I’m always interested in what’s going on in the world outside my garage, and am regularly updated by my customers about the latest closures of franchised car dealerships in the area. At first, it was just the odd one or two, but lately, it seems to be getting more frequent. I was reading one of my regular fleet news websites when I came across the following article:

Franchise dealer closures spell trouble for fleets

 

Fleets dependent on local dealers for servicing and repairs could be facing a major shortage of service outlets after it emerged that as many as 1,000 franchised dealers will close next year.

While some servicing work will be picked up by independent authorised service centres, there will be some areas of the country that could end up without a local service centre.

Motor retail experts at Grant Thornton said they believe there could be more than 1,000 franchised outlets closing in 2009.

Nigel Ruddock, national head of Grant Thornton automotive services, told delegates at a recent AM (Automotive Management) conference that he predicts the network of 5,200 franchised retail outlets in the UK could shrink to between 3,500 and 4,000.

He said: “This will be painful…

“There have been too many dealers making little to no profits for too long.

“There are too many dealers chasing too few customers.”

John Lewis, director general of the BVRLA, confirmed that decline in dealer numbers will hit fleets.

“This is one of the reasons we have been asking manufacturers to enlarge their network of authorised service centres,” he said.

The BVRLA is also calling on manufacturers to release more vehicle technical information to the repair market.

“Ideally, we will end up with a scenario where any vehicle owner, business or consumer, will have access to a local, low-cost authorised repairer,” said Mr Lewis.

However, there are growing fears that the recession may take bigger fish than just franchised dealers, with several carmakers desperately seeking government funds to prop them up.

General Motors, Ford and Chrysler’s latest call for US state aid failed in December 2008

“Chrysler is the most likely to go under,” said Mr Ruddock.

The failure of a major carmaker will cause concerns not only for ensuring vehicles already on the road can be serviced and repaired, but also over whether warranties will be respected.

This could cause problems for fleets heavily biased towards one manufacturer.

“GM must adopt Chapter 11 style precautions even if it doesn’t go into insolvency.

“There’s too much complexity with GM’s brands, it needs to shed six and focus on its core brands.

“This could mean that Saab will go,” added Mr Ruddock.

 

Now, even as recently as 6 months ago, I’d never have anticipated that anything like this could happen but times are truly changing and the face of the motor industry may never be the same again. With the sudden disappearance of finance from banks, the entire scenario is changing as there just aren’t enough people in the position to buy a brand-new car. The lenders are taking huge losses on outstanding finance agreements and simply aren’t prepared to take the risk anymore. I reckon that it’s about as hard to get car finance nowadays as it used to be to get a mortgage, and a mortgage is nigh-on impossible to find at the moment!

Several customers I know that were considering changing their cars this year are now rethinking their stratergy as the prospect of taking on a big loan over 3 years to buy something that’s going to shed most of its value within a year seems less appealing. No matter how nice a prospect a new car might seem, there’s plenty of other options available that can save you thousands and still offer excellent reliability. Let’s face it – you can buy a perfectly reasonable car for under £2000 that’ll give you 2 or 3 years of comfortable and cheap motoring, without losing a fortune.

One option that’s often overlooked is to buy a slightly older car from one of the quality manufacturers such as Mercedes Benz, BMW or Audi. We’ve currently got a lovely 1995 Mercedes Benz S420 in (similar to the famous car in which Lady Diana met her untimely end) for some minor work. Costing over £65000 when it was new, it boasts almost every conceivable luxury you can imagine (including double-glazing and self-closing doors) and a silent and powerful 4.2 litre V8 engine. It really is the most sublime way to travel, and with a full service history, a new MOT and a new set of tyres, can be yours for a fraction under £2000! These cars rarely go wrong and are so ‘over-engineered’ that they can cover 250,000 miles with ease. With unleaded petrol now costing around 87p a litre, even if you drove 10,000 miles a year at an average of 22mpg you’d be spending £35 a week on petrol. Because it’s older than 2001, the road tax is a just £185 a year. Even if you just scrapped the car after 2 years (which is unlikely as it should still be worth over £1000), you’d still be £12000 better-off than had you bought a new Mondeo V6 and sold it after 2 years! Plus, you’d have the added bonus of being able to feel like a third-world dictator as you waft around in near-silence behind tinted and double-glazed windows. 

If it wasn’t for the fact I’d recently leased a new vehicle (yes, hindsight is a wonderful thing!) I’d be buying it myself.

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