Skip navigation
Skip navigation
You are using an outdated browser. Please upgrade your browser.

IBM-sponsored survey predicts greater than expected switch to approved brand-independent operators, despite extended warranty agreements

LONDON, December 2nd, 2002 -- A recent pan-European IBM survey, shows that competitive reforms to existing Block Exemption legislation (the new EU directive governing car sales and servicing) could prompt an industry-wide shake up for the European franchised automotive dealership network. Dealerships that are not prepared to change their business models in the newly deregulated marketplace could face significant revenue losses from new sources of competition. According to figures from the European Commission*, the European after sales services and repairs market is worth approximately 12 billion euros.

The survey, which was conducted by IBM's Automotive Practice, revealed that whilst franchised or manufacturer-owned dealerships are currently the outlet of choice for servicing and repairs, up to 85 per cent of fleet managers and 45 per cent of consumers in Europe would consider changing to an approved, brand-independent garage. Price was quoted as the most important reason for switching to an independent operator; and a 20 per cent decrease in servicing costs would inspire 58 per cent of the survey sample to switch from a franchised dealer.

Although car manufacturers have traditionally linked dealer servicing to the continuance of manufacturers warranties, the survey suggests that extended warranty periods would not play a significant part in persuading the customers to remain loyal to franchised dealerships. This means that, with new regulations in place, high-volume manufacturers must now be prepared to fight for this business with new market entrants.

Mike Woodward, Automotive Retail, Sales and Aftermarket Leader, IBM Europe, says We've already seen changes in the way people buy their cars across Europe. Our research shows that with the block exemption reform, motorists are ready to leave dealerships in large numbers for servicing elsewhere.

He continues, It's clear that the sales and aftersales segment of the marketplace is about to enter an era of unprecedented change, with new entrants looking to gain a substantial foothold. Motorists can expect increased contact from car manufacturers as they try to maintain long-term relationships. "At IBM, we are working very closely with all players to develop the new business models that will help them being successful moving forward.

Franz Gantner, Head of Operations at Arval PHH Deutschland, a fleet management company. We will watch the reaction of dealerships and manufacturers carefully. Beginning next year, the total amount of warranty claims within our fleet will be compared to the savings achieved by assigning inspections and repairs to independent shops. For accident repairs, we already work very successfully with a number of carefully selected body repair shops, the majority of which are independent. Our aim is to find partners able to guarantee a defined quality and service level at the lowest cost."

In response to the Block Exemption reforms and the new research findings, IBM has developed a set of solutions for OEM's, dealers and new market entrants to make them more adaptive to industry change and help them build long-term relationships with their customers. Specific solutions include:

-Aftermarket Portal - enabling new entrants and existing dealers to purchase; parts, technical information and other services on-line, making it easy to maintain relationships with old and new entrants alike.

-Fleet Portal for building relationships between OEMs and fleet managers. This has traditionally been left to the dealers. The new model plays to the dealers strengths of fulfilment, personal contact and resolution of problems.

The research study, sponsored by IBM and conducted by NOP, polled 1050 consumers and 75 fleet managers throughout the UK, France and Germany.

* Source: European Commission study on the future of car distribution

About IBM

IBM is a global leader in developing and deploying solutions that enable automotive companies to dramatically reduce concept to launch time, develop better and more innovative products for an ever-changing market, reduce operational and product costs, and improve quality. With an extensive network of alliances, deep industry-specific knowledge, and broad capabilities in strategy consulting, process improvement and technology integration, IBM consultants transform innovative ideas into bold, meaningful actions that can help deliver a strategic vision, drive business success, and enhance enterprise value for our clients.

Visit us at

Notes to editors:

Block Exemption

Currently car manufacturers are permitted to sell exclusively through their own distribution channels. This affords them complete control over their vehicle distribution networks. Normally this would be viewed as anti-competitive, however, car manufacturers currently benefit from EU legislation (referred to as a Block Exemption) that exempts them in certain respects from normal EU competition laws. On October 1st 2002 reforms to Block Exemption were brought in to change the market for car distribution, after-sales servicing and spare parts distribution. It is now stated that all OEMs (original equipment manufacturers) must function under either a selective or an exclusive network basis. The reforms are to be implemented within a twelve-month period.

This announcement refers to how the reforms will affect the after sales and servicing market. Any service dealer that meets the manufacturer's service criteria will be able to provide after sales servicing and warranty to that brand of vehicle.

For more information, contact:

Lesley Booth/Casey Balkham

Brodeur Worldwide

Tel: +44 (0)1753 448863/ +44 (0)1753 448841

Mail to:


Click on the link below to see this news release as it appears on the Brodeur
News Room website and obtain full contact details.

Click the link below to login and update your company and subject preferences,
or personal details.

Click on the link below to have your login details re-sent to you.

This press release was distributed by ResponseSource Press Release Wire on behalf of Pleon in the following categories: Consumer Technology, Personal Finance, Business & Finance, Computing & Telecoms, for more information visit