Subscription versus submission? Preparing for the on-demand future

Can independent garages survive in a vehicle-via-subscription world?

Published:  19 August, 2019

“Nothing is ever going to change, and everything is going to be alright forever” is usually the last thing said by a business owner, just before their enterprise becomes completely irrelevant. Customers sometimes take a little while to realise that something has happened that is affecting their behaviour, but once they notice they are doing something differently, it is probably too late. Then again, why should they go back? While the customers of our oblivious service provider have happily moved on, he or she is watching their life’s work quietly slip away.
    
This has happened to many businesses across a wide range of industries. If there is a new offering that is a serious disruptor to the status quo, only those who are adaptable and open to change will survive. Keep doing what you have always done and you will go under. Think it won’t happen to you? Then maybe it already has.

Subscription
Alright, let’s take a step back from the brink for a second and think about what could be coming around the corner to change our world. Actually, maybe it is already here. I am sure most of you are aware of subscription-based services, and probably use one or two in your private time i.e. Netflix or Spotify. The principle applies to the automotive sector too. There are quite a few car-sharing services and car clubs. These tend to be on-off options that users will activate when they need a vehicle.
    
Vehicle leasing is probably a better example. This is not a new concept, but it has become much more common and accepted by motorists, particularly in a world where people are becoming increasingly comfortable with using a vehicle without the need to actually own the vehicle.
    
The big issue with motorists not owning the vehicle from our perspective is this: If they don’t own it, who does, and where does that owner expect to get the vehicle serviced? Because, if it is not at an independent garage, or if legislation does not keep up and shuts out independents until amendments are made, you are not going to see any of that business.
    
Let’s get back to subscriptions. We read something interesting recently from Syncron, the provider of cloud-based after-sales service solutions. The company recently released research that highlighted increasing consumer interest in subscription-based services, and the company believes this is forcing vehicle manufacturers to redefine their dealer service operations. If manufacturers look to change the rules of the game, it is always a good idea to make sure independents are still allowed play.
    
As Syncron pointed out, vehicle subscription services are a way for people to access what are euphemistically called ‘mobility services’ as an alternative to traditional car ownership. Through mobility services, a provider’s customer pays a flat monthly fee to a manufacturer or third-party provider in return for on-demand access to several vehicle models. The fee covers insurance, maintenance and roadside assistance. As with music or on-demand TV, this can be turned off or on at will. OEMs already employing these models worldwide include BMW, Volvo, Jaguar Land Rover, Lexus, Mercedes-Benz and Audi.

Submission
As you might already be imagining, in this model where the customer picks up and drops off a car when they feel like they need it, or not, there is not much need for the customer to source servicing or repairs. Where’s the convenience in that? It would be like having Netflix, and having watched the film, deciding to go outside, up the road to Blockbuster to take the tape back. What tape? Also, how can you take the tape back to Blockbuster since it is not there anymore. Aha, but there is always the independent video store…no I can’t get to the end of that sentence either. Can you see where the logical end of all this might go? Motorists that do not own their vehicles do not need to have a vehicle serviced. Neither will they be looking for servicing or repairs on a price point, as again it is not their responsibility. Where does this leave independent repairers?  Should you just chuck in the towel? Actually, things might not be as bad as you think.  

Upside
As far as Syncron is concerned, there could be an upside for service providers like the automotive aftermarket. The change in attitudes brought on by the subscription economy, as far as they are concerned puts the most pressure on vehicle manufacturers in their traditional core business area, i.e. vehicle production. With less impetus to buy vehicles, there will be less vehicles sold. That means they need to derive income from the other end of the chain – namely servicing and repairs. This means manufacturers would need to look to their dealer networks to generate income for them.
    
As some you may have already realised, in many ways servicing and repairs is not where the primary strength of many franchised dealers lies. This is despite the fact that most of them generate more profit from this end of the business than from new car sales. Part of the issue may be that for dealer workshops, most of the work they do will be on cars below three years old, mainly focused on servicing and warranty work. While they do try to keep as much metal from escaping as possible once the standard three years is up, for the most part their workshops do not need to perform the more challenging diagnostic work that many independents will see day-in-day-out.
    
Given the right circumstances, and if vehicles were owned by a third party rather than by VMs themselves, or if consumers still had the same level of choice as if they were the owner within certain parameters, independent repairers could offer a more rounded care offering that would fit with the needs required. There is some good news right there.

Reactive
Overall, servicing aside, vehicle care is often reactive, with vehicles being repaired after something has gone wrong. Syncron posits that in this model, franchised dealers will need to be armed with enough information coming in from vehicles so they can pre-empt failures, effectively repairing the vehicle before it goes wrong.

Experience
Syncron looked into what consumers get from the dealer experience, in a survey of 500 vehicle owners from across Europe and the U.S. The findings were featured in a report; shifting Gears from Reactive to Proactive: How Customers’ Rising Interest in the Subscription Economy is Revolutionizing the Automotive Dealer Service Experience.
    
We are talking about vehicle subscriptions as if motorists are chucking their cars away left and right. However, the report found that awareness was relatively low, with more than 60% of respondents not aware of the concept. Not so much to worry about then perhaps, we can get agitated about this idea further down the line when we have got our heads around EVs and hybrids? Afraid not. Once they did hear about the idea, 57% said they were very interested in the idea. You might need to think about your business model after all.

According to Syncron, additional findings from the research report include the following:

Customers are satisfied with the dealer service experience as it stands today
Nearly 60% of vehicle owners indicated that they use their dealer for maintenance and repairs today, with more than 90% describing their most recent dealer service experience positively.

Interest in subscription services is high, but awareness is low
Around 60% of respondents indicated fixed monthly cost and included maintenance and repairs as the biggest advantages of vehicle subscription services. More than 40% of respondents also indicated they would be willing to pay a premium price for a subscription-based model.

Automotive OEMs must invest in service today to prepare for the future
More than half of survey respondents lack loyalty to a particular automotive brand when making final vehicle purchasing decisions. And, with nearly 40% of these vehicle owners indicating that a negative dealer service experience would sway their perception of a brand, the customer experience at the dealer level is more important than ever.

Game-changer
According to Gary Brooks, CMO of Syncron, subscription services could be a game-changer: “In the coming months and years, automotive manufacturers must optimise their current infrastructure to lay the foundation for a successful future. It’s not so much a matter of if, but when, customers will overwhelmingly demand subscription-based services. Automotive OEMs must begin equipping their dealers today to prepare for a proactive service model where vehicles are repaired before they ever fail. In this new research report, we aim to inspire and motivate automotive manufacturers to do just this as they navigate today’s ever-changing customer expectations and prepare their businesses for the seismic shift to the subscription economy.”

Positive position
What can we learn from this though, and where does the independent repairer fit in? Assuming that our representative organisations, including the IGA, IAAF, GEA etc are able to make sure that independents maintain the rights secured under the Block Exemption Regulation, independents could be in a very positive position.The connected car could provide a whole new income stream for those able to access it – and we want that group to include independents.
    
Garages that thrive need to be proactive to attract business in the first place – they do not have the built-in customer base of owners that dealers can rely on. Given the circumstances, and the access to remote diagnostics, independents could be in a good position. Among the exhibits on the HELLA stand at Automechanika Birmingham this year was information on CarForce, the software platform that provides real-time vehicle health data to garages. While this is not currently running in Europe, it does point towards where we are going.
    
Again, assuming drivers still have the choice, if independents were able to compete on a level playing field information-wise in the brave new future, they could do really well. The best thing to do at this point is to stay on top of the technology, keep up with developments and make sure your business is attuned to the zeitgeist.


Related Articles

  • When the stars align: Robertson Gemini 

    You know you are doing something right when you are doing something that is not the central part of your business, but you are doing it more successfully than those who have made it their main focus.
        
    This is the position that Castle Douglas-based independent garage Robertson Gemini Ltd finds itself in. The garage is a six-ramp repairer with a dedicated MOT bay. It offers all the usual services in terms of alignment, diagnostics and the rest. Meanwhile, it is also has a line in used cars, where it is doing very well.  
        
    Director David Butler explained: "We are trying to grow car sales. We have talked to some of the main dealers in Dumfries and they are having a hard time, being asked to do all their showrooms, but their sales are pretty static at the moment. Meanwhile, our model is actually working well for us. I am looking at a 65 plate Focus going out now, and a 67 plate Toyota. We have quite a few getting up to just one or two years old. That is where we are trying to be. That is the kind of image we are looking at."

    Focus
    While this will keep the business warm on cold nights, the main focus for the business remains servicing and repairs. Being in a largely rural area, the catchment area for customers is quite large: "Goodness me, they come from all over the place," exclaimed David. “They come from Castle Douglas itself, Dalbeattie, almost as far as Stranraer as well. It is quite a rural setting. We are a market town with quite a big hinterland. There is a lot of farming, forestry and that kind of thing. We even get people coming down from Edinburgh, people that are associated with the town here."
        
    The company provides a broad offering, but is looking to concentrate more tightly on the upper end of the market: "We are a  general garage, we take all makes of cars. Jaguar and Land Rover, which is the upper end of the market is where we are heading.  We have invested quite heavily in all the diagnostic equipment for Land Rovers and things like that, so we are getting more and more of that now, which is great. We are trying to move away from old bangers. We are not really interested in that end. We do a lot of Ford, it used to be a Ford service centre until quite recently, but ultimately we decided to sever that relationship."

    Evolution
    The business is now in its 97th year of operation:  "It opened in 1921," said David, "and has always been owned by the Robertson family." Any business that exists for almost a century will go through a great degree of change. For the business now called Robertson Gemini, this included being a franchised dealership for the Rover and MG brands, but it survived the collapse of Rover and went on to evolve into its current independent form.
        
    Names change over time too, with the branding of the business developing a cosmic angle thanks to a brainwave by Stewart Robertson, the late husband of owner Caroline Robertson: "The name Robertson Gemini came about for an interesting reason," revealed David. "Stewart, who unfortunately died in 2010, had another garage in Dalbeattie, so two garages. In addition, in the family, Caroline and Stewart had twins, with Gemini being their starsign. So that is where the Gemini came in; twin garages, twin children, starsign. That is how Robertson Gemini came to be named. That was Stewart's little lightbulb moment."
        
    David came into the business following Stewart's passing: "Caroline lost Stewart and I lost my wife, we both lived in Kippford and we are now business partners. We are both directors in the business. I was not in the automotive sector before. In addition, Caroline was married to Stewart but had very little to do with the business. The garage was thrust upon us – just circumstances. So
    we have had to pick it up and drive it forward."

    Excellence
    From 2015, Caroline and David took on the day-to-day management, and the business has not looked back: "We've had to do a lot of learning, but we are rather fortunate in that we have some excellent staff here, who have guided us. They have been fantastic.   

    "We have got five full time mechanics. We have just taken on an apprentice as well, who is excellent, and we have also taken on an autistic lad called Thomas as our valeter. That was something that Caroline and I wanted to do. We took a gamble but it has been very positive for us. We are quite pleased about that. It came through a programme run by Dumfries and Galloway council called Total Access Point. It is about employability for all. We went to an open day to find out about it and we  thought 'we want to have a go at this.' We are absolutely delighted with what we have achieved, and what Thomas is achieving. That has been a good venture for us."

    Toolbox Sessions
    According to David, the key is enabling the staff to pass their knowledge on: "We have two guys who are experts on Land Rovers. The rest are all very good mechanics too. We have started doing what we call Toolbox Sessions in the workshop. Each of the mechanics is running a topic. We have done one on all the MOT new legislation very recently. Yesterday we had one on electrics.
        
    "What we are trying to do is spread the skills across the workforce, so it is not just one individual that keeps getting the same old jobs all the time. We have got someone lined up for the next one, which will be on vehicle health checks. That's going well and we are all enjoying that. Each mechanic is being left to do their own little session. That is stretching them a little bit, which is good."

    Top Technician
    When you are spreading knowledge around a business, it helps to have staff members who know their stuff. Luckily for Robertson Gemini, one of their team is a regular Top Technician finalist, namely Neil Currie, who was in the final five in 2017 and 2018.
        
    "It was Neil who did the Toolbox Session on electrics," explained David. "That was the first of his sessions. It was good. He enjoyed it as well. He will be doing one on diagnostics before long."
        
    David said he was pleased to have a Top Technician regular on staff: "It is great for us as we can promote it for a start, and it really gives the other boys something to aspire to as well. Neil is good at spreading his knowledge about. From our point of view that's great. If he is on Top Technician, we like to think that the company is benefitting as a whole. This is why we are doing these toolbox sessions. I think we are quite progressive on that side of things and it has certainly motivated the workshop team. I sat in on a couple of sessions and I have been very impressed with what they have done.  I'm delighted with it."
        
    At this point, Neil himself popped his head round the door: "I have been here three years," he explained. "I regularly get training, and they helped me with the cost of going down for Top Technician, paying for the hotel, so they have been very supportive that way. David has looked to us to help him with equipment, and he has certainly invested in what we have asked him to, dealer-level equipment and oscilloscopes, all the kit we need so we can keep up to date with the technology. We specialise in Land Rover, so he bought the equipment for that as well. It allows us to do more things."
        
    Commenting on the Toolbox Sessions, Neil observed: "We started that recently – it saves money on training courses and time, in terms of  having people out of the door. We just put some time in the diary and shut the workshop door. The guys will come in and one of us will talk about a subject, just trying to pass on some knowledge. Instead of going away on a two day training course it is all kept in house."
        
    Taking part in Top Technician was inspirational for Neil: "It has inspired me to try and push the industry higher. You meet guys with the same aims and goals as you and you want to aim for the best. It is about bringing the trade up and trying to improve everyone's skills. I'm all for it. There is definitely a need for more talent, especially up here in Scotland. I just want  to help people and keep it going."

    The future
    Looking forward, David commented on plans for the future at the business: "We have put in so many new procedures – a new management system, which is absolutely brilliant in terms of giving me an on the pulse feeling of what the company is doing on a daily basis. It starts from the customer coming in, all  the details, job cards and invoicing. It is all interlinked, so it is tremendous. We are getting to grips with all of that. We are just about to take on a new fleet of brand new Peugeot 2008s courtesy cars, they are coming next week."
        
    David added: "We are running at 110mph at the moment!" Long may it continue.

  • Exact Fit - TRICO launches new display  

    TRICO has unveiled its new planogram design with signage, which allows retailers to display its entire Exact Fit range to customers – using just a single two-metre bay.   The Exact Fit programme is a comprehensive range of direct fit, OE replacement blades, with almost 150 references giving 99% front and rear wiper coverage.

  • Here comes the flood: The Parts Alliance open evening attracts 250 

    he unprecedented rain and flooding that lashed much of Britain recently did not deter keen garage owners in the midlands from attending an open evening at The Parts Alliance’s new Midpoint Distribution Centre in mid-June, during the worst of the weather. A total of 250 attendees including 25 key suppliers made it for the event

  • Trust my garage hits TV 

    Trust My Garage hits TV A TV campaign promoting the Trust My Garage (TMG) Code of Practice is now running.

  • Ring Spring Spectacular is sprung 

    Ring customers are in with a chance of winning £3,000 worth of prizes, including TVs, iPads, Xboxes and Amazon Echo devices through the company’s Spring Spectacular promotion.

Most read content


Search

Sign Up

For the latest news and updates from Aftermarket Magazine.


Poll

Where should the next Automechanika show be held?



Calendar

Click here to submit an event

Facebook


©DFA Media 1999-2019