Scrappage: scrap the negativity?

Vehicle manufacturer-led schemes have put scrappage back on the agenda. We were worried last time – should we be worried now?

Published:  28 November, 2017

With new car sales on the slide during 2017, vehicle manufacturers delved into their big ideas bag and pulled out a classic from the turn of the decade: Scrappage. At the last count, 17 carmakers  including, Volkswagen, Skoda, SEAT, Audi, Ford, Mazda Renault , Hyundai and Toyota had set up schemes. Money on the table varies, but some are offering motorists up to £8,000.

While these are all manufacturer schemes with no government backing, they bring back memories of 2009-2010 when the official programme was offering motorists £2,000 to scrap their old banger. Many in the aftermarket were pulling their hair out at the thought of customers scrapping perfectly sound older cars to get a discount on a brand new vehicle that would probably not see the inside of an independent garage for some years.     

The freedoms of Block Exemption and the overall business acumen of the aftermarket may have mitigated the damage a few years ago, but now it’s back on the agenda. There are even suggestions that government might consider another official scheme to accelerate the exit of diesel vehicles from our roads. You know, those diesel vehicles that a previous government encouraged in the first place?

Talk about dirty politics.

Anyway, while the manufacturer schemes mostly expire by the end of the year, should we be concerned about the return of scrappage?

Impact
Wendy Williamson, CEO at the Independent Automotive Aftermarket Federation (IAAF) is not a fan: “In general, vehicle scrappage schemes can – and do – negatively impact the aftermarket long-term. An example of this is the 2009 scrappage scheme which removed up to 400,000 serviceable vehicles from the aftermarket and did little to support UK jobs, as most vehicles acquired under the scheme were from non-UK factories. Through offering consumers an incentive, scrappage schemes may be seen as a cynical ploy to increase new sales. And herein lies a major problem, as we’re not just talking about off-road cars consigned to the scrapheap that were due their MOT or service, or requiring replacement parts. While the independent automotive aftermarket is very adept at servicing newer vehicles, much of the servicing and repair of new, zero to three year old vehicles is with the main dealer.

“New vehicle sales are declining, hardly surprising given the highs reached in recent months and years but, the repercussions for the aftermarket could be far worse with new vehicles flooding the market thanks to scrappage schemes.”

Legislative loophole
One obstacle of a potential newer vehicle parc for the aftermarket is the forthcoming Type Approval legislation. This relates to the diagnostics, repair and maintenance of vehicles and are an important step towards improving the legislative framework for independent operators. Over 184 amendments were approved and importantly for the aftermarket included a number of key revisions, the most important of which is keeping the OBD port to the vehicle open and accessible.

Wendy has serious concerns here: “There is a risk that some of the vehicle manufacturers would use a legislative loophole to replace the OBD connector with another system in new models of cars, potentially gaining a monopoly on access to vehicle technical condition data.

“A new vehicle parc makes this more feasible and also raises the question of data access.  If we get the access rights that we should enjoy under current legislation then providing the workshop has the right tools and equipment they should be on a level playing field with the franchised sector.

“However, the information the aftermarket currently receives in not at the same detailed level as the dealer network and this is

For Wendy, the larger issue is not scrappage, it’s what’s coming down the line behind newer cars: “The big threat at the moment is that through ‘the extended vehicle’ the aftermarket will no longer be able to enjoy unmonitored access to the vehicle information.”

Minimal
Opinions on scrappage vary however. While scrappage takes vehicles out of the car parc,  more are always coming in. Terry Gibson, head of member services at the Independent Garage Association (IGA) feels scrappage is not a big concern, or even that relevant to the sector: “So called ‘scrappage’ schemes are good for car sales – period. The last time there was a genuine
So, garages are not losing business, and hopefully not losing sleep either. After all, from a legislative and a practical standpoint, today’s independent aftermarket is a much more sophisticated place – they can handle more modern vehicles in larger numbers – why not let them come?  “Exactly,” replies Terry. “Modern independent garages invest heavily in tools, technology and training to keep pace with changes in vehicle technology. We say – bring it on.”

Of course, legislation can change, and you sometimes take your life in your hands when you trust it to committee. Brexit could have an impact on the Block Exemption Regulation (BER) and Type Approval might not go ‘our’ way. Could independents lose the right to service new vehicles without invalidating the warranty?

Terry has a positive view: “While there is no certainty in this area – and a certain amount of noise in some quarters, the high volume of European cars sold in the UK suggests that it is unlikely that we will see any wholesale change in the right to repair arena.”

Assuming the schemes all succeeded, a surge of new cars coming into the parc could speed up some of the more worrying trends, like connected car. However, the industry is resilient says Terry: “Although it’s true that some of issues around connected cars may present challenges for independents, the inevitable outcome of an increase in challenge is an increase in solutions – driven by the efforts of trade bodies like the IGA.”

It’s not a simple picture is it?  “Very little is simple these days,” adds Terry, but one thing is for sure, independents will never lose customers if they continue to focus on the personal service and honest communication that creates the lasting customer relationships that are the hallmark of independents’.”

For industry consultant Andy Savva, scrappage is a non issue: “I don’t worry about scrappage. As far as I am concerned it is a marketing ploy to pull forward sales. Then again, I was never concerned about my business being damaged by older cars being superseded by newer models.”

Andy’s concern is more about business planning in the aftermarket: “Concerns about scrappage are really come down to fears about change and the ability to plan ahead. Unfortunately, many businesses in our industry don’t do so well in this area.”

Andy believes businesses have all the information they need to work forward and invest, if they look at the sales going on at any given moment: “When I was running my garage, I focused on the three popular brands in my area. I would look at the sales figures and know that cars from those brands were going to be coming through my doors for the next three or four years.”

Planning
Knowing what to do is one thing, applying that knowledge is another though: “In the aftermarket, most garage owners don’t plan ahead. The average mainstream garage might be looking a few days ahead, or a couple of months at best, but not much further than that. It is one of the problems we face as an industry.”

For those who are looking forward, there is a bright side to this, although it’s a little hard on those who don’t: “Within five to seven years, a third of the garages currently in trade won’t be in trade, which means there will be more business for those who are looking forward.

“It’s not just independents who struggle remember – if franchised dealers need scrappage to sell cars, what does that say about their ability to cope?”

On diesel sales dropping as EV and hybrid sales rise, Andy observes: “EVs and hybrid sales are rising, from a very low starting point. If you think your business should be going in this direction, look at where these sales go, look at what’s selling in the local area and plan investment accordingly.

“It’s not rocket science.”


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  • Part two The good and THE GREAT  

    In part one, we looked at the start of the ‘diagnostic process.’ The first steps were customer questioning, confirming the fault and knowing the system and its function. These help the technician to build the ‘big picture’ necessary to repair the vehicle correctly.
    In this article we will look at the next four steps.

    Step 4: Gather evidence
    It is easy to overlook this step as many technicians think of it as the overall ‘diagnosis.’ However, once the technician understands the system, gathering evidence will provide key information. This step is normally best carried out with the use of test equipment that does not mean the dismantling of systems and components.

    Many technicians have their own favourite tools and equipment but this list can include (but not limited to)
    the following:
    Scan tool – It is always best practice to record the fault codes present, erase the codes, and then recheck. This means codes which reappear are still current. Remember that a fault code will only indicate a fault with a circuit or its function. It is not always the component listed in the fault code that is at fault

    Oscilloscope – An oscilloscope can be used for a multitude of testing/initial measuring without being intrusive. Some oscilloscope equipment suppliers are looking at systems within high voltages hybrid/electric vehicle technology. The waveforms produced by the test equipment can be used when analysing the evidence and may indicate that a fault exists within a system. An understanding of the system being tested will be necessary to understand the information. This may even include performing sums so all those missed maths lessons at school may come back to haunt you. It may take time to become confident analysing the waveforms, so be patient

    Temperature measuring equipment – This can include the use of thermal imaging cameras. Most systems that produce energy/work will also produce some heat. The temperatures produced vary from system to system. Examples include everything from engine misfires to electrical components, as well as air conditioning system components and mechanical components such as brake and hub assemblies. The possibilities are endless and results can be thought provoking.

    Emission equipment – By measuring the end result, an exhaust gas analyser can show you if the engine is functioning correctly. The incorrect emissions emitted from the exhaust help indicate a system fault or a mechanical fault with the engine

    Technical service bulletins – Many vehicle manufacturers produce technical service bulletins (TSBs) that are generated by a central point (usually a technical department) from the information that is gathered from their network of dealers. Some of these may be available to the independent sector either through the VM or through a third party – It’s always worth checking if these exist. They may indicate a common fault that has been reported similar to that the technician is facing. Some test equipment suppliers may provide TSBs as part of a diagnostic tool package

    Software updates – Many vehicle systems are controlled by a ECU. Most vehicle manufacturers are constantly updating system software to overcome various faults/  customer concerns. Simply by updating the software can fix the vehicles problem without any other intervention of repairing a possible fault. This is where having a link to a vehicle manufacturer is vital in repairing the vehicle

    Hints & tips – Most technicians will have a link or access to a vehicle repair forum where they can ask various questions on vehicle faults and may get some indication of which system components are likely to cause a vehicle fault

    Functional checks – Vehicle systems are interlinked and typically share information using a vehicle network. The fault may cause another system to function incorrectly, so it is vitally important that the technician carries out a functional check to see if the reported fault has an effect on another system. By carrying out this check the technician again is building the big picture

    Actuator checks – Most systems today are capable of performing actuator tests. The technician can perform various checks to components to check its operation and if the system ECU can control the component, often reducing the time to the diagnosis, by performing this task the technician can identify whether it is the control signal, wiring or component or it is sensor wiring. This function can be used in conjunction with serial data to see how the system reacts as the component functions

    Serial (live) data – The technician can typically review a vehicle system serial data through a scan tool. Having live data readings to refer to can help you review the data captured. Using actuator checks and viewing the serial data can also help the technician to identify a system fault

    Remember to record all the evidence gathered so it can be analysed during the next step in the diagnosis. We can’t remember everything. If the technician needs to contact a technical helpline they will ask for the actual readings obtained recoding the data gathered will help.

    Step 5: Analyse the evidence
    Analysing evidence gathered during the previous steps can take time. The technician needs to build the big picture from all the evidence gathered during the first few steps. You need to analyse the information gathered, and decide on what information is right and wrong.

    This step may rely on experience as well as knowledge on the product. You should take your time – don’t be hurried. Time spent in the thinking stages of the diagnosis can save time later. Putting pressure on the technician can lead to errors being made. It may be necessary to ask the opinion of other technicians. If the evidence is documented it may be easier to analyse or share between others.

    Step 6: Plan the test routine
    After analysing the evidence gathered it’s now time to start to ‘plan’ the best way to approach to the task or tasks in hand.

    The technician should plan their test routine, decide on what test equipment should they use, what results are they expecting, if the result is good or bad  and which component should they test next.

    Document the plan – this enables you to review decisions made at this stage in the next step. The technician may not always get it right as there may be various routes to test systems/components. The test routine may have to be revisited depending on the results gathered during testing. Documenting the test routine will provide a map.  Also, don’t forget to list the stages, as this is something that could be incorporated into an invoicing structure later.

    The technician should indicate on the routine what readings they expect when they carry out the system testing. This can be generated by their own knowledge/skill or the expected readings may come from vehicle information which they have already sourced. If the information is not known at the time the test routine is planned, then the test routine may highlight what information is required and what test equipment is needed. You shouldn’t be afraid to revisit the plan at any time and ask further questions on which direction the tests should take. If the plan is well documented and the technician becomes stuck at any point, they can pause the process and revisit later. Also the information can then be shared with various helplines that support workshop networks.

    Step 7: System testing
    The technician then follows their pre-determined plan, if it is documented they can record the results of the test(s) as they follow the routine.

    Many technicians tend to go a little off-piste when they get frustrated. Having the routine documented can keep the technician on track and focused on the result. If the routine is followed and the fault cannot be found the technician may have to go back to the analysing the evidence or planning the test routine. The technician shouldn’t be scared of going back a few steps, as I said previously analysing the evidence takes practice and can be time consuming, not to be rushed.
        
    Summing up
    Remember to follow the process. It is easy to be led off track by various distractions but don’t try to short circuit the process. Some steps may take longer than first thought to accomplish than others. Some distractions may be outside of your control, and it may be necessary to educate others. Practice, practice, practice. Refine the process to fit in with your business and its practices, the business could align its estimating/cost modelling to the process, being able to charge effectively and keeping the customer informed at each stage of the process.

    Coming up...
    In the next article I will be looking at the next four steps which are; Step 8: Conclusion (the root cause), Step 9: Rectify the fault and Step 10: Recheck the system(s). The last article in this series will indicate the final three steps and how to fit them all together in order to become a great technician and perhaps succeed in Top Technician or Top Garage in 2018.



  • Connecting to tomorrow’s lean workshop 

    In a previous article, I had written about the fourth industrial revolution, but I suspect that this may not have been the most threatening topic that you were thinking about concerning your day-to-day workshop business – the business of diagnosing and repairing cars, using a range of workshop equipment and agreeing ‘partnership’ relationships for the technical data and replacement spare parts.

    The way that you work may have evolved over the years, mainly due to the increasing vehicle technology, but the basic principle has remained the same. You have customers who choose to come to you due to the good service and competitive pricing that you provide. However, the world of vehicle repair is changing and if you do not adapt, you will die. Unlike previous industrial revolutions, the pace of change is now much faster. So how is this going to impact the aftermarket?

    Approach
    The ‘internet of things’ (IOT) will change the approach to diagnostics, service and repair of vehicles, but also the way that the workshop equipment will be connected, the way that you handle your customers’ data and the way that you exchange data outside of the workshop, both as a consumer of data, but also as a data provider in data trading eco systems. All this will change the way that you do business. This might all sound like some science fiction concept, but this is already happening today with many vehicle manufacturers and their associated main dealer workshops. If the aftermarket does not start to develop the same approach and service offers, then it will not be able to compete.
        
    However, to understand this better, let’s start with today’s ‘classical business model’ and then see what will change. Today it all starts with your ability to directly communicate with both your customer and with their vehicle and (for the more difficult jobs once that vehicle is in the workshop) your ability to offer a competitive quotation.
        
    Once the vehicle is in your workshop, the diagnostic work or the replacement parts are identified, the parts ordered and the ‘complete repair process’ is conducted. However, there are three fundamental aspects to ensure that this process can be fulfilled – firstly, being in direct contact with the customer, secondly, being able to directly access their vehicle via the OBD plug and subsequently its data and thirdly, using that information to conduct
    the complete repair process in the workshop.

    Internet of things
    So, what is changing and how will the ‘IOT’ help to implement new and ‘lean’ business models to remain competitive? It will still all start with the ‘repair process’, but this will no longer be with the customer initially calling you or coming into the workshop with a question of ‘can you fix my car?’, but it will be through remote monitoring of the ‘thing’ – the vehicle (via OBD plug-in devices or in-vehicle telematics platforms) to conduct remote diagnostics, prognostics and predictive maintenance services. This will inform you when the vehicle needs work and should lead into being able to contact the customer and offer a competitive quotation for the work needed that ultimately should still result in the vehicle coming into the workshop.
        
    When the vehicle does arrive, you will already know the details of the vehicle and the necessary work, so can configure the workshop resources (which ramp, what workshop equipment, what technical data, what replacement parts etc.), before the vehicle arrives.
        
    You can also ensure that the various ‘external data’ that may be needed for the job is pre-arranged and can be downloaded into the specific workshop equipment which is needed as part of the repair process. This can be a ‘just in time’ download of the technical data, the diagnostic test routine, the replacement part fitment method and so on. All this can easily reduce the workshop time needed to complete the repair process by 50%.

    Captured
    This may already sound like a great move forward to be lean, more profitable and more competitive, but there is even more! You also now have new ways to use the data that you have captured. Not only will you know the faults of the specific make and model of vehicle, which in turn, you will store in your database (non-personal, machine generated data), but you will also be able to use this data to exchange or trade data with your existing suppliers or other (new) partners to reduce both your costs and theirs. Welcome to the world of data trading – and get used to it, because it will be your future.  The internet of things, means linking to the ‘thing’ (e.g. the vehicle and workshop equipment) and then handling the data created, by using it in new ways to make the whole workshop and vehicle repair process more efficient, as well as supporting new business models beyond just what you can do today in the workshop. However, let’s also take a step back and look at workshop equipment as part of ‘the internet of things’. It already starts with a new range of ‘connected’ workshop equipment that will not only be able to be remotely monitored by the equipment manufacturer to ensure better reliability, together with faster and cheaper repairs, but will also be the basis for ensuring that the technical information you require for the job ‘in hand’ is supplied not only ‘just in time’, but also charged for on a new competitive bidding basis from a range of suppliers and charged on an individual job basis. Going a stage further, you may be able to exchange data with your equipment suppliers so that they can collect ‘big data’ from all their customers and use it for their own new data trading business models and in turn, use this to offset supplying data or services to you at
    a lower cost. This may also apply with your parts suppliers to provide them with better forecasting and trend analysis.

    Data centric
    The classic business model of today that is ‘customer centric’ will change to become ‘data centric’ that creates added value to the consumer’s experience, but also to the service provider – you!

    This change of accessing the vehicle, your customer and use of the vehicle-generated data is a disruptive evolution that will drive (no pun intended) a revolution in the aftermarket. However, the key issue will be the ability to access the vehicle, its data and in-vehicle displays to offer your services when the vehicle needs work and that is likely to be a legislative issue as the vehicle manufacturers try to use their technological advantage to dominate and control tomorrow’s repair and maintenance business. It’s up to you to fight not only for your ‘right to do business’, but for your ability to evolve your current business models into those of tomorrow.

  • Launch UK introduces new X431 Euro Tab 

    Launch UK, has introduced its latest addition to the X-431 range of diagnostic tools, the X-431 Euro Tab. Based on the latest Android technology and Launch vehicle software, the X-431 Euro Tab harnesses Launch’s diagnostic technology, including wide vehicle manufacturer coverage, test functions, dealer level special functions and live data with accurate comparative values. The in-built hi-res camera enables identification of the vehicle model by photographing the licence plate and VIN number, with automatic VIN recognition for most makes and models. It is supplied with a two-year warranty, two-years’ subscription and printer.
    www.launchtech.co.uk


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