More than 130,000 independent repair shops are bracing for the effects of the closings of thousands of Chrysler and General Motors new car dealers. A study by consulting firm Grant Thornton says that 20% of car dealerships in the United States are projected to close in 2009.
An unknown number of closed dealerships are likely to continue in the business of servicing vehicles and selling used cars, with a new concentration on repair work now that the factory-financed warranty claims will no longer provide a source of revenue.
It is very unfortunate that so many dealerships will be closing this year,” said Rich White, executive director, Car Care Council. “Because a vehicle is the second biggest investment for most car owners, they want it serviced by someone they trust. It makes sense to take the time to select a new auto repair facility that will take the best care of their investment.”
In general, the effect on the repair market for consumers should be positive, since competition — in theory — will bring down the price of repairs. At a minimum, ex-dealers will have the latest service equipment and the residual effects of factory training going for them. As electronics and onboard computers have completely taken over the monitoring and control of critical areas of a vehicle – brakes, tire pressure, steering, air bags, fuel delivery, ignition, oil change intervals, theft prevention, emission controls, among others – a shop with the latest technical knowledge can save you hundreds, if not thousands of dollars.
Countering this need for up-to-date information, is the widely held belief that dealers charge much more for repairs than independent shops, which is confirmed by surveys.”
As we last reported, on average dealership repairs cost 34% more than at independent shops. If you aren’t careful, you could end up paying too much for their services for equivalent work. This comes from a study from the Automotive Aftermarket Industry Association. It maintains that consumers paid $11.7 billion too much last year for parts and service. That’s a trend you don’t want to participate in.
Given such pricing disparities, it is not surprising that independent repair businesses account for more than 70% of vehicle service and repair, compared to 28% of non-warranty repairs by new car dealerships. Even before the accelerated dealership closings that started late last year, the number of dealerships and their share of the service and repair market have gradually declined each year since 2000, according to AAIA. (more…)