Not only is the UK leading the way in car maintenance, but the tyre industry is held up as an example of how the aftermarket can be digitized.
Figures suggest UK cars are the world’s best kept
The latest data from the Society of Motor Manufacturers and Traders (SMMT) shows that British cars are among the best maintained in the world, with UK motorists spending a collective £21.1 billion a year on servicing and repair. The data, which was released on the eve of the inaugural Automechanika Birmingham, forms the basis of the first official industry analysis of the UK automotive aftermarket. It also comes at the same time that Sainsbury’s bank has released data suggesting the average annual cost of running a car is around £2,197.42, 22 per cent – or £622 – less than 2013. The main reason for this change is that the cost of fuel has fallen by 37.8 per cent during this period.
The SMMT report, “The Importance of the Aftermarket to the UK Economy”, was commissioned by SMMT and produced by independent research consultancy Frost & Sullivan. It reveals that UK consumers spend an average £695.39 on car maintenance every year – some 12 per cent higher than the average global spend per car of £621.62. The report also states that compared with other markets there are fewer cars in disrepair, generating excess pollution or needing new brakes on British roads.
With more than 42,500 vehicle service and repair locations of all types, the UK aftermarket is a huge, diverse and highly competitive industry. It has the largest share of work carried out by independently owned businesses in Europe at 64 per cent. The reports suggests there is also a strong franchised dealer presence in the market. At the same time there is a wide range of pricing. Parts and labour costs at independent outlets can be up to 65 per cent and 45 per cent lower respectively.
All this delivers an annual £12.2 billion direct to the UK economy and supports more than 345,000 British jobs. As the number and age of vehicles on UK roads increases, thanks to a healthy new car market, ever-improving quality and ever-more advanced servicing techniques, by 2022 the UK aftermarket is projected to be worth some £28 billion with an employee base of around 400,000.
Mike Hawes, SMMT Chief Executive, said: “The UK’s aftermarket is one of the most competitive in the world and plays a critical role in keeping Britain’s 30 million-plus cars roadworthy. Robust competition and a strong independent sector have helped reduce the cost of vehicle ownership in the UK and provided greater choice to consumers. For this growth to be sustained, however, the sector must stay abreast of evolving vehicle technologies and changing mobility patterns.”
The UK aftermarket is already the fourth largest in Europe by car parc size, with more than 30 million vehicles in use requiring regular servicing and maintenance work, and it is set to overtake France to take third place by 2022. By the same measure, it is also the eighth largest sector of its kind in the world; bigger than those in Brazil, Korea, Canada, and even India.
Something else the SMMT report reveals is that the way people buy and use cars is also changing rapidly. The shift from outright vehicle purchase to leasing and a longer-term trend from car ownership to ‘usership’ requires new business models – which we are increasingly seeing in both the tyre and wider fast fit sectors.
The UK is also said to be one of the most online-ready markets. Here, the aftermarket is said to have the highest penetration of online retail for automotive parts and services in Europe at 7 per cent, ahead of Germany and France at 5 per cent and 4 per cent respectively. Indeed, the SMMT’s report suggests: “Tyres are the best example of this as they are already being bought online in significant volumes (£2.54 billion in 2015 out of a total parts and services online retail market of £5.97 billion in Europe)”.
For its part Sainsbury’s Bank says that of the £2,197.42 UK’s spend on running their cars each year, fuel makes up nearly half of the cost. And the second biggest expense is insurance, accounting for around 28 per cent. What’s interesting to note is that the Sainsbury’s figure is roughly half that suggested by Frost & Sullivan/SMMT at £301.60 a year. The fact that this figure doesn’t include MOT charges accounts for some by clearly not all of the discrepancy (see table for further details).
Either way, there are clearly both plenty of opportunities but also competition in the highly developed UK Automotive Aftermarket.
Not all figures agree – servicing costs are going down, say Sainbury’s
|Item||Estimated costs 2016||Estimated costs 2013||Change (£) since 2013||Change (%) since 2013|
|Fuel||£1,031.412||£1,657.57||¯ £626.16||¯ 37.8%|
|Servicing||£301.60||£333.96||¯ £32.36||¯ 9.7%|
|MOT||£54.85||£54.85||No change||No change|
|Total||£2,197.42||£2,835.09||¯ £621.53||¯ 21.9%|
Source: Sainsbury’s Bank