big unknown is what will happen to the euro. EU politicians seem utterly determined to keep the euro alive even if it means reducing southern Europe to permanent penury rather than fixing the basic flaws in the design of the currency.

This could end in the disorderly failure of the euro and even the collapse of the European Union. It is more likely, however, that ailing countries like Greece will be forced out of the euro. Whatever happens, the UK will undoubtedly suffer.

For UK auto retailing, uncertain economic conditions make planning difficult. Past experience suggests that used cars and aftersales represent the most reliable profit centres in times of uncertainty, and there is every reason to hope these departments will not disappoint in 2012.

Written by Trend Tracker director Chris Oakham, this piece first appeared his column in the subscription monthly Auto Retail Bulletin.(See auto-retail.co.uk for subscription details.)



]]> http://www.trendtracker.co.uk/blog/2012/01/our-crystal-ball#comments http://www.trendtracker.co.uk/blog/2012/01/our-crystal-ball Franchised workshop retention - going the wrong way http://www.trendtracker.co.uk/blog/2011/12/franchised-workshop-retention---going-the-wrong-way Mon, 05 Dec 2011 22:05:03 +0000 office@trendtracker.co.uk (Trend Tracker) With Trend Tracker’s consumer data about car servicing now available up to the end of September 2011, the full impact of the ageing car parc on franchised workshop retention on servicing, maintenance and repair (SMR) is emerging.

Every month since mid 1994, we have interviewed 1,000 motorists about where they last had their car serviced. Since 2005 we have added a host of other questions about common SMR operations. It is this extensive consumer survey that forms the basis of our Castrol Professional Car Service and Repair report.

Comparing retention of routine servicing and retention of the full range of SMR exposes only minor variations. Hence retention of routine servicing (“servicing retention”) is an excellent guide to the state of play in the SMR market.

Trend in retention of routine servicing by provider segments

Last month we took delivery of the interim results (January to September 2011) for our servicing retention consumer survey question.

These data have been added to the trends since 1995 for franchised dealers (“dealer for make”), independent garages and fast-fits (“other garage”), and DIY. Also shown is the percentage of motorists interviewed who hadn’t had their car serviced since buying it, noting that the “not yet serviced” element is included in the calculations.

As the chart makes abundantly clear, the independent sector has increased its share dramatically since 2006 (to 45.7%) whereas franchised dealers are going the wrong way and losing share (25.4%). DIY has apparently levelled off although a more detailed analysis of all SMR operations actually records a slight increase.

The reasons for these changes in fortune are complex but one of the biggest drivers is car parc age – and the chart shows this recent ageing trend. By segment, franchised workshops tend to appeal to owners of cars up to four years old, independents four to eight years old, and DIY over eight years.

Because new car sales have been falling since 2005, the number of cars up to four years old has fallen by over 20%. Meanwhile the high new car sales pre-2005 have populated the four to eight year old car parc and handed a lot of SMR business to independents. Clearly the recent recession has not helped.

Of course not every retailer is equally affected. Some makes of cars, like Skoda, have increasing four-year car parcs. And we have first hand experience of volume dealer groups bucking the trend with imaginative aftersales strategies including: service plans, customer communication centres, upselling and retention of used car buyers.

Written by Trend Tracker director Chris Oakham, this piece first appeared his column in the subscription monthly Auto Retail Bulletin in November 2011.(See auto-retail.co.uk for subscription details.)



]]> http://www.trendtracker.co.uk/blog/2011/12/franchised-workshop-retention---going-the-wrong-way#comments http://www.trendtracker.co.uk/blog/2011/12/franchised-workshop-retention---going-the-wrong-way The horse’s mouth http://www.trendtracker.co.uk/blog/2011/09/the-horses-mouth Mon, 26 Sep 2011 13:33:53 +0000 office@trendtracker.co.uk (Trend Tracker) Research is all about bringing together facts to help answer crucial questions. In the case of the auto retail industry, research typically means ‘market research’. It’s about the market background, customers, the supply structure, the market size and trends, and so on.

Studies like this are often called ‘market sizing reports’ and they are principally used to inform business decisions frequently involving huge sums of money.

Assembling the data and facts for a market research report can be done in a number of ways; indeed several methods and sources might be utilised in a single report. Desk research is a popular way of gathering information, and the UK is extremely fortunate to have one of the world’s best sources – the Office of National Statistics. Its website is a mine of information and it is, for the most part, absolutely free of charge.

Data about the sales of new and used cars at the highest level are available free of charge from the SMMT and published in magazines such as Auto Retail Bulletin. Of course, if you want to know how many new and used cars were sold in your postcode area, you will have to pay for the information.

But desk research is limited. If someone or some organisation hasn’t already investigated what you want to know, then you have no choice but to consult the ‘horse’s mouth’. You have to carry out primary research – a survey.

For instance, a dealership can (and should) carry out a regular survey of used car selling prices in their area and I showed delegates at this year’s Auto Retail Network used car workshop how to do this. Quite simply, you list selling prices from your local newspapers. Similarly you can assess the ages of used cars on sale.

More complex requirements usually involve talking to people, lots of people. Our Castrol Trend Tracker 2011 report on the market for servicing and repairs, for example, is based on interviewing 15,725 motorists over a period of 16 months. Because this type of study is very expensive, the whole exercise was planned and organised right down to the last detail.

The same rigorous approach is required for business (B2B) surveys. There is a range of options for B2B – telephone interviews, postal, fax, and internet. While we have used all four, sometimes on the same project, telephone interviews are the most reliable and many readers will have taken part.

So that’s how you end up with lots of numbers. Interpreting the results is the final important step: what do the numbers mean and what should you do because of them? Analysis can be difficult but a good survey helps the process.

Written by Trend Tracker director Chris Oakham, this piece first appeared his column in the subscription monthly Auto Retail Bulletin in September 2011.(See auto-retail.co.uk for subscription details.)



]]> http://www.trendtracker.co.uk/blog/2011/09/the-horses-mouth#comments http://www.trendtracker.co.uk/blog/2011/09/the-horses-mouth Where has all the work gone? http://www.trendtracker.co.uk/blog/2010/11/where-has-all-the-work-gone Fri, 05 Nov 2010 11:42:58 +0000 office@trendtracker.co.uk (Trend Tracker) Auto Retail Network ran two aftersales workshops at the beginning of October and it was our job to present the latest information on the state of the market, which in these tough times was not the most upbeat of assessments. Once we had elucidated the problems, the delegates were tasked with finding solutions as they rotated around four workshops facilitated by experts in relevant areas.

With delegates drawn principally from franchised dealer groups, it was unsurprising to find they all had one common concern: where has all the work gone? The complete explanation is complex, but the two most important factors are the lack of new car sales and competition from an increasingly professional independent sector.

As a ‘rule of thumb’, motorists with cars up to four years old are most likely to utilise franchised workshops for servicing, maintenance and repairs (SMR). Independent garages tend to see cars between four and eight years old; and DIY becomes more prevalent on cars over eight years old. Therefore the number of cars in use by age segment is a crucial influence on the SMR potential for each of the market providers.

The size of the car parc age segments is a function of new car sales. New car sales were at their highest in 2003/04 and have declined ever since, notably falling by over ten per cent between 2007 and 2008 as the recession hit. Falling new car sales conspire to reduce the size of the car parc up to four years old and presently the four-year parc is nearly 20% off the peak in 2004/2005, which represents a similar fall in SMR market potential for franchised dealers.

On the other hand, there has been an increase in the number of cars between four and eight years old. Thus the independent sector is resurgent and growing more competitive by the day from an invigorated revenue base. Kwik-Fit has diversified into MoT testing, servicing, diagnostics, air con, and other areas previously the dominion of franchised dealers. Halfords bought Nationwide Autocentres recently and declared its intention to open 200 new sites. There are now over 50 well-funded independent fast-fit and autocentre groups running nearly 2,000 outlets between them.

Trend Tracker has run a consumer survey since 1994 asking the simple question: “Where did you last have your car serviced?” The latest, 2010 results will obviously not be available until the end of this year. However we provided delegates with an intermediate snapshot for 2010, which is reproduced below. This shows how independents are increasing their share, as franchised dealers experience a downturn. The long-term decline in DIY has temporarily stalled, as might be expected during a recession.

So what solutions did the aftersales workshops come up with? It would be unfair to give away the details, but suffice to say that delegates enthusiastically shared ideas and real-life experiences. Their solutions included highly innovative ideas focused on diversifying SMR products, upselling and service plans.

Written by Trend Tracker director Chris Oakham, this piece first appeared his column in the subscription monthly Auto Retail Bulletin in October 2010. (See auto-retail.co.uk for subscription details.)

]]> http://www.trendtracker.co.uk/blog/2010/11/where-has-all-the-work-gone#comments http://www.trendtracker.co.uk/blog/2010/11/where-has-all-the-work-gone The remarkable resilience of retailers http://www.trendtracker.co.uk/blog/2010/09/the-remarkable-resilience-of-retailers Sat, 25 Sep 2010 17:48:15 +0000 office@trendtracker.co.uk (Trend Tracker) At least some of Trend Tracker’s analysts, myself included, have shown a glass-half-empty attitude towards the standard-model new car franchise system, as some of our past white papers have attested. But we have to admit that earlier reports of its impending demise were more than a little premature. The system isn’t bust yet, indeed it survived the 2008 recession rather better than many might have expected.

True, the Motor Trader Top 200 UK franchised dealer groups shed some 7,000 jobs, or six per cent of their workforce last year, and complacency would be indecent. But if things weren’t worse, that was partly because the high gross margins achieved in dealer workshops (to the continued dismay of consumer lobbies) continued to underpin the expensive business of maintaining showrooms for new cars that fewer and fewer customers could consider buying.

One of Trend Tracker’s regular client engagements is the aforementioned Motor Trader Top 200 survey, whose latest, 2010 iteration, sponsored by Mobil 1, can be accessed at http://www.motortrader.com. The report shows that dealer profits in 2009 proved to be less sensitive to fluctuations in new car sales than to losses sustained from declining used car values: “We’ve always made so little profit on new cars that when sales dropped it hardly made any difference,” said the managing director of one Top 200 group responding to the Motor Trader survey.

Aftersales demand, which contributes around half of most dealers’ gross profits, declined slower than the new car market, so did not significantly impact on overall turnover, though many dealers saw overhead absorption weaken during the period.

We have in the past referred to “the falling props” (service/repair, parts and vehicle finance) which would ultimately, some of us felt, let the roof fall in on the franchised dealership business model. There has been decay in these props – but the edifice is still standing. Some networks have decided to become more competitive with their labour rates, and some tied finance houses have begun to fight back against direct lenders. Life for the average franchise will be tough at best in 2011, with a VAT hike and the downward curve in new car sales post-scrappage that will go on shrinking the dealer service parc. But considering the imminent demise of block exemption following hard on the heels of a major recession, the dealer body is still showing remarkably little appetite for change, and few volunteers for consolidators to buy out.

photo of Toby Procter
Trend Tracker Limited
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]]> http://www.trendtracker.co.uk/blog/2010/09/the-remarkable-resilience-of-retailers#comments http://www.trendtracker.co.uk/blog/2010/09/the-remarkable-resilience-of-retailers Charting The Decline in SMR Work http://www.trendtracker.co.uk/blog/2010/06/charting-the-decline-in-smr-work Fri, 11 Jun 2010 16:38:02 +0000 office@trendtracker.co.uk (Trend Tracker) Download and read our latest aftersales article, published in the June 2010 issue of Auto Retail Networks' Bulletin.

Auto Retail Network is the leading networking and best practice organisation for senior executives in the auto retail industry. Get free trial membership by registering at The Bulletin.

]]> http://www.trendtracker.co.uk/blog/2010/06/charting-the-decline-in-smr-work#comments http://www.trendtracker.co.uk/blog/2010/06/charting-the-decline-in-smr-work