Manufactures were caught napping when Tom Farmer saw an opening in the motor retail business and set up his Kwik-Fit chain. They were still not fully awake when others, like National Tyres and Autocare, added their weight to the, fast-fit force, inflicting considerable damage on the servicing profits of franchised networks. Initially creaming off ‘distress’ items like batteries, tyres and exhausts, the independent operators expanded their repertoire to embrace additional work including oil changes, shock absorber replacement, brake servicing and MOT testing.
The response by some manufacturers was to set up their own fast-fits as bolt-ons to dealerships’ traditional servicing functions. In 1989, Vauxhall started MasterFit and a few years later Ford launched Rapid-Fit. Others to follow suit included Peugeot, Renault and Volkswagen.
Now fully awake to the army at their door, the carmakers are staging a counter-attack with a barrage of heavy investment. Existing networks are being expanded, while others are being set up, typically by means of pilot schemes as a first step towards a more comprehensive roll-out.
There are sound strategic reasons for these developments. In part they reflect the changing nature of vehicle repair whereby longer servicing intervals and greater component quality and longevity are lessening the chances of ‘distress’ parts replacement. With margins on new car sales under relentless pressure, servicing and repair through the franchised workshops are critical to profits, and clearly a ‘captive’ fast-fit network offers a valuable distribution channel.
Less than a year after the announcement that MasterFit was to become the authorised national repair brand of the Vauxhall marque, the size of the network has increased by 60%. The number of MasterFit centres throughout the UK stood at 387 at the end of January, close to the targeted 400 which is expected to be reached during the first half of 2005.
According to Neil Hunt, MasterFit brand manager, the response to the new challenges stemming from block exemption changes has been “to build an instantly recognisable service brand that can compete on equal terms with the other major fast-fit networks across the UK”.
The Renault Minute fast-fit programme for all-makes is also being extended. There are now 67 sites, with Renault reporting survey results showing increasing customer satisfaction ratings. Further development of the network is expected during the next two to three years to take the number of outlets to over 100. In addition to the usual range of fast-fit activities, Renault Minute carries out air conditioning repairs.
A key aim of manufacturer efforts is to recapture servicing business on older vehicles. Vauxhall intends to provide substantial resources for a MasterFit marketing support programme during 2005 in an attempt to entice lapsed owners of cars in the four to seven year old segment back into the franchised network. According to the company, an estimated £160m annually is spent outside the network on servicing cars of this age. Similarly, Renault is seeking to recapture the servicing business of cars over three years old which fall out of the warranty net.
But independent fast-fit operators remain formidable competitors. Replicating the dominant trends in food retailing, large groups - like Michelin-owned ATS Euromaster and the aforementioned Kwik-Fit and National Tyres and Autocare - have big advantages over smaller groups, not least through the economies of scale afforded by centrally supported functions. ATS Euromaster’s headquarters in Birmingham houses nine central functions including customer services, group finance, human resources, information technology, legal and marketing. The call centre has over 200 agents and handles in excess of 50,000 calls a month.
Size also matters when it comes to negotiating favourable prices from component suppliers for bulk purchases, together with the ability to offer a nationwide service to fleet operators. National Tyres and Autocare reports that its fleet division saw a 40% sales rise last year.
The largest groups are also developing a wider European presence. ATS Euromaster operates in ten European countries from 1,850 centres. Meanwhile, Kwik-Fit - already the largest fast-fit operator in France through ownership of Speedy with 475 outlets - has made another acquisition, Axto, whose 43 outlets will join the Speedy network. Kwik-Fit is also expanding its Pit-Stop brand in Germany with more than 30 openings last year, bringing the total to over 320 sites.
As the two sides – vehicle manufacturers and the independents – chase fast-fit supremacy, both need to address issues affecting the sector as a whole. MOT business is a case in point. Independents have seen dependable revenue sources like exhaust replacement fall by up to 7% in volume, again due to better original equipment quality. The UK car parc supports around 20m MOT tests a year and a 30% rejection rate, with brakes and tyres –two other core fast-fit earners – looming large as reasons for failure.
There is also an imperative to ensure that premises and staff present a customer friendly image. Speaking at an aftermarket conference last year, Tim Parker, then CEO of Kwik-Fit, admitted that the average fast-fit site offered a depressing experience for customers. At the beginning of the year, the company announced a two-year modernisation and refurbishment programme costing around £75,000 per site.
As competition in the automotive aftermarket intensifies, and the split between the franchised and independent sectors becomes more muddied, customers will have the luxury of becoming more choosy. Based on a review of current strategies and public pronouncements, there is certainly no shortage of candidates who aspire to be the Tesco of the aftermarket, in terms of satisfying a growing band of consumers and thereby assuming a seemingly unassailable position of market leadership.
Ambition is one thing, but winners and losers will be determined by the skill with which customer demands are understood and met. It is no secret that vehicle manufacturers have faced an uphill task in convincing much of their networks to embrace the fast-fit concept and make the appropriate investment in premises, equipment and staff training.
No matter how grand the strategy from staff HQ, this is a battle which hinges on the commitment and attitude of the troops.