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The Warranty Insights
The importance of the UK aftermarket to the UK economy
26 July 2016
The automotive aftermarket is a vital component of the UK economy, it provides motorists with choice over how they service and repair their vehicles. By helping to keep the country moving, the aftermarket delivers both direct and indirect financial benefits to the country.
The statistics are conclusive: with an estimated turnover of £21 billion, a gross value add of £12 billion and 345,000 UK jobs dependent on the sector, the aftermarket makes a huge economic and social contribution to the UK.
Two types of channels
Two key distribution channels exist in the aftermarket. Businesses in the franchised network are tied to one or more particular car manufacturer(s) so they specialise in providing parts and services for those brands.
However, independent aftermarket companies offer a range of parts and services to support many brands. Typically, cars will be serviced by the franchised network for the first few years, during the manufacturer's warranty period, but this is not a legal requirement and independent operators are free to compete for this work.
Both the franchised and independent aftermarkets face different challenges opportunities in the context of the global aftermarket. Franchised dealers can often be insulated by having a parent company when vehicle owners reduce their spending. Independents operate independently which can create opportunities but they must work harder to engage with customers who are linked to the franchised network when they buy a new car.
The differentiator is being strengthened by such things as technology, connectivity, service plans, longer manufacturer warranties and financing. It is important that both channels co-
Did you know that more than 30 million vehicles are services annually in the UK aftermarket, this includes personal cars and company cars. Owners enjoy several important benefits from the size and diversity of the UK aftermarket, including choice, convenience and competitive cost of ownership.
In the UK, unlike mainland Europe, private label, manufactured parts, direct-
Motorists service their vehicles through a network of more than 42,000 independent workshops, franchised repairers, autocentres, fast fit and speciality garages.
The average annual spend per car is approximately £695 in the UK, slightly less for personal/private cars, fleets tend to spend more and stick to manufacturers guidelines.
The multi vehicle brand characteristics
The multitude of vehicles types being serviced in the UK aftermarket creates a challenge for suppliers. It increased the number of different parts and stock keeping units they must source.
The strength and growth of the independent sector in the UK is driven by customers becoming increasingly service and convenience conscious. Independent businesses are smaller and more numerous than franchised dealers (82% independent against 18% franchised locations, approx), which means customers in the UK are more likely to find an independent garage conveniently located near to where they live or work.
Growth of private labels
Private label parts manufactured for companies that apply their own Brand to the product have helped to proliferate the variety of components available to the end user for the same purpose. Its this greater parts availability that has put a downward pressure on prices to the benefit of the consumer.
The growth in remanufactured parts presents one of the most significant opportunities for the aftermarket. Remanufactured parts are pre-
Another major benefit of utilising remanufactured parts is the reduction on the industry's environmental impact.
Under strict controls we at Warranty First are happy and encourage the use of remanufactured parts where the necessary guarantees are in place, it helps us in our aim to reduce our customers liability whilst, in some cases, means vehicles can be back on the road in a more timely fashion.
Growth forecast in the UK aftermarket
The UK aftermarket is likely to grow at an annual rate of 3% per year between now and 2022, with a higher growth rate in service and repair compared to the retail of parts. This growth will be driven by a powerful combination of an increasing number of cars on the road, from more than 30 million in 2016 to 32 million by 2022, with the increased age of cars from 7.8 to 8.1 years over the same period.