As anyone who has lived in China and bought a car from new in the PRC knows, Chinese dealerships charge an absolute fortune for simple repair services. How much does it cost to change 4 spark plugs on a 2007 VW Passat at a VW dealerships? 1200RMB (192USD) according to one of my friends who is lamenting having to pay so much. The problem is that dealerships essentially have a stranglehold on the service and repair market, of course you have the mom and pop stores that are by the side of the road and say they can swap you spark plugs, but would you really trust them with a car worth two years of your salary?
The good news for budding entrepreneurs is that the cars bought during China’s golden years of 2007 to 2011 are reaching the end of their warranties and car owners are no longer willing to part with big money for the dealer stamp in the servicing log book. Some foreign servicing companies such as Grease Monkey have entered into the Chinese market, but there is still a great deal of the pie open to other service providers.
The China Daily reports on the new phenomenon that is expected to make a lot of people a lot of money:
In another sign that China’s auto market is maturing, a growing number of independent repair shops are posing a challenge to the dominance of authorized dealerships.
A recent survey by automotive news website Gasgoo found that just half of car owners now use dealer shops after auto warranties expire.
The survey also found that only 15 percent of cars older than eight years are serviced at authorized outlets.
More experienced customers often prefer independent repair shops, saying they offer equally good or even better parts and services than dealers at a much lower price.
Car detailing and customization are also lucrative revenue streams for independent shops.
China’s auto repair and maintenance market is expected to generate 700 billion yuan yearly by 2015, said the survey.
While more than 90 percent of owners use dealerships to maintain vehicles during the warranty period, the majority voice concerns over expensive, non-transparent charges.
Some 92 percent of respondents agreed that “repair and maintenance prices at a dealership are exceedingly high”, while 70 percent thought “charges are not transparent”.
Other complaints include long waits and long distances from owners’ homes.
Further fueling independent operations is the low cost threshold for repair shops, which in turn means lower prices for consumers.
Global auto component company ACDelco has more than 100 franchised shops in China. In Beijing alone, it has 48 outlets.
The company’s website said it costs only 400,000 yuan to 500,000 yuan to buy a franchise. An authorized dealership can cost up to 100 million yuan.