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Automotive Services Market Report 2007
Key Note Publications Ltd, May 2007
The UK market for automotive services was worth an estimated £16.38bn in 2006 — a 5% increase on 2005 and 27% higher than the figure for 2002. Expenditure on automotive services continues to benefit from strong sales of new and used cars and a steady increase in the number of cars on UK roads.
As defined by this report, the term `automotive services' covers car servicing and mechanical repairs, car body repairs, and car breakdown and recovery services. The largest of these sectors is car servicing and mechanical repairs, which is served by a range of organisations, including franchised car dealers, independent garages, garage chains, autocentres, fast-fit centres and mobile service units. The second-largest sector is car body repairs. This sector has been affected by declining prices for both new and used cars and the limits that insurance companies have placed on the sums they are willing to spend on bodywork repairs. Car breakdown and recovery services is the smallest sector of the market. This is a mature market, but it remains an essential service for millions of motorists and the leading suppliers are extending the range of services they offer in order to increase their revenues.
At present, MOT tests need to be undertaken when cars are 3 years old and annually thereafter. Failure rates for vehicles taking MOT tests are fairly high, and the industry is concerned that the Government is now considering delaying the requirement for an MOT test until a car is 4 years old and then making the test compulsory every 2 years thereafter. Around two-thirds of the UK's 18,300 MOT test stations are independent garages, which rely on the annual tests for around 40% of their income, and if the proposal to delay the test is accepted, it could cost these garages a substantial amount of income.
The market for car servicing and repairs is influenced by a range of external factors, including the Block Exemption Regulation (BER), technical developments such as computerisation, and commercial developments in the upstream market, such as the reduction in new car prices. The changing ownership of companies is an ongoing feature of the market — especially in the car dealership sector. As a result of these influences, the structure of the automotive-services sector is changing over time.
Expenditure on automotive services is forecast to show steady growth over the period to 2011, although the expected decline in the number of new car registrations in 2007 is likely to affect the rate of increase somewhat. Thereafter, between 2008 and 2011, continued growth in the UK car `parc' and the trend for fewer motorists to undertake basic car maintenance (a factor that increases demand for car breakdown and recovery services) should combine to produce a steady increase in the value of the market.
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