Maybe the higher service charges at franchised dealers should be seen as an insurance

Brian Taylor author of Castrol Trend Tracker

The cost of fuels and lubricants rose the highest - by 41.6% between 1996 and 2000 - according to figures from the Society of Motor Manufacturers and Traders.

The figures appear in the Society's new Castrol Trend Tracker, a report monitoring car servicing prices and market trends.

Increased costs

The cost of car components rose well above the retail price index (RPI) - the domestic inflation benchmark.

Repair costs have risen by 27.7% over five years

Between 1996 and 2000, the costs of car components rose by 29.7%, while the RPI increased by 17.6%.

During the first half of the year, the cost of maintenance and repairs increased by 6.4% - 4.3% higher than the RPI for the same period.

Increased labour rates, for work done on cars, partly account for the increase, and more sophisticated on-board technology will continue to push prices upwards.

But, according to a separate survey from Market Facts and Business Information (MFBI), market analysts, mechanics are earning more but doing less work.

Labour rates have risen from �29.58 per hour in 1995 to �37.08 in 2000, but mechanics are doing 25% less work.

They make most of their money through servicing - on average 28.8% profit - compared to 19.5% in body shops.

Service monopoly?

Servicing your car at a franchised dealer is a third more expensive (35%) than having your car repaired at an independent dealer, according to MFBI's survey.

Exclusive dealer networks charge an average �176 compared to �130 at an independent.

Critics say that franchised dealers are virtually running a monopoly through warranty period servicing.

"Most car manufacturers and franchised dealers will state that a car's warranty is invalidated if it is not serviced during the warranty period by a franchised dealer or some other manufacturer-approved garage," says Robert Macnab of MFBI.

About 70% of new car owners use a franchised dealer, compared to only 20% with used cars. When warranty periods expire, the majority of car owners go to independent garages.

And some experts believe that dealers are likely to extend the typical warranty period of three years to five years by 2005.

Car facts

On average car owners have 1.3 visits per year to a garage Head gaskets are most likely to go wrong, followed by gearboxes, alternators and starter motors

MFBI expects the European Commission to bring in new regulations next year that will allow independent garages to compete with franchised dealers networks for warranty period servicing.

The Block Exemption rules which govern the UK car market are due to be reviewed in 2002.

However, some experts say that cars regularly serviced by a franchised dealer retain their values better than one serviced by an independent garage.

Brian Taylor, author of Castrol Trend Tracker, said: "Maybe the higher service charges at franchised dealers should be seen as an insurance."