Extended Service Agreements, Not Right to Repair, Are the Real Aftermarket Story

Manufacturing has spent the last few years absorbing structural shifts in how OEMs relate to customers after the sale: tighter margins on new equipment, more price transparency, more channels competing for the same purchase, and rising expectations around uptime and digital service. Right to repair is the loudest of these shifts, because it’s legislative and adversarial, with hearings, settlements and a clear opposing side. But manufacturers treating it as an isolated legal threat are missing that it’s one piece of a broader realignment of who controls the aftermarket relationship.

Parts pricing power is eroding as customers get better price visibility and more sourcing options. The dealer channel faces more competition for the same purchase, with buyers increasingly willing to shop around rather than default to convenience. Digital capabilities, such as real-time parts data, automated ordering and predictive service, are turning into the baseline for everyone, not the edge that a handful of manufacturers used to have. And now right to repair is opening up the diagnostic and parts data that used to be the moat itself.

Four pressures, one common effect: proprietary control is fading as a competitive advantage, on roughly the same timeline for nearly everyone. Plenty of OEMs never had to compete on service, because a locked-down parts and diagnostic ecosystem did the competing for them. That era is ending.

Right to Repair in Context

Of the four, right to repair gets the headlines because it carries a regulatory clock, and it’s moving at different speeds across industries. Agriculture went first: a Colorado state law in 2023, then industry-negotiated MOUs with five manufacturers covering roughly three-quarters of agricultural machinery sold in the U.S., and then federal and private legal action that produced two Deere settlements this year alone: a $99-million class-action settlement and an FTC settlement requiring Deere to give farmers and independent shops the same repair tools its dealers get. Automotive, including trucking, is now formalizing that same sequence federally, with REPAIR Act provisions folded into the Motor Vehicle Modernization Act, which codifies the 2014 and 2015 repair MOUs and gives the FTC enforcement authority. Construction and mining don’t have a dedicated statute yet, but pressure is arriving secondhand through industry bodies like AEM and AEMP, with AEM itself flagging that right to repair could ride along on federal surface transportation legislation. Several manufacturers are already moving on their own. 

Manufacturers in construction, mining and trucking shouldn’t read the absence of a statute as extra time. It’s a window to study what agriculture and automotive got right or wrong, and get ahead of the trajectory with a voluntary, industry-negotiated standard, rather than waiting for a state legislature to set the terms.

Getting access to the data doesn’t automatically win independents the customer, and it doesn’t automatically cost manufacturers the customer either. The same diagnostic feed an authorized dealer gets tells an independent repairer what’s wrong with a piece of equipment, not which parts to stock or how to get ahead of the next issue before it becomes an emergency call. Manufacturers and their dealer networks still hold that advantage in service history, installed base and network footprint. It only counts if they put it to work.

Extended Service Agreements

The response taking shape across all of these pressures looks the same: longer-term service relationships. Extended warranties, multi-year service agreements and preventive maintenance contracts give equipment owners predictable cost and coverage, and keep the customer inside the authorized network by choice rather than by default. Strip right to repair out of the picture entirely, and service revenue is still the more predictable, durable line on the P&L compared to new equipment sales, which move with construction starts, planting seasons, and freight rates. BCG’s latest industrial services benchmark found that services carry gross margins roughly twice the 15% to 25% typically earned from equipment sales, with top performers reaching around 42%, and that services growth now outpaces new equipment sales for most companies surveyed. That’s the revenue stream manufacturers need to protect as customers gain more options: cheaper parts, more competitive dealers, capable independents, and now open data.

A multi-year service contract is a risk commitment as well as a retention tool. The manufacturer has to understand how failure rates, parts costs and labor are likely to shift across the life of the agreement, and those shifts look different depending on the equipment and how hard it’s being run. This is where organizations get it wrong: pricing contracts using static assumptions or spreadsheet models that can’t keep pace with the real, changing cost of delivering on them (tariffs, anyone?).

The gap isn’t theoretical. In one analysis of a manufacturer’s service contract portfolio, Syncron found that 28% of contracts were loss-making, and that bringing just those contracts back to break-even represented a $13.6 million opportunity. Built on shaky pricing, a contracted-service strategy turns a promising revenue stream into a margin problem, the opposite of what it was supposed to do.

The contract has to reflect the real cost of support, and the network needs the parts, capacity, and visibility to meet the commitment. Get the economics wrong and the contract erodes margin; fail to deliver and it erodes trust.

Taking the Advantage Back

Many OEMs read right to repair as a straightforward loss: a moat drained, a level playing field handed to independents who didn’t have to build the service infrastructure to earn it. That view is understandable, but incomplete. Right to repair doesn’t take away an advantage manufacturers were entitled to keep forever; it removes one that was never going to hold indefinitely. What it does is push OEMs toward a new source of advantage, and extended service agreements are that source.

Data access levels the field on information, not execution. Manufacturers and their dealer networks still control the service history, the installed base and the network footprint, and a well-priced, well-delivered contract turns that depth into something independents can’t easily match: a standing commitment that the customer doesn’t have to think about.

Right to repair is forcing part of this conversation, but the pressure was already there from three other directions. Manufacturers that treat aftermarket as a back-office function will keep feeling all of it as a threat. Those that treat it as a growth business, and price their service contracts like one, will turn a leveled playing field back into a competitive edge.

Ben Groeneveld is industry principal for global supply chain solutions at Syncron.