How forward-thinking franchisees can maximise opportunities in the aftermarket

Few industries are experiencing such rapid change as the automotive sector. New models of vehicle ownership, the growing emphasis on electric vehicles and widespread changes in purchasing habits are changing the face of automotive retail as we know it. As a result, the traditional retail franchise model many countries have long been used to, is struggling to adapt and for many manufacturers, is quickly being left behind.

Throughout 2019, a number of OEMs consolidated their franchise networks, with Honda and Vauxhall significantly reducing franchised retail and repair networks in a bid to improve network profitability. At the same time, we’ve seen a host of new manufacturers enter the UK with alternative go-to-market strategies. Geely’s Swedish-based Lynk&Co brand is favouring an online sales model supplemented by just a few boutique-style offline stores, while Polestar and newcomer Byton also have no plans to establish a franchised network of any significant scale, focusing more on digital sales.

As traditional manufacturers look to compete with a new breed of OEM, substantial franchise network reductions and restructuring is inevitable. A recent report* from automotive distribution and retailing experts IDCP revealed that the number of franchised car retailers across Europe had declined by 16% in the past decade, with countries such as Germany having over-representation of OEM brands compared to other nations. The report showed that franchised servicing networks are also reducing, with a 17% decline in the past ten years. While OEMs look for new opportunities to establish fresh customer relationships away from physical networks, the future for any existing automotive retail franchisee is looking increasingly uncertain.

Making the most of your assets

While re-franchising can allow franchisees to experiment with new models, the automotive retail market is evolving at such a rapid pace that it will always be difficult to keep up with emerging manufacturer retail strategies. Yet, rather than lose real estate, experience and a local customer base, there is another option for franchisees with opportunities increasingly being presented by a burgeoning aftermarket.

According to the SMMT, the UK aftermarket services more than 30 million vehicles per year. Most fall outside warranty after three years and all after seven years, representing good potential business for an all makes servicing specialist.

Coupled with this, the fact that new vehicle sales have fallen more than 6% throughout 2019 demonstrates people are holding on to their vehicles for longer, uncertain of when the best time is to invest in replacements. Forward-thinking franchisees can maximise opportunities in the aftermarket by joining a new national franchise dedicated to convenient and effective servicing and repair.

Overcoming obstacles

Some of the biggest obstacles to franchising are finding the right location and facilities and the time it takes to grow a customer base from scratch. However, with existing facilities and localised customer bases, experienced franchisees can hit the ground running with a new service and repair proposition, retaining existing customer loyalty and still being part of a recognised national brand.

Any gaps in servicing knowledge can quickly be plugged, with franchisors working to locate the highest skilled team members, looking after marketing and providing ongoing support to ensure franchisees can get on with what they’ve always got on with; making money and growing the business.

Whatever shape the automotive retail market starts to adopt over the next few months and years, one thing that will not change for decades is the number of vehicles in operation requiring essential maintenance and repair services. For disillusioned or struggling automotive retailer franchisees, the aftermarket presents a lucrative new franchising opportunity.

*European Car Distribution Handbook 2019

For information on the Quick Lane franchise opportunity, visit their FranchiseInfo profile to request more information here.