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FAST-FITS: Franchise or independent?

Date: 28 April 2009

With increasing numbers of fleets extending contracts, more maintenance is required to keep cars on the road, but which type of servicing operation should you turn to? Tom Webster investigates

It's no longer just a possibility that cars will be staying with owners for longer - contract extensions are now a reality with fleet sales down 30% year-on-year.

But as the average age of the company car park increases, the level of effort needed to keep the vehicles running is going to rise as well.

The task facing fleet managers will be to keep everything on the road, but at minimal cost. When cars are under warranty, it makes sense to send vehicles back to the dealer from which they came. But once they pass their third birthday, a variety of options open themselves up.

One natural response would be to continue to send the cars back to the same dealer they've always been to, but tradition dictates that manufacturer-affiliated dealers can be the more expensive option.

In fact a spokesman for the National Franchise Dealer Association goes so far as to say: "If you are going on cost then perhaps there is no argument in favour [of franchised dealers]."

The main independents certainly agree, and claim the recession means they have never been busier.

"Because people are tending to keep their car longer there are more requirements for maintenance," says Duncan Wilkes, CEO of Nationwide Autocentres.

This is bearing itself out in the company's performance figures - Wilkes says Nationwide's March business-to-business work is up 15.7% compared to 2008. And this has been consistently the case over the past few months.

Kwik-Fit Fleet also claims to be busy, and the company's head Mike Wise puts the uplift in business down to "increased consumption from extended contracts".

However, he admits that as a result this might have a negative impact on the amount of time vehicles spend off the road as demand leads to longer booking times: "I'm sure if you go to Slough there'd be more of a delay than in somewhere like Norfolk. But we've got a [business] model to deal with it and I think we manage it pretty well."

Despite this increase in business, neither Nationwide nor Kwik-Fit Fleet has plans to alter the service they provide to capitalise on their success, relying instead on its pricing.

Wise claims his company is "up to 34% cheaper than a franchise dealer", while Wilkes says his "offers the same quality of service as a franchise dealer for a lower cost".

If the service quality is the same, but the cost is greatly reduced, there is seemingly no reason for anyone to go back to the dealer once a car turns three years old.

However, Peter Eldridge, operations boss at Inchcape, which counts both leasing and dealer groups among its business, doesn't feel the case is so clear-cut...