22. The structure of the repair and maintenance sector is based on the fundamental distinction between the "manufacturer channel"24, consisting of repairers authorised by vehicle manufacturers, and the "independent channel"25, consisting of a variety of independent repairers, who may or may not belong to independent franchises26.
23. These two channels have different economic models, which reflect in part the different economic models of the vehicle manufacturers and equipment suppliers upstream (see discussions in part II). The relative compartmentalisation between the two channels, despite an increasing tendency for more head-on competition, is illustrated by the average repair and maintenance prices in the independent channel, which are between 15% and 30% lower than in the manufacturer channel (see Table 2 below)27. For standard services such as oil changes, routine servicing or tyre replacements, there are also significant price differences between the manufacturer and independent channels. Furthermore, price differences between the manufacturer channel and the independent channel are particularly marked for routine manufacturer services; this observation has been corroborated by a recent study conducted by the consumer association UFC Que Choisir28.
24. Evidence of the relative compartmentalisation between the manufacturer channel and the independent channel can also be found by looking at market shares, which vary tremendously depending on whether the market is segmented according to type of service or vehicle age (see Graph 3, page 27 below).
24 The "manufacturer channel" consists of repairers who are members of manufacturers' networks. As a general rule, these fall into two functional categories: level 1 authorised repairers, who tend to be dealers who distribute spare parts and often also sell new vehicles, and level 2 authorised repairers, who only carry out repair and maintenance works and are not authorised by the manufacturer to distribute parts. Not all manufacturers have level 2 authorised repairers.
25 The "independent channel" consists of a variety of operators. Independent repairers can carry out work on any make of vehicle, but may specialise in certain types of services. Different areas of specialisation can be found: collision repairs (independent body shops), tyres, windscreens and windows, servicing, diagnostics.
Such specialisation is related to the economic model of the equipment suppliers, which can supply a multi-make range of spare parts dedicated to certain very specific vehicle functions, and also to the productivity gains that can be made through specialisation as compared to a more general activity.
26 A detailed presentation of stakeholders can be found in paragraphs 29 to 33, and also in Box 2 in the public consultation document dated 11 April 2012.
27 It may be the case, as the manufacturers observed in their contributions to the public consultation, that the content of services differs between the manufacturer channel and the independent channel, although they were unable to produce any clear evidence of this. However, whether or not the marked price differences between the two channels are due to different service content, they do illustrate a definite segmentation of the repair and maintenance sector. Furthermore, significant price differences have also been observed for relatively standard services. Lastly, the hourly rates are substantially higher in manufacturer networks (see
§25).
28 UFC Que Choisir study published in September 2012, entitled "Réparation et entretien automobile: la concurrence en panne" [vehicle repairs and maintenance: a breakdown in competition].
Table 2 – Average prices per type of operator and reason for garage entry
Level 1 + level 2 authorised
repairers
Independent repairer Auto-centre Fast-fit centre Tyre specialist
€ €
Source : GIPA 2011 Drivers’ Study 2011, page 270
25. Differences in the hourly labour rates charged by authorised repairers and independent repairers are also significant29. The law requires garages to display their hourly rates, which will vary depending on the technical complexity of the work: T1 corresponds to the simplest work and T3 corresponds to the most technically complex work. Graph 1 below compares T1 rates (minimum, average, maximum, spread between the first and third quartile) par type of repairer.
Graph 1 – Comparison of T1 rates according to type of repairer
29 The aforementioned September 2012 UFC Que Choisir study also reported significant differences in hourly rates between the manufacturer channel and the independent channel for T1, T2, and T3 repair and maintenance works.
Source : GIPA – 2011 Repairers Study, page 93
26. In its Guidelines on the application of Regulation 461/2010, the European Commission observes that "insofar as a market exists for repair and maintenance services that is separate from that for the sale of new motor vehicles, this is considered to be brand-specific"30. Accordingly, authorised repairers for a given make of vehicle tend not to be in competition with authorised repairers for another make of vehicle. The only source of competition comes from the independent channel and, to a lesser degree and more rarely, from authorised repairers in the same manufacturer network, when they are located in the same catchment area and do not belong to the same group of dealers31.
27. Most studies tend to limit themselves to a presentation of market shares for each main category of operator at a national level, without distinguishing between service segments (1). However, the Autorité has been able to identify operators' positions according to vehicle age and certain service segments (2).
30 Source: paragraph 57 of the Guidelines. See description of the regulatory framework in section 2, part I.
31 In order to establish the level of competitive constraint between the different types of operator, any analysis must factor in both vehicle age and type of service, as the segments defined on the basis of these two criteria are more or less substitutable from the point of view of offer and demand. Lastly, a description of the position of operators nationally does not reflect differences in competitive constraint in local markets, as this may vary according to catchment areas. However, due to the fragmented nature of the repair offer and the large number of repairers, who also often offer several different types of services, information with this level of detail is difficult to obtain.
1. GLOBAL PRESENTATION OF MARKET POSITIONS
28. In 2010, the vehicle manufacturers' networks held 45% of market shares in terms of volume32 and 53% in terms of value for the entire repair and maintenance sector (excluding "DIY"). They are in competition with a fragmented offer from independent operators, who are also in competition with each other. Vehicle manufacturers' networks of authorised repairers therefore occupy an important position on the vehicle repair and maintenance sector for their specific brand, as they hold an average market share in terms of value in excess of 50% and compete with operators that are much smaller33. Table 3 below contains a breakdown of market shares for the main categories of operators defined above.
32 Number of vehicle entries.
33 Although these market share figures were submitted by the manufacturers themselves, they disputed them in their contributions to the public consultation. They put forward the 2012 GIPA Drivers' Study, according to which the manufacturers' networks hold a market share of 37% in terms of volume and 45% in terms of value. However, these figures were not retained for the purpose of the public consultation document, as the market share in terms of volume is not consistent with the market shares suggested in most other studies submitted by the manufacturers during the inquiry (Boston Consulting Group study: 48% in terms of value, TCG Conseil studies: figures as per the table, CAP studies: 47% in terms of volume, and are based on a survey of 3,897 drivers only, while the other studies are based on data that is more comprehensive and more reliable (source: Datamonitor). Although the findings of the GIPA survey are instructive concerning drivers' choices and the characteristics of the market (which is why they are frequently quoted in this Opinion) and useful in mapping trends, they cannot be used as a reliable basis for a rigorous analysis of market shares.
Moreover, in this sector, market shares in terms of value are more useful than market shares in terms of volume when assessing the respective positions of the various operators and their weight in the most profitable segments.
Furthermore, the fact that TCG Conseil’s market share figures do not include the bodywork segment does not affect the relevance of these figures. Figures produced by insurers in the course of the inquiry and the estimates in the BCG Study and the CAP Study all confirm that repairers authorised by vehicle manufacturers have a market share in terms of value in the bodywork segment of between 52% and 55%.
Table 3 – Global market shares per type of operator in 2010 and number of garage entries34
Other independent operators 14 % Tyre specialists:
2,200 Source: TCG Conseil
29. In Germany, authorised networks hold an even greater market share than in France, i.e., 58% in terms of volume in 2010. The situation in the Netherlands is comparable to that in France, with authorised repairers holding 42% of the market share. However, authorised repairers only represent 29% of the market in the UK and 32% in Italy36.
30. Moreover, although foreign vehicle manufacturers in France have authorised repairer networks that are much less dense than those of the French vehicle manufacturers37, their market shares for the repair and maintenance of their vehicles is relatively high38. Toyota holds approximately [55; 65]% of the market shares in terms of volume and Volkswagen holds [45; 55]%. This can be compared with the [40; 50]% of the market held by French vehicle manufacturers on the basis of the same sample. Ford, Opel and Fiat hold the lowest market shares: [30; 40]%.
34 Market shares in terms of value per different type of independent operator are not available. The DIY segment is not included. In addition, body shops are not listed separately, and are included in the "standalone independent repairer" and "franchised independent repairer" categories.
35 Within the independent channel, auto-centres and fast-fit centres are much more significant in terms of volume of vehicle entries than in terms of the number of centres. Furthermore, the three main manufacturer
"soft-franchises" - Motrio, Motocraft and Eurorepar - represent approximately 7% of the 34,085 repair and maintenance garages. Source: manufacturers. This corresponds to approximately 2,500 garages/centres in 2010.
36 Source: TCG Conseil. Compared to Germany, Italy and the UK, standalone independent repairers occupy a fairly small position within the independent channel in France, whereas this type of repairer is very common and represents a very large market share in Italy (source: ICDP report of September 2007, "Evolution of the independent repairer sector", page 18). At the same time, franchised independent repairers hold a larger market share in France than in the other three countries. France and, to a lesser extent, the UK also have a larger number of auto-centres and fast-fit chains. It is clear that the independent channel in France is more structured than in other European countries.
37 According to the report, Renault has 20 times more authorised repairers than Toyota.
38 Source: 2010 CAP study (Car After-Sales Performance). Vehicles aged less than 10 years represent 70% of repair and maintenance turnover in terms of value.
31. The market shares of most authorised networks have decreased slightly since the middle of the last decade, and the same trend has been noted in other European countries, as shown in Graph 2 below39. This is essentially due to the general ageing of vehicles, which is beneficial to the independent channel as it has a stronger market share for older vehicles.
Another reason for this trend is the rise in the market shares held by independent repairers for each vehicle age and in particular for vehicles aged 3-4 years, where competition between the manufacturer channel and the independent channel seems to have increased40. 32. Graph 2 below shows that market shares of authorised repairers in France in terms of value fell from 49% to 48% between 2005 and 201041. They fell from 51% to 49% in Germany, and from 36% to 34% in the United Kingdom. Market shares remained unchanged in Spain (38%)42.
Graph 2 – Market shares in terms of value held by independent repairers and authorised repairers in 2005 and 2010
Source : BCG (Datamonitor, interviews of specialists and analyses conducted by BCG)
39 The differences in market share data compared to figures mentioned in paragraph 29 may be due to different category definitions and margins of error in this sector, where the repair offer is very fragmented.
40 Source: 2010 CAP study (Car After-Sales Performance). This data suggests a drop in the retention rate, in other words, the percentage of customers for whom a routine service is scheduled in the year and who use the services of an authorised network. This rate does not exactly match the market shares of the manufacturer network, as it does not take into account all types of work (repairs in particular), but it does serve as an indicator for the routine service segment.
41 In their contributions to the public consultation the manufacturers also disputed these figures, despite having submitted the underlying study themselves. In terms of the level of market share, the manufacturers put forward the findings of the 2012 GIPA Drivers' Study (page 65), which suggest that market shares in terms of volume held by authorised networks fell by eight points between 2007 and 2011. The manufacturers have also criticised the fact that the BCG data is expressed in terms of value, rather than volume. Although it is true that the public consultation document dated 11 April incorrectly referred to market shares expressed in terms of volume, the fact that the figures are actually expressed in terms of value does not detract in any way from the interpretation made. On the contrary, it is more appropriate to base a diagnosis of competition in this market on turnover rather than on the number of vehicle entries, particularly as there are very wide variations in average prices per vehicle entry.
42 Average vehicle age rose from 8 years in 2005 to 8.2 years in 2010 (source: CCFA).
2. POSITION OF PLAYERS IN THE VARIOUS MARKET SEGMENTS
33. In view of the fragmented nature of the repair market, the large number of repairers and the fact that they propose several different types of services without differentiating between them in their accounting records in most cases, it is difficult to accurately estimate the position of operators in the different service segments presented in part A.1. However, it is possible to estimate the market shares of the vehicle manufacturers' authorised networks in the following three service segments43:
• collision repairs: estimated market share of approximately 55%44;
• window and windscreen damages: estimated 20% market share45;
• tyres: estimated 20% market share46.
34. These estimates show significant disparities between positions in the manufacturer channel according to service segments, confirming that the sector is compartmentalised and head-on competitihead-on between the various types of operators is limited. This observatihead-on is supported by the respective market shares of the dealers, authorised agents and independent operators according to vehicle age (Graph 3 below).
35. This graph very clearly shows the market segmentation according to vehicle age. While the manufacturer channel holds an 83% market share for vehicles aged under 2 years47, 70% of which is held by dealers, it only holds a 28% share in the repair and maintenance market for vehicles aged 10 years or more. The 5-6 year segment (approximately 20% of the market) is the one on which market shares are the most balanced48.
43 The 2011 CAP study estimates that in France in 2010 the authorised networks had a 54% market share in the "maintenance/routine" segment, a 41% share in the "wear and tear" repairs segment, a 61% share in the breakdown segment, a 35% share in the tyre segment and a 52% share in the bodywork segment.
44 Estimated by the Autorité de la concurrence on the basis of data received from insurers. Market share in terms of value.
45 Source: TCG Conseil. Market share in terms of volume.
46 Sources: BCG and Roland Berger. Market share in terms of volume.
47 This represents slightly more than 10% of all repair and maintenance works for all vehicles in terms of value (source: Roland Berger).
48 In their contributions the manufacturers once again contested this, citing the findings of the GIPA 2012 drivers' study, which suggest that independent repairers hold a majority market share (52%) for vehicles aged 3-4 years. However, the GIPA data, which is based on a survey of 3,897 drivers, would appear to be less reliable than the data compiled by TCG Conseil (also submitted by the manufacturers). The December 2010 CAP report estimated the market share held by authorised networks at 63% for the 3-4 year old vehicle segment.
Graph 3 – Market shares in terms of volume per vehicle age in 2010
Source : TCG Conseil – “Do-It-Yourself” excluded