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One-in-three garages has closed in ten years
publication date: May 22, 2010
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author/source: Robin Roberts
The Car Service and Repair Trend Tracker Update 2010
report from specialist UK research firm Trend Tracker Ltd charts a
declining trend in automotive retail servicing and repair demand from
1999 to 2009.
The report also measures how well franchised dealer networks,
independent garages and fast-fits have fared in attracting custom from
the owners of different car brands in the last two years. |  | At current prices, the value of the retail car service
and repair market
increased over the past decade by two per cent.
One positive driver in
this respect has been increases in labour charges by workshops, designed
to compensate both for inflation and a reduction in the work available
to workshops. From 1999 to 2009, franchised dealers' labour rate
increases exceeded inflation by 36pc, while independent garages raised
their charges by a more modest 15pc above the Retail Prices Index (RPI).
But these labour rate hikes have not been able to offset the decline in
demand for retail car servicing and repair in the first decade of the
new century. In real terms, the value of the retail car service and
repair market - including private motorists and businesses - dropped by
21pc from 1999 to £7.70 billion last year, while the number of services
and repairs carried out dropped 17pc from 55.9 million to 46.6 million.
Back in 1999, garages could count on motorists paying for an average
2.04 transactions a year. By last year, this had dropped to an estimated
1.50 transactions yearly.
This decline in demand has already taken its toll on the providers of
servicing and repairs. Today's UK motorists now have one-third fewer
garages to choose from - 20,195, down from over 30,000 in 1999.
Across all brands and ages of car, 27.8pc of all motorists interviewed
for this latest Trend Tracker report had used the franchised dealer for
their make of car for the last routine service undertaken, down from
28.4pc in 2008. Across all franchises, dealers slightly improved their
retention of servicing for own-brand cars up to four years old, from
53.3pc to 53.9pc.
In part due to the labour rate increases,
franchised dealers gained share in terms of retail service and repair
market value between 1999 and 2009, from 36pc to 45pc of the total,
including MOT testing.
However, franchised dealers appear not to be
increasing their penetration of the older car market fast enough to
neutralise the effect of extended service intervals, and are vulnerable
to further declines in demand.
The decline in market value and repair demand will continue, and by 2015
Trend Tracker forecasts that retail service and repair demand will be
19pc lower than in 1999 in volume, and 25pc lower in value in real
terms.
Franchised dealer workshops will be affected in the medium term by a
decline in their principal market - cars up to four years old.
Because
of weakening new car sales since the peak years of 2003/2004, and
especially as a result of the recession, the ‘parc' of cars aged 0-4
years will fall by 25pc by 2012 compared to its peak in 2004/2005.
Trend Tracker director and analyst Chris Oakham comments, "These
declining trends in service and repair demand will squeeze providers to
the point where Trend Tracker forecasts there will be 44pc fewer
service/repair outlets by 2015 than there were in 1999." | Headline findings from this latest report include:
Although the number of cars in use in the UK grew by 13pc in the last
decade, it shrank by 0.7pc, 2008/2009. This is the first time the number
of cars on UK roads has fallen since the Second World War and will have
an adverse effect on the retail car service and repair market.
Motorists are also driving less according to the National Travel Survey
with average annual mileage down by 9pc between 1998 and 2008 to 13,985
km per year (8,740 miles), while improvements in vehicle build quality
have eroded retail service and repair demand by 3-4pc per year, along
with extended service intervals and reduced work content per service.
Looking at the whole range of service, maintenance and repairs - and not
just routine servicing - independent garage workshops carried out
51.3pc of all retail servicing, MOTs and repairs in 2009, franchised
dealers accounted for 26.3pc, and fast-fits for 7.1pc.
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