Fleet News

Franchise or independent: The great SMR debate

Fleet managers can use franchised main dealers or independent garages when it comes to service, maintenance and repairs. But should they choose between them or opt for both? Ben Rooth investigates

Should fleet managers use franchised dealers or independent garages for their service, maintenance and repair (SMR) requirements – or both?

These are the choices facing them as they aim to keep their vehicles on the road in the most cost-efficient and effective way.

Traditionally, it is perceived that independent garages provide cost savings as they don’t have large overheads, while franchised garages provide greater peace of mind – not least that manufacturer-approved parts will be fitted in order to maintain warranties.

Consequently, many fleets will ensure they take vehicles to franchised garages for the duration of the warranty before heading to more cost-efficient independent outlets once that runs out.

Last year’s FN50 listing of the country’s largest leasing companies found that around three-quarters of their SMR business for cars and vans was with franchised dealers and one-quarter with independents.

Industry figures expect this ratio to change, but are split on whether this will favour independent garages or franchised dealers.

Stuart James, director of the Independent Garage Association (IGA), predicts that business will move away from franchised dealers in the future.

One of the main reasons for this is because a new European-wide industry legislation, known as security-related repair and maintenance (SERMI), is set to be implemented, and this will allow independent garages access to all areas of manufacturer technical information.

“We believe that the independent share of the fleet maintenance and repair market can only increase – it has already grown from around 15% to around 26% over the last few years,” says James.“The introduction of the SERMI standard is the last step in the introduction of a truly level playing field for independent garages.  

“As well as ensuring that independent garages have ‘access all areas’ to the information required to maintain and repair modern vehicles, accreditation to this ISO-level standard will provide fleet managers with reassurance that they are dealing with a company that has proven its integrity as a business as well as its technical competence. 

“There will no longer be good and bad garages, there will just be those that have proven their integrity and those that have not.”

Conversely, Chris Mitchinson, director of in-life services at fleet management company CLM, has seen a shift towards fleets using franchised dealers for SMR.

“Since the end of the credit crunch and the last recession, more companies have bought new vehicles,” he says. “These tend to be serviced within the manufacturers’ networks, especially during the warranty period. 

“The growth of manufacturer service packs now available also means that more vehicles are retained within the franchise networks to take advantage of the manufacturers’ offers.

“This ratio is now circa 80:20 in favour of franchised dealers on our managed fleet of around 14,000 vehicles, which is up slightly from the more historic 75:25.” 

CLM has “both ends of the spectrum” on its fleet with some clients having 100% of their vehicles serviced by franchised dealers, while others are 100% independent, says Mitchison.

“The choice of vehicle service profile depends on what the customer wants,” he adds.

“When we take on a new client, during the implementation phase and then again at our regular review meetings, we look at their service profile and discuss their preferences with them, making our recommendation as required. 

“But our standard recommendation is always to use a number of independents within the servicing mix because we firmly believe that this is most cost-effective option for the client.”

The case for independent garages

Lower cost is arguably the main reason for using independent garages ahead of franchised dealers.

“There is no difference in the technical competence of independent garages and franchised dealers, but the lower overheads of independent garages mean they can offer better value,” says Stuart James, director of the IGA.

“They also tend to be multi-brand, giving them a wide understanding of diagnostic principles and avoiding the need for potentially expensive ‘diagnosis by substitution’ solutions. 

“The small size and individuality of often family-owned businesses provides the kind of flexibility and personal service to fleet drivers that larger corporate organisations struggle to match.” 

He feels there is “no downside” when it comes to using an independent garage for routine maintenance and repair work, although he acknowledges that they still cannot undertake some warranty work, historically due to the lack of technical information being made available by manufacturers.

However, Vincent St Claire, commercial director of Fleet Assist, which provides contract hire and leasing companies with a nationwide network of more than 8,000 SMR outlets, says it is important for fleets to choose the right independent garage.

“There are many very good independent garages which have invested heavily to ensure they are capable of matching the service levels offered by the franchised dealer,” he says.

“Conversely, there are many poor independents out there who simply do not have the required knowledge or equipment required to meet the standards needed when working on a modern vehicle. 

“While there can clearly be benefits of utilising an independent garage for certain types of job, the consequences of choosing the wrong garage can very quickly negate any savings. 

“It is therefore essential that fleet managers have access to a network of quality assured and vetted garages before making a decision either way.”

Kwik Fit has witnessed demand for its range of SMR services increase in recent years. 

“Demand for mechanical work across the fleet sector is being driven by a range of factors, but notably our price competitiveness, our customer service levels and an extended opening hours policy at centres when compared with franchised dealers,” says Peter Lambert, fleet director at Kwik Fit. 

“The rising fleet demand for mechanical services is reflective of the progress we are making in creating an image of the company where the acceptability among company car drivers and fleet decision-makers of using Kwik Fit is the same as it is for tyre repair and replacement.”

However, despite the advances made by the independent garage network, some leasing and fleet management companies still feel that the expertise doesn’t exist in the sector to handle the SMR requirements of
prestige and high-performance fleet vehicles.

“For exclusive and prestige marques, we never take the vehicle away from the franchised dealer network during its life because the work they require is so specialised,” says Chris Mitchinson of CLM.

“But for the majority of our vehicles, the norm is to use the franchised network during the warranty period and then switch to independents after that. 

“However, a hybrid viewpoint is to use the franchised network for the first 12 months of the vehicle’s life and for all warranty work, and then switch to independents for the rest of our servicing needs – providing this is not contrary to our clients’ wishes.

“A minority of our clients adopt the independent service route completely from new. 

“We’ve found that these are very robust in their processes and procedures and, if we do have a poor experience with one outlet, we are able to ‘switch off’ that particular branch for any future bookings and make alternative arrangements.” 

The case for franchised dealers

The most obvious reason for choosing franchised dealerships is that work will be carried out to manufacturer-approved standards, which maintains the vehicle warranty.

Using a franchised dealer ensures that components are certified by manufacturers themselves, while technicians have access to the most up-to-date diagnostic equipment.

“The headline figure that everyone looks at is the labour rate and there can be significant savings on labour costs by utilising an independent,” says Vincent St Claire, commercial director of Fleet Assist.

“However, other factors such as vehicle type, job type, warranty, diagnostic capability and courtesy vehicle availability often need to be taken into consideration.

“Often a combination of these factors will mean that while an independent may be cheaper, a franchised dealer is better placed to deliver the end result.”

These sentiments were echoed by David Baddeley, customer service director for Volvo Cars UK.

“Today, maintaining a car in peak condition is as much about software as it is the traditional elements of a service programme,” he says.

“All franchised dealers have real-time links to the manufacturer’s systems to ensure that any required software or product updates are done at the time of servicing and don’t result in additional downtime. 

“Technicians today need to be skilled electrical and system engineers with access to the latest diagnostic equipment and processes.

“Without those skills and resources, the likelihood of expensive periods of vehicle downtime or sub-optimum performance – in areas such as fuel efficiency – are significantly increased.” 

Kevin White, aftersales fleet manager at Kia Motors (UK), adds: “No-one knows a Kia better than the Kia network. Every Kia dealership has experts who have the latest Kia training and access to our advanced tools and technology.  

“This is becoming increasingly important as more complex technology is incorporated into cars and conventional internal combustion drivetrains are complemented by hybrid, plug-in hybrid, and electric variants.

“In addition to a courtesy car and collection and delivery service, with around 75% of all jobs completed in an hour or less customers are increasingly enjoying the convenience of the customer lounges, refreshments and wi-fi in their Kia dealership, facilities rarely offered by independent repairers.”

White added Kia, like most major manufacturers, has a service plan and fleet charter to help ensure vehicles stay within the Kia network by offering “significant customer benefits”.  

“Customers with the Kia Care-3 Service Plan enjoy a competitive fixed price package which helps them budget for servicing costs,  while our fleet charter provides fleet specific service level agreements (SLAs) with transparent and competitive labour, parts, and fluid pricing, to help fleet operators budget for and manage their operating costs,” he adds.

Volkswagen UK told Fleet News its fleet package pricing programme is used by the majority of Britain’s leasing companies to provide “reassurance” surrounding SMR quality and costs.

It fixes SMR prices for many regular tasks – from routine servicing to MOT tests – on a regional basis to ensure that it consistently offers value for money in those areas.

James Dower, senior black book editor at automotive analysts Cap HPI, adds that vehicles maintained by franchised garages tend to sell better when defleeted.

“While the data makes no distinction between a full service history from a franchised workshop or authorised independent, there is plenty of evidence to suggest that franchised dealers will choose the car with a main dealer service history over the one without,” he says.

“Undoubtedly, a full dealer service history within the prestige market will have a greater effect on value and desirability, especially at lower mileage. Volume, higher mileage, and more price point cars are less affected. One significant benefit of main dealer servicing is that the diagnostic equipment will automatically pick up on any outstanding service or safety recalls.”



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