1. FALLING DEMAND
36. After peaking in 2000, the number of repairs and maintenance services carried out declined steadily, falling by 15% between 2000 and 2010. This is true for all segments, with the exception of windscreen and window damages49.
37. The decline can be explained by several factors: the fall in average mileage50, increased vehicle reliability, extension of the "pace of maintenance works", in other words, the recommended time period or mileage between two vehicle services, the fall in insurance claims (with the exception of windscreen and window damages), which is in turn due to lower average traffic speed and lower average mileage, the effectiveness of the road safety policy and greater vehicle reliability. As a result, the rise in the total number of vehicles – although this is now slowing down – and the ageing of vehicles51 are not sufficient to compensate for the other factors that cause demand to fall.
38. In their contributions, the vehicle manufacturers stated that a vehicle's repair and maintenance costs over the first seven years of its life fell by 17% between 2002 and 2010,
49 The number of "windscreen and window breakages" fell until 2007, in which year the trend was reversed, due to bad weather conditions and communication efforts by specialist windscreen chains.
50 The main reasons for this are the development of public transfer networks, increased fuel prices, increased tolls and the increase in multi-vehicle households.
51 Average vehicle age increased steadily in France between 1990 and 2008, rising from 5.7 years to 8.2 years. A slight downturn was observed from 2008 due to the introduction of incentives to purchase greener vehicles and to trade in old vehicles for new (the "prime à la casse" campaign).
and by 28% between 1991 and 2010. In turn, repair and maintenance turnover per vehicle52 also fell by 17% in real terms between 2000 and 2010.
2. PRICE INCREASES
39. At the same time, repair and maintenance costs increased significantly in France, meaning that the market increased in nominal terms (no adjustment for inflation) and only decreased slightly in real terms (adjustment for inflation), falling from €33.1 billion in 2000 (in 2010 euro value) to €31.2 billion in 2010. The average price charged per garage entry rose from
€456 in 2000 (in 2010 euro value) to €506 in 2010, which is a 10% increase after adjustment for inflation.
40. The increase in repair and maintenance prices, which takes account of changes to the content of services53, is all the more pronounced given the increase in the average cost per service, as shown in the Insee indexes replicated in Graph 4 below (indexes adjusted for inflation, 2000 = 100 base). The repair and maintenance index (real prices) rose by 28%
between 2000 and 201154. Over the same period, maintenance rose by 17% and repair by 36%55. Although the repair index rose steadily over the period, the maintenance index rose sharply from 2006, levelling off in 2009.
52 Repair and maintenance turnover (source: CCG) compared to the number of individual and light commercial vehicles in France.
53 In their contributions, manufacturers suggested an increase in the number of tasks carried out per vehicle entry due to extended maintenance periods between 2008 and 2011. However, the data on which these figures are based does not correspond to the number of tasks per entry. When two manufacturers were questioned orally at a hearing they expressed contrasting opinions.
54 Moreover, repair and maintenance price indexes have risen constantly since 1990, whereas the repair index experienced a sharp upturn from 2000, unlike the maintenance index.
55 These three indexes increased by 55%, 42% and 65% respectively in nominal terms (no adjustment for inflation).
Graph 4 – Changes in real price indexes for repairs and maintenance, combined for individual vehicles
Source : Insee (consumer price indexes adjusted for inflation, 2000 = 100 base; Mainland France and overseas départements)
41. According to the vehicle manufacturers, these changes can be explained by the increase in labour costs and, to a lesser extent, the increase in the price of spare parts (the increase in spare parts prices did not match the increase in repair and maintenance prices). Insee observed a sharp increase in hourly labour costs for repairs (44% in real terms between 2000 and 2011), due in part to technological developments that require more highly qualified labour and additional technical and training investments. Although vehicle manufacturers have spoken of a shortage of specialist labour in the sector, it would seem, on the contrary, that there are 2 to 3 times fewer vacant positions than there are newly qualified mechanics every year56. Accordingly, although it is true that the rise in labour rates seems to have weighed more heavily than the rise in spare parts prices on the overall increase of repair and maintenance prices, the factors contributing to the increase in labour rates do not seem to be exogenous to the competition situation in the sector.
56 Source: Autofocus, "Approche prospective des besoins de recrutement dans le commerce et la réparation automobile à l’horizon 2015" [A forward-looking approach to recruitment needs in the motor vehicle trade and repair sector from 2015], La lettre de l’observatoire l’ANFA. This document notes, in particular, that the actual annual recruitment needs for specialist labour in the motor vehicle trade and repair sector range from 5,500 to 8,000, whereas 17,000 young people complete relevant training courses every year (in schools and apprentice training centres). It concludes that "the main reason for the low level of integration in the sector is linked more to structural weaknesses and the number of available positions, rather than the desire of young people to leave the trade or sector". Two contributions to the public consultation stated that the specialist labour shortage was felt more keenly with regard to specialist employees with several years' experience, and that between 30% and 40% of young people completing repair and maintenance courses leave the sector every year. This does not in itself prove the existence of a shortage. As suggested by ANFA, the reason why this young and specialised potential workforce leaves the sector may be a lack of available positions. If this were not the case, there would be a large number of available positions for recently qualified young people.
42. The possibility has been suggested57 that, in response to a declining aftermarket and a stagnant and highly competitive vehicle sale market, the segments that are protected from competition increase their prices in order to compensate for the fall in turnover and profits recorded by dealers and repairers58. The fact that the repair index has risen twice as fast as the maintenance index can be seen as symptomatic of the fact that the better a segment is protected from competition the more likely it is to experience price increases. Generally speaking, the repair segment is less competitive than the maintenance segment.
43. Furthermore, although the technological developments cited by the manufacturers affect all countries59, France is one of the countries that have recorded the greatest increases in the repair and maintenance price indexes. Only six of the 27 countries in the European Union have experienced higher price increases: the UK, Portugal, Sweden, Belgium, Ireland and Finland. Graph 5 below compares price trends in France and neighbouring countries.
Prices have risen sharply in the UK, which can perhaps be explained in part by the impact of exchange rates. France ranks just behind Belgium in terms of repair and maintenance price increases, with prices increasing four times faster than in Germany over the period from 1998 to 2010. Contrary to the vehicle manufacturers' claims that some countries include parts fitted by garages in the repair and maintenance index, whereas other countries do not, in actual fact, all EU countries include parts fitted by garages in this price index.
The Autorité de la concurrence has received confirmation of this directly from Insee.
Therefore, the comparative changes in the repair and maintenance indexes presented below have a bearing on the matter.
57 This explanation has been put forward in a large number of articles in the specialist motor vehicle press. It has also been suggested by many of the operators questioned within the framework of this inquiry. Lastly, a report issued in February 2010 by Xerfi entitled "Entretien, réparation et distribution d’équipements automobiles" [motor vehicle equipment maintenance, repair and distribution] (page 8) also observed that
"professionals, and especially manufacturers and their distribution networks, will once again opt for significant price increases in order to offset the fall in volumes".
58 Accordingly, although vehicle prices have fallen constantly, repair and maintenance prices have increased significantly. Within the repair and maintenance sector, the repair segment has experienced much higher price increases than the maintenance sector, which is more competitive.
59 The differences in changes to labour costs can also be explained in part by these changes. One contributor stated that average labour costs rose by 39.2% in France and by only 19.4% in Germany over the past 10 years. Note, however, that these figures concern average labour costs for all sectors.
Graph 5 – Changes in real price indexes for private vehicle repair and maintenance in France
and neighbouring countries
Source : Eurostat (consumer price indexes adjusted for inflation, 1998= 100 base)
II. Presentation of the spare parts manufacturing and distribution sector
44. The sale of spare parts in the retail market represented €13.9 billion, excluding VAT, in 201060, i.e. almost 45% of the total turnover generated by the repair and maintenance sector. Motor vehicles contain a very large number of spare parts (approximately 10,000 per vehicle) and there are approximately 200,000 part references in a manufacturer's catalogue for each make of vehicle.
45. Although the repair and maintenance sector brings together an offer by repairers and demand from private individuals, insurers and vehicle fleets, and is therefore situated downstream in the chain, an analysis of the spare parts distribution sector needs to look at the value chain as a whole, from the manufacture of the spare parts to their sale to the end consumer, usually as part of repair or maintenance works. Given that it is the repairers who generally select the spare parts, such parts tend to serve as an input for repair and maintenance activities rather than as the end product sold to and selected by consumers.
Demand for spare parts therefore originates essentially from repairers, as described in the previous section.
46. The following diagram depicts the general structure of the spare parts manufacturing and distribution sector. The sector is organised around two relatively compartmentalised channels; in the first, the suppliers are the manufacturers, who only sell their parts to their authorised network ("manufacturer channel"), in the second, the suppliers are the equipment suppliers, who can sell manufactured parts to the vehicle manufacturers and also to independent distributors and, to a lesser degree, to the vehicle manufacturers' authorised networks. Independent distributors sell the parts on to the authorised networks and, first and foremost, to independent repairers ("independent channel"). The independent repairers can also obtain spare parts from the authorised repairers.
60 Source: FEDA.
Diagram 1 – Organisation of the spare part distribution chain
Source : TCG Conseil
47. Competition in the spare parts manufacturing and distribution sector depends on the number of suppliers upstream who are capable of offering the parts (A), the ability of the various operators to place the upstream suppliers in competition with each other ("interbrand" competition – B), and the ability of the repairers to put parts distributors in competition with each other (“intrabrand” competition – C). Observed changes in prices and margins (D) can also be used to assess the degree of competition within the sector.
Lastly, the differences between part prices and profit margins observed in the overseas départements and mainland France provide an indication of the degree to which competition is lacking in the overseas départements as compared to mainland France (E).
A. THE SPARE PARTS OFFER: VEHICLE MANUFACTURERS AND EQUIPMENT