MUNICH -- Carmakers could lose half their aftermarket profits because of regulatory changes to Europe's auto sales and service business, says a new study.
To counter the threat, automakers are establishing discount chains, changing their franchise systems and introducing preferential treatment for selected dealers.
European Union regulatory changes to loosen the automakers' grip on servicing and repairs could cost car companies as much as 50 percent of aftermarket profits in the next five to 10 years, says a study by consultants at Booz Allen Hamilton.
Premium brands such as Porsche or BMW will be hit less hard than volume carmakers, said Michael Schwarz, principal at Booz Allen Hamilton in Munich and author of the study.
"Customers of premium brands go more regularly to their traditional dealership," Schwarz said. "Their brand loyalty is higher."
Aftermarket sales and service can contribute up to half of an automaker's operating profit.
The EU's move last year to increase competition in the automotive services sector threatens those revenue streams. Changes to the auto industry's so-called block exemption from normal EU competition rules reduce automakers' rights to decide who sells and services their cars.
Fresh legislative proposals to deregulate the so-called crash-parts aftermarket in Germany, France and other EU markets would be another blow to automakers' spare parts profits.
But many automakers including Mercedes-Benz and Volkswagen are more optimistic than Booz Allen.
"We have detected almost no recognizable changes in the prices for parts and services," said Günter Egle, senior vice president for global service and parts for Mercedes in Stuttgart.
"We are absolutely satisfied with the way our business is developing," he said.
Arno Kalmbach, the VW director who manages dealer relationships, also said aftermarket business has been steady.
"Sales are as good as last year, and prices for parts and services are actually stable," he said.
Still, automakers have been taking steps to secure aftermarket revenues.
VW has upgraded its customer service to dealers by increasing the number of traveling representatives. It has also set up a 70-dealer network of "Stop and Go" service outlets. Renault has created the service outlet "Minute" in France. Both chains work on cars of all brands.
Some automakers are considering a stronger aftersales presence in the used-car market. Extended warranties and cheaper parts could be used to enhance customer loyalty.
Mercedes tried to officially sell used parts between 2000 and 2002, but dealers were unenthusiastic and the program failed.
"We may try this approach again, but reconsider the marketing," said DaimlerChrysler's Egle. He did not rule out creating a separate brand for used parts.
Carmakers are also differentiating the service they provide to dealers. Though under the new EU retail rules they must provide services to all dealers, carmakers often only provide rapid or overnight parts delivery to brand dealers.
Suppliers are also affected by the block-exemption changes. But German supplier Robert Bosch, which has operated its own aftermarket service chain since 1921, said its sales strategy didn't require any changes.
"We already are where many want to get with the help of block-exemption regulation," said Mathias Ganzhorn, a Bosch European marketing director.
Bosch will add premium services such as replacement cars or a car-pickup-and-delivery service, Ganzhorn said.
Bosch has 10,000 service outlets globally and wants to reach 20,000 in future.