Are you being serviced?

Date: Wednesday, March 16, 2011

Servicing is a critical area where businesses operating van fleets can drive down costs, which is why manufacturers offer incentives to tie customers into their dealers’ workshops while powerful relative newcomers to the market, such as Kwik-Fit, seek to entice them away.
Volkswagen Commercial Vehicles, for example, got in early with a recession-beating deal for VW vans bought from January to March 2009, and is now two-thirds of the way through a three-year fixed cost servicing plan. Prices start at £295 and go up to £695, with mileages banded from 45,000 to 90,000 miles. The plan applies to customers with fleets of up to 25 vehicles, and the brand says it offers the reassurance of a well-maintained vehicle worked on by trained VW technicians, which thus results in an RV-boosting full manufacturer service history.
However, this received wisdom has come under increasing scrutiny since the 2003 Block Exemption legislation sought to loosen manufacturer control of warranties to free up competition.
Kwik-Fit certainly believes the old order has changed. For the past five years the fast-fit giant has focused on building up fleet servicing and mechanical work to supplement its traditional business, and claims to have carried out 16% more services on fleet vehicles in 2010 than 2009.
Fleet sales director Peter Lambert says the company presents a compelling case to van fleets when it comes to servicing. It offers a collection and delivery service, a mobile service, is open seven days a week and will service vans outside of normal working hours, which, Lambert claims, distinguishes the business from most franchised dealers’ workshops. Kwik-Fit has 530 UK centres equipped for servicing, all of which are covered by the same pricing policy.
“I’d be surprised if a franchised dealer could do this,” says Lambert. “Normally it would be on a regional basis – but because we are one organisation we can do it.” He adds that fleets can take vans to whichever centres are most convenient and pay for them on a single invoice: “Accessibility to Kwik-Fit is unrivalled. We are in every town.”
Lambert spells out the rationale behind the firm’s drive into servicing in stark business terms. Its core market – tyres, exhausts and batteries – was worth £3.7bn in 2010 whereas the servicing and MoT sector was worth £5.3bn. The transition into servicing cost Kwik-Fit a relatively modest £50m, spent on equipment such as ramps and Bosch diagnostic tools, as it already had an extensive site network.
Lambert claims lead times for service bookings are no more than two days for anywhere in the UK and argues this would be hard for dealer workshops to match. He also reckons higher overhead costs mean franchised dealers are forced to charge up to 30% more for a service. Kwik-Fit’s premises, he admits, are not “gin palaces”, but are equipped to fill the service schedule “precisely to the manufacturer’s specification”.
Kwik-Fit currently commands 1% of fleet servicing in the UK.
“If we get to 2% I’ll be popping champagne corks – the market is massive,” says Lambert. Meanwhile, the firm’s 3% MoT sector share (800,000 vehicles) makes it the market leader.

In the loop

With the competition stiffening, Renault has moved to keep its van fleet customers in the servicing loop.
The firm uses its telematics-based iCare system monitors to inform drivers a service is due. The system then arranges the service with the nearest Renault dealership. In addition, the brand’s 120-minute Pit Stop deal guarantees a service will be completed within two hours of the keys being dropped in, and booking lead times are guaranteed at no more than 48 hours through the 25 Pro-Plus dealerships (which offer benefits such as extended opening hours) and up to 72 hours for the rest of the network (Renault also has 50 specialist van centres). Labour rates vary geographically but dealers commit to a pre-arranged fee of between £49 and £62. Dealerships also offer a collection and delivery service within a 20-mile radius.
Renault LCV?boss Darren Payne admits it’s difficult to gauge the value of a manufacturer’s service history but adds: “If two vans were side by side and one had a service history, which one would you choose?”
However, Ken Brown, editor of CAP Monitor’s Red Book of LCV values, says trade buyers do not have time to swot up on every example’s service history. He says buyers are likely to trust that ex-lease vans would have been well looked after but be more sceptical about dealer trade-ins. He concedes that for prestigious vans, such as Mercedes’ Vitos and Sprinters, a manufacturer service history carries more weight but overall, from an operator’s point of view, he says: “If savings can be made on servicing it will far outweigh any possible savings on RVs.”
Identifying where to make servicing savings is not always straightforward. While independents invariably have lower labour rates, franchised workshops may be quicker. Glass’s CV editor Andy Picton says a full main dealer service history has little effect on late-year vans but can benefit older vehicles outside of manufacturer warranty: “Although it is difficult to put a figure on, a small premium would be paid on late-year examples rising to £300-£500 on older models outside of warranty.” But, as Picton points out, condition is key. A high mileage, older van in poor condition will attract little attention with or without a service history.

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