Caring for your car comes at a cost – but can service packs cut the bills?
Whether it’s for the rent, mortgage or a smartphone, most of us have come to the conclusion that spreading the cost of living with monthly payments often allows us to manage our finances better.
It’s a trend that’s caught on with car buyers. According to the Finance Leasing Association, 76% of cars bought by private individuals were funded on finance in 2014. So it’s hardly a shock that car servicing is heading in the same direction.
Manufacturers and their franchised dealers offer a bundle of several years of servicing, at what we’re told is a preferential price. But is it right for all drivers? Let’s take a closer look…
Why do car makers offer service packs?
Car makers offer service packs for one simple reason: to keep customers loyal to franchised dealers.
This is partly because dealerships make more money from servicing cars than selling them; partly because franchised dealers have historically seen a decline in servicing numbers; and partly because when such service plans are bought at the same time as a car’s finance package, the customer is typically 25% more likely to buy the same brand of car from the same dealer again (according to the Castrol Professional Servicing & Repair Trend Tracker).
Surely a service pack is a waste of money on smaller, cheaper cars?
Not so hasty!
Let’s take the company and car that really kick-started the trend for selling service packs: Mini. It calls its pack TLC. Buyers of a new Mini Cooper hatchback can pay £399 and in return they get five years of servicing up to a maximum mileage of 50,000 miles. That works out at just under £80 a year, which is seriously good value. It even includes replacement spark plugs for petrol models, and a change of brake fluid.
Mini said this saves drivers £629 - if paying the national labour rate of £99 an hour and £12 per litre of oil. And bear in mind, service packs guard against future price rises. Now you’re interested, aren’t you?
What if I drive something bigger?
It’s not so clear-cut. A good example is Britain’s best-selling compact executive car, the Mercedes C-Class. It offers a Service Care plan for three years, with one service per year based on a maximum annual mileage of 15,500 miles.
On the plan, drivers would pay £30 a month, or £1,080 in total. But speaking with a Mercedes dealer, paying as you go for two ’A’ bi-annual minor services and the major ’B’ bi-annual service would tot up to £1,150 at current rates. It’s a very modest saving.
Can you buy a service pack for used cars?
Yes. But this is where careful crunching of the numbers is required.
When cars are older and no longer under warranty, many drivers have them serviced by a local garage, rather than a franchised dealer. Local garages typically have a far lower labour rate than the national average of £99 an hour. So the only way to tell is to call your local garage, ask for a quote for the next couple of services, and check it against comparable packages on offer at the glitzy dealerships.
What other benefits are there to service packs?
With franchised dealers, the workshop should only fit original equipment parts to your car. That is to say, exactly the parts that were fitted to it when it was built. This brings the benefit of a guarantee (typically for one or two years) for the part and for the workmanship involved in fitting it.
Any other incentive for giving my money to a flashy showroom/workshop?
Aside from getting a nice cup of coffee and wifi while you wait, the car makers will stress that technicians at franchised dealers’ workshops have been trained by the manufacturer so they should know your car like the back of their hand.
The service departments are also supplied with constant information and guidance about technical issues with the brand’s cars. They sometimes even perform updates to the car’s electronic software without the customer knowing about it.