By Andy Savva

Good contracts go to the heart of good business, and employment contracts are part of the story. In the last issue we noted the importance of having a written contract, how they are constructed and varied. But what other practical considerations should employers take notice of?
    
The first is, according to Philip Richardson, a partner and head of employment at Stephensons Solicitors LLP, to understand what a breach of contract is. “This,” he says, “is where either party breaks an express or implied term of a contract. Examples of an employee’s breach include violence, theft, fraud and gross negligence. If the employer finds this has happened they may be entitled to dismiss the individual immediately.” However, he adds that it is important that the employer has genuine grounds for taking such action otherwise it could face a legal claim from the departing employee for unfair dismissal and breach of contract. He offers examples of an employer’s breach that include demoting an employee or failing to pay them without good reason – “if this happens then it may give the employee the entitlement to bring a claim against the employer in the Employment Tribunal.”
    
At the outset of the employment relationship, disputes aren’t usually envisaged. However, Philip says “a shrewd employer will often put mechanisms in place in the employment contract to protect its position should a dispute arise.” Common clauses that can offer assistance to the employer include the following:

Garden leave
If the employer gives an employee notice of dismissal it may decide to place them on garden leave. Philip says the benefit here is that during this period, the employee is usually prohibited from attending work for the duration of their notice period and prevented from contacting other employees or key clients of the business during the interregnum. “This,” he says, “gives the employer the opportunity to deal with employees whose contract has been terminated in acrimonious circumstances and also allows them to protect confidential information and prevent the employee from using it against the company in the future.”
    
He warns that if an employer wants to utilise this then it is important to include a clause to this effect in the contract of employment otherwise the employer may have difficulty in exercising it. It is also important to note that employees maintain all their contractual and statutory rights and benefits until the end of the garden leave period.

Restrictive covenants
This can be a particularly useful clause to include in the employment contract as it sets down the obligations on the employee after his contract is terminated. Philip says the most common types of restrictive covenant prevents the employee for working for a competitor, usually within six months to one year of leaving the business and “can prove extremely useful to protect confidential information and trade secrets.”
    
Another common form of a restrictive covenant is a non-poaching clause. This prevents the former employee from enticing the employer’s staff away from the business to join him/her in working for a new employer.
    
However, Philip says that it can be difficult to enforce a restrictive covenant against a former employee, “especially if the clause is unreasonable and does not protect a legitimate business interest as the court may declare the clause void.” He explains that this is because the courts are reluctant to place too great of a restriction on employees after termination. But in practice Richardson thinks that the mere existence of the clause may make the employee think twice before acting in breach, meaning “that a restrictive covenant can be a valuable contractual clause for an employer despite the concerns about its enforceability.”

Deductions from salary
A last, but useful, clause for the employer to include, at least from Philip’s perspective, is one that entitles it to make deductions from the employee’s salary in certain circumstances. He says that the most common types of deduction usually contained in the contract of employment include where the employee has caused financial loss to the employer because of their negligence or misconduct, or where the employee leaves shortly after having incurred substantial training costs. However, he cautions employers to “exercise caution in drafting and exercising this clause as any deduction that is not permitted by the clause could be considered unlawful.”

Some people listen but they don’t hear, others are disbelievers, while others consider that if it worked yesterday it will still work tomorrow. Many of us don’t like change, but I am sorry to inform you, but change is a’ coming!
    
I was recently discussing with a workshop owner about the legislation that helped his business, but when I mentioned ‘the third mobility package’ his eyes glazed over like I was Kaa the snake from Disney’s Jungle Book and I was trying to hypnotise him!
    
However, this is not a work of fiction, but the serious issue of how you need legislation to support your business. Currently, there is a lot of discussion during the remaining tenure of this Commission in preparation for the next European Commission in September 2019, concerning how a whole variety of ‘mobility services’ around vehicles will be provided and what legislation will be needed, which will impact the future of the European aftermarket, but also the UK after Brexit.
    
Sorry to be the messenger of doom and gloom, but the automotive industry is changing and with it, the aftermarket. It may not be too long before you become aware of just ‘how good you have had it’ and to use another colloquialism, ‘you will miss it when it’s gone’. So, what’s going on in Brussels?
    
Vehicle technology is changing at an ever-increasing rate, but most critically this includes the connected car, where a vehicle and its data can be accessed remotely. This is great news for the development of new services, new diagnostic and repair methods, the vehicle has become part of the internet of things that enables traffic flow management, the implementation of intelligent transport systems to reduce accidents and ultimately, autonomous vehicles. In legislative terms this creates a whole new raft of challenges – but most critically, how to handle the safe and secure communication with the vehicle.
    
The third mobility package seeks to address some of these aspects, one of which is fundamental – who controls access to the vehicle and subsequently data. In simple terms, simply plugging in to a vehicle to conduct diagnostics or repair and maintenance will be controlled by the vehicle manufacturer unless the legislator does something. To most of the UK aftermarket, this is an ‘out of sight and out of mind’ scenario. However, we are at a crossroads and the only way forward is legislative action.
    
So, what else are the jolly Eurocrats in Brussels working on that may impact the aftermarket?    
    
Although this may be an excellent example of how slowly the wheels of legislation can turn, one of the most important ‘left overs’ from the Euro 5 legislation that came into force in 2007, is the inclusion of a reference to ISO 18541, which standardises the access to repair and maintenance information via vehicle manufacturers’
websites. Additionally, and linked to the ISO 18541 implementation, will be the inclusion of the SERMI scheme – the Secure Repair and Maintenance Information which will provide accredited access to vehicle anti-theft information, data and parts for independent workshops. Both of these should significantly help in avoiding having to refer your customer’s vehicle back to a main dealer to finalise a repair job.
    
In another recognition of increasing vehicle technology, there will be the finalisation of the access and data requirements to test electronically controlled safety systems via the OBD port in Roadworthiness Testing – the MOT test to you and I. However, there is much discussion, both in Brussels and in the ISO standardisation, about exactly what the test methods will be and what data the vehicle will provide. There is some risk of the vehicle just testing itself without the ability to have independent functional testing. Oh what fun we can look forward to with older vehicles when inventive ways are found to avoid that pesky little MIL light coming on!

Multi-faceted
This also leads into another discussion around how access to the vehicle will be possible. The beloved OBD connector and the corresponding data for diagnostics, repair and maintenance is now referenced in the revision of the Euro 5 legislation (EU 2018/858), but it is by no means clear exactly what this means in technical terms, or indeed how the access may be controlled by using electronic certificates. No firm proposals are yet on the table and the corresponding menu of whether it will be a feast or just some crumbs will be a major subject of discussion. This is yet another example of how connecting to an object that is part of the internet of things is a multi-faceted topic that will impact the aftermarket. This moves into another sphere with the inclusion into legislation of remote diagnostic support (RDS) – originally from heavy duty vehicle legislation implemented in 2009 (!), but under the new EU 2018/858 it will also apply to passenger vehicles as well. This is intended to allow the remote diagnostics of a vehicle, but it is certainly not clear how this may be achieved independently of the vehicle manufacturer, as they would then know you and your customer, as well as charging you for this RDS service.
    
To better understand the vehicle manufacturers’ extended vehicle model that would be used to provide this RDS service, the Commission are currently monitoring a proof of concept that seeks to assess what is possible. From the outcome of this proof of concept, the current Commission are likely to make recommendations for the incoming Commission for future legislation. However, a recent study conducted by the aftermarket associations in Brussels showed that this extended vehicle model provided very limited data, with further costs and contractual restrictions, making it unusable for truly competitive services. The battle lines have been drawn.
 
Implementation
On a more tangible note, there is a request for a better implementation of the Machinery Directive. ‘Yeah’ I hear you say, but a recent study showed that out of 47 lifts inspected throughout Europe, 11 (23%) were found non-compliant with a total number of 24 non-conformities. The European Garage Equipment Association (EGEA) has therefore called on the Commission to stop dangerous and non-compliant workshop equipment being sold in the EU by imposing stricter and more effective market surveillance and thus avoid further deaths and serious injuries, as well as ensuring fair competition in the marketplace.
    
Although Brussels is ‘out of sight and out of mind’ to many UK workshops, there are many critically important discussions currently being held, leading to future European legislation that will be needed to ensure the continued ability to independently access, diagnose, repair, service and maintain objects that are part of the internet of things – which for the Aftermarket means vehicles. Much to think about and much to fight for!

xenconsultancy.com

There is a common belief amongst employers that if an employee does not have a written contact there is no contract in place, leaving the employee without any rights.
    
However, from a legal perspective, Philip Richardson, a partner and head of employment at Stephensons Solicitors LLP, says: “a contract of employment will be in place at the point where the prospective employee accepts an unconditional offer of employment.”
    
This means, quite simply, that a contract and the obligations under it are often in existence prior to the employee’s first day or signature on a written contract; employers should be mindful of how they conduct themselves from the moment the offer is made.
 
Fundamental terms
Philip says that while it’s true that there is no legal obligation for the employer to provide a written contract of employment, “the employer is under a duty to give employees a written statement of employment particulars. This sets out the fundamental terms of the employment contract such as the names of the employer and employee, brief job description and hours of work along with other key terms of the employment relationship.”
    
It’s worth pointing out that an employee’s right to a written statement arises where the contract lasts for at least one month; the written statement must be given within two months of the start of employment. If the employer fails to provide the written statement within the stipulated period Philip says the employee may be able to obtain an award of up to four weeks for compensation from the Employment Tribunal.
    
“In practice,” says Philip, “it’s beneficial for the employer to draft a full contract of employment as soon as possible so that it can clearly set down its expectations of how the relationship will progress.”

Express and implied
There are two types of contractual term – express and implied. Philip says that an express contractual term is one that is explicitly agreed upon by the parties and as such is binding on both – “the terms included in the written statements or terms referred to above would all be considered to be express terms of the contract.”
    
An implied term is one that has not been expressly stated but is considered to be included in the employment contract. Philip explains that these are often clauses that are implied by law for example the employee’s right to the minimum wage. He says that other terms are implied where they are too obvious to mention, including the duty of care owed by the employer and employee, the duty of mutual trust and confidence, the duty to pay the employee and the employee’s duty to provide the work personally.
    
This is where Philip sees problems for employers, as some believe that providing the term is not in writing, it isn’t relevant. “However, this isn’t the case and the employer ought to have regard to the terms mentioned.” He adds that implied terms are usually based on the perceived intention of the parties and notions of good practice and reasonable conduct.

Variation
Any variation of a contract must be agreed by both parties in order to be valid. However, as Philip notes, this does not mean that the employer’s hands are tied in varying the contract. “One way in which the employer may be permitted to make changes is if the contract includes a carefully drafted flexibility clause. Employment relationships often naturally develop and evolve over time and such a clause gives the employer capacity to make changes to the employment contract without the need to obtain the employee’s consent.” That said, he says a fundamental point to note with a flexibility clause is that there is an underlying duty for the clause to exercise reasonably: “If the clause is drafted too widely or the employer unreasonably exercises the right to vary the contract then the employee may argue this has broken the mutual trust and confidence in the relationship and could resign, taking legal action against the employer.”

From a practical perspective if the employer is seeking to vary the contract of employment it is also important to discuss the changes with the employee first. Often employees will be in agreement with the changes if they fully understand the reasons behind them.

At the time of writing, the Brexit talks have not reached any agreement, but even if an agreement has now been reached as you are reading this, from the position of the UK aftermarket there will still be a lot of unanswered questions relating to both existing and future European legislation and how the UK government may decide to handle the implementation of these regulatory requirements after Brexit. This will be of critical importance to the aftermarket.
    
So, what does the government need to do to avoid a negative impact on the UK aftermarket?
    
To understand the background, it is important to understand the ‘legislative landscape’. The automotive sector in Europe is heavily regulated by European legislation, especially concerning vehicle safety and emissions. However there are also other aspects of automotive regulation that are an integral part of European legislation – especially the UNECE Regulations, which are centered on Geneva and cover many aspects of the European vehicle type approval (the UK is a signatory to these UNECE activities). At first glance, this may not appear to be an issue for the aftermarket, but increasingly, UNECE Regulations are referenced in the European Vehicle Type Approval and have started to include direct requirements for the aftermarket. In summary, this has complicated the legislative landscape and the increasing impact that legislation has on the future of the aftermarket in Europe, including the UK.
    
This legislation has different aspects in terms of its legal basis and has both an historic element as well as a future requirement which has yet to enter into force. Historically, the Block Exemption Regulation (BER) is based on competition law. This principally covered the agreements between the vehicle manufacturer and their authorized dealer network (originally allowing an ‘exemption’ from the monopolistic geographical trading area), but importantly for the aftermarket, included the rights for ‘independent operators’ to access all technical information, tools, spare parts, training etc. at the same level as the authorised repairer – the ‘non-discrimination’ principle.
    
However, although BER was revised in 2010, in practical terms, it did not change the basic problem of the ability for a small business to take legal action against a vehicle manufacturer if they did not provide access to e.g. technical information, when requested – a real ‘David and Goliath’ challenge.
    
To address this problem, the European Commission decided to put the ‘access to repair and maintenance information’ (RMI) into Vehicle Type Approval Regulations, where it addressed the issue by changing the legal basis – still fundamentally a competition issue that supports non-discrimination - but now based on the vehicle manufacturer having to prove that access to the RMI was possible before they can achieve whole Vehicle Type Approval. However, now there is a mechanism that allows the type approval authorities to challenge the vehicle manufacturer if a possible non-compliance problem is raised by an independent operator once the vehicle model is in the market. This is all part of the requirements of the Euro 5 emissions legislation, introduced in 2007.
    
Most importantly, do not underestimate the importance of these two pieces of legislation. Without them, today’s aftermarket would not be anywhere near as capable to work on the increasingly complicated systems found in modern vehicles and subsequently be able to offer the driver the myriad of competing choices that are the basis of the very existence of the aftermarket.
    
However, there are further challenges ahead. Today’s vehicles are not only more sophisticated, but they are connected to provide telematics (remote) based services and are increasingly equipped with advanced driver assistance systems (ADAS). This leads to an increasing safety issue, where vehicle manufacturers want to protect their (claimed) liability requirements and consequently, a security issue of only the vehicle manufacturer controlling access to the vehicle and its data. Although I have covered the impact that this is likely to create in previous articles, but from the legislative perspective, this is yet to be addressed.
    
Some better news is that a new Vehicle Type Approval legislation is coming into force for new vehicle models entering the market from 1 September 2020 and this will help, as it directly references both the OBD connector and its ability to support access to the in-vehicle data, as well as referencing the vehicle manufacturer as part of the principle of non-discrimination if they provide remote services. However, the technical detail of how the access to the vehicle will be provided and consequently who will have access to what data is far from clear and is the subject of much heated debate in Brussels. The business model of vehicle manufacturers is evolving into remote services that pre-empt what a vehicle needs (i.e. predictive or prognostic functions that allow the ‘repair process’ to be assessed remotely before a vehicle needs to come to a workshop) as well as providing ‘mobility’ services as vehicle ownership models evolve. The fundamental legislative issue is how to ensure safe and secure access to the vehicle and its data to ensure that competition remains possible.
    
For the UK aftermarket after Brexit, the key issues will be how the government act on these important points and how these will be covered in UK legislation. Obviously, the UK is likely to follow European Vehicle Type Approval legislation to ensure that vehicles manufactured in the UK can be sold in Europe, but the key question is if the RMI requirements will also be referenced and if so, with what detailed requirements. Potentially, the UK could still copy/paste the European Regulations into UK law, or could implement a different approach for RMI, just for the UK, but this could be both complicated and counter-productive for both parts manufacturers and the aftermarket, as one of the future requirements may be the extension for the type approval of replacement parts, especially for ADAS and autonomous vehicles.
    
The position of the UK Government today (ahead of Brexit) has been to support manufacturing as a longer term post-Brexit strategy, but as the UK aftermarket represents almost 70% of the post-production services market, this also needs to be an integral part of life after the EU. Clearly a lot of important political work will need to be done after Brexit, both in the UK and Geneva to ensure a continued healthy and vibrant UK aftermarket.

xenconsultancy.com

Top Technician 2018 champion Shaun Miller is on a roll. Apart from being crowned as the best tech the country, he has diagnostic investigation as a passion as well as a profession. If that’s not enough he is also a new father with plans for the future of the family business, Millers Garage.
    
Sounds like a busy life eh? Well that’s not the half of it, as Shaun is also one of the brains behind a growing campaign to change attitudes to the fitment of customer supplied parts. Together with Steven Paterson from Krypton Garage and MOT Centre, Shaun has set up 'Say NO to customer supplied parts (UK),’ a Facebook group dedicated to spreading the message of, as you might expect, educating customers not to fit customer
supplied parts.
    
A year after setting up, the group has almost 2,000 members, with participation on the rise.

Steady increase
Shaun explained the thinking behind it: "It came about as I noticed a steady increase in people asking us to fit their own supplied parts. I didn't want to do it, as at the end of the day, the parts profit is part of our business, Also, the parts they where supplying where normally incorrect or cheap budget parts which we won’t fit anyway.”
    
Shaun had some experience of the problems fitting customer supplied-parts brought, as like many businesses, there was a time when Millers Garage would do it too: “We used to fit parts provided by customers, everybody did.“
    
When the business made a stand against the practice, Shaun found that a solid explanation of why they were refusing would come in handy: ”When we started to say no, people wanted to know why.”
    
So talking to Steven, Shaun discovered one of Steven’s friends lost a lot of money when a part they fitted supplied by a customer went wrong, “Public liability insurance is actually a massive issue with this. If you fitted the part, you are a professional, that means you are saying that the part is fit for purpose. Most public liability insurance will only pay out if there is a paper trail where the company has supplied the part. This way, if they can trace it back to the supplier in cases where something has failed and caused a lawsuit, the manufacturer of the part can officially be questioned about the issue.”

Education
Shaun felt this was something people should be talking about more, and the social media realm beckoned: “Not long after I started to look into it,  I was speaking to Steven Paterson about it – he is probably the best diagnostic guru in the country – he said he'd also had enough of it. That is when we set-up the Facebook group, along with admin help from Dave Hill another very well respected technician. Within a few days we had 700 members up and down the country. It is trying to educate the industry to stop fitting customer supplied parts.”
    
He obviously hit a nerve.
    
Shaun wants to spread the message that, while a business may believe it is helping a customer by fitting a part they brought in, long-term it is bad for the customer and the sector as a whole: “One you are damaging the industry, as it is a rapid race to the bottom, with everything cheaper and cheaper. Two – If something goes wrong you are going to be in massive trouble for it. Is it worth it?”
    
It also raises the question of who is your customer: “Mostly those customers who bring their own parts  are not the customers for us, although I have managed to convert one or two – the ones who say "can you fit it?” I explain why not.
  
“I ask how much they paid for that clutch and I tell them I can get it for maybe £20 more, but they are getting value for it as they have cover. It is that perceived value and that is what really made us start pushing it. We have 2,000 members now.”

Watch this space
Not that we want to let the cat out of the bag, but Shaun was keeping quiet about his involvement in the group: “I go to training courses now and people say, 'have you heard of that group?' They start talking about it, but I don’t say anything. It is interesting to hear people mention it. It’s quite cool.“
    
On plans for the future of the group, Shaun said: “We want to spread the word countrywide and completely end this fast growing trend created by the internet. If garages keep allowing this it will become the norm and we will lose control of our industry. We will keep pushing the group and trying to get as much publicity in the industry as possible.”
    
The campaign may extend to other platforms as well: “We may look to expand to other networks such as Twitter, Instagram and YouTube as some point in the future. Watch this space.” As for right now, Shaun is looking to the readers of Aftermarket to join the campaign: “We all have a responsibility to protect our profit and the future of our industry so now is your turn to help stop this cancer in our industry.” If you want to join the group go to: http://bit.ly/saynouk

You know you are doing something right when you are doing something that is not the central part of your business, but you are doing it more successfully than those who have made it their main focus.
    
This is the position that Castle Douglas-based independent garage Robertson Gemini Ltd finds itself in. The garage is a six-ramp repairer with a dedicated MOT bay. It offers all the usual services in terms of alignment, diagnostics and the rest. Meanwhile, it is also has a line in used cars, where it is doing very well.  
    
Director David Butler explained: "We are trying to grow car sales. We have talked to some of the main dealers in Dumfries and they are having a hard time, being asked to do all their showrooms, but their sales are pretty static at the moment. Meanwhile, our model is actually working well for us. I am looking at a 65 plate Focus going out now, and a 67 plate Toyota. We have quite a few getting up to just one or two years old. That is where we are trying to be. That is the kind of image we are looking at."

Focus
While this will keep the business warm on cold nights, the main focus for the business remains servicing and repairs. Being in a largely rural area, the catchment area for customers is quite large: "Goodness me, they come from all over the place," exclaimed David. “They come from Castle Douglas itself, Dalbeattie, almost as far as Stranraer as well. It is quite a rural setting. We are a market town with quite a big hinterland. There is a lot of farming, forestry and that kind of thing. We even get people coming down from Edinburgh, people that are associated with the town here."
    
The company provides a broad offering, but is looking to concentrate more tightly on the upper end of the market: "We are a  general garage, we take all makes of cars. Jaguar and Land Rover, which is the upper end of the market is where we are heading.  We have invested quite heavily in all the diagnostic equipment for Land Rovers and things like that, so we are getting more and more of that now, which is great. We are trying to move away from old bangers. We are not really interested in that end. We do a lot of Ford, it used to be a Ford service centre until quite recently, but ultimately we decided to sever that relationship."

Evolution
The business is now in its 97th year of operation:  "It opened in 1921," said David, "and has always been owned by the Robertson family." Any business that exists for almost a century will go through a great degree of change. For the business now called Robertson Gemini, this included being a franchised dealership for the Rover and MG brands, but it survived the collapse of Rover and went on to evolve into its current independent form.
    
Names change over time too, with the branding of the business developing a cosmic angle thanks to a brainwave by Stewart Robertson, the late husband of owner Caroline Robertson: "The name Robertson Gemini came about for an interesting reason," revealed David. "Stewart, who unfortunately died in 2010, had another garage in Dalbeattie, so two garages. In addition, in the family, Caroline and Stewart had twins, with Gemini being their starsign. So that is where the Gemini came in; twin garages, twin children, starsign. That is how Robertson Gemini came to be named. That was Stewart's little lightbulb moment."
    
David came into the business following Stewart's passing: "Caroline lost Stewart and I lost my wife, we both lived in Kippford and we are now business partners. We are both directors in the business. I was not in the automotive sector before. In addition, Caroline was married to Stewart but had very little to do with the business. The garage was thrust upon us – just circumstances. So
we have had to pick it up and drive it forward."

Excellence
From 2015, Caroline and David took on the day-to-day management, and the business has not looked back: "We've had to do a lot of learning, but we are rather fortunate in that we have some excellent staff here, who have guided us. They have been fantastic.   

"We have got five full time mechanics. We have just taken on an apprentice as well, who is excellent, and we have also taken on an autistic lad called Thomas as our valeter. That was something that Caroline and I wanted to do. We took a gamble but it has been very positive for us. We are quite pleased about that. It came through a programme run by Dumfries and Galloway council called Total Access Point. It is about employability for all. We went to an open day to find out about it and we  thought 'we want to have a go at this.' We are absolutely delighted with what we have achieved, and what Thomas is achieving. That has been a good venture for us."

Toolbox Sessions
According to David, the key is enabling the staff to pass their knowledge on: "We have two guys who are experts on Land Rovers. The rest are all very good mechanics too. We have started doing what we call Toolbox Sessions in the workshop. Each of the mechanics is running a topic. We have done one on all the MOT new legislation very recently. Yesterday we had one on electrics.
    
"What we are trying to do is spread the skills across the workforce, so it is not just one individual that keeps getting the same old jobs all the time. We have got someone lined up for the next one, which will be on vehicle health checks. That's going well and we are all enjoying that. Each mechanic is being left to do their own little session. That is stretching them a little bit, which is good."

Top Technician
When you are spreading knowledge around a business, it helps to have staff members who know their stuff. Luckily for Robertson Gemini, one of their team is a regular Top Technician finalist, namely Neil Currie, who was in the final five in 2017 and 2018.
    
"It was Neil who did the Toolbox Session on electrics," explained David. "That was the first of his sessions. It was good. He enjoyed it as well. He will be doing one on diagnostics before long."
    
David said he was pleased to have a Top Technician regular on staff: "It is great for us as we can promote it for a start, and it really gives the other boys something to aspire to as well. Neil is good at spreading his knowledge about. From our point of view that's great. If he is on Top Technician, we like to think that the company is benefitting as a whole. This is why we are doing these toolbox sessions. I think we are quite progressive on that side of things and it has certainly motivated the workshop team. I sat in on a couple of sessions and I have been very impressed with what they have done.  I'm delighted with it."
    
At this point, Neil himself popped his head round the door: "I have been here three years," he explained. "I regularly get training, and they helped me with the cost of going down for Top Technician, paying for the hotel, so they have been very supportive that way. David has looked to us to help him with equipment, and he has certainly invested in what we have asked him to, dealer-level equipment and oscilloscopes, all the kit we need so we can keep up to date with the technology. We specialise in Land Rover, so he bought the equipment for that as well. It allows us to do more things."
    
Commenting on the Toolbox Sessions, Neil observed: "We started that recently – it saves money on training courses and time, in terms of  having people out of the door. We just put some time in the diary and shut the workshop door. The guys will come in and one of us will talk about a subject, just trying to pass on some knowledge. Instead of going away on a two day training course it is all kept in house."
    
Taking part in Top Technician was inspirational for Neil: "It has inspired me to try and push the industry higher. You meet guys with the same aims and goals as you and you want to aim for the best. It is about bringing the trade up and trying to improve everyone's skills. I'm all for it. There is definitely a need for more talent, especially up here in Scotland. I just want  to help people and keep it going."

The future
Looking forward, David commented on plans for the future at the business: "We have put in so many new procedures – a new management system, which is absolutely brilliant in terms of giving me an on the pulse feeling of what the company is doing on a daily basis. It starts from the customer coming in, all  the details, job cards and invoicing. It is all interlinked, so it is tremendous. We are getting to grips with all of that. We are just about to take on a new fleet of brand new Peugeot 2008s courtesy cars, they are coming next week."
    
David added: "We are running at 110mph at the moment!" Long may it continue.

It’s been a while since I’ve trawled the online job pages,  but the other day I was sent a link to a job that had been advertised. A local main dealer who shall remain unnamed was in need of a NVQ Level 3 Technician, nothing too strange about that, but as I read on the salary surprised me. The role was being offered was just £16,000-£18,000 per annum. Underneath this advertised job was a vacancy for a Warehouse Operative with a starting salary of £18,500 and no experience needed.  
    
This is a huge problem with the automotive industry and its inability to keep skilled and experienced mechanics especially in main dealers. The Level 3 qualification requires a significant amount of work and exams that can take years to achieve, knowledge needed to work on modern cars is becoming vast and learning is continuous to stay up to date with technology.

Shortage
Every year I hear the problem about a shortage of mechanics. Every year the industry struggles to fill gaps in its workforce due to the lack of skilled techs. And yet, as I constructed a Twitter post about the job I had seen I found how many disgruntled ex-technicians actually exist. The tweet proved to be a sore point with certain people who explained that they left main dealers to go to independents due to better pay, some even moved completely away from the automotive sector to again be paid more and be treated better.
    
As an industry we need to retain staff and pay them according to the skills and knowledge required to work on ever more complicated vehicles. A common problem I found was the time restrictions within which techs are expected to complete repairs. From every mechanic I have met they strive to fix issues, they want to solve customers problems and provide a roadworthy vehicle in return.
    
Primarily I entered the car repair trade because I am addicted to fixing problems and providing a great service to consumers, hourly rates are soaring and I feel customers simply aren’t getting value for money at some establishments.

Imperative
As a business owner it’s imperative that the mechanics are all highly skilled and customer friendly, the garage business is all about reputation and that starts with the quality of work. There are no time restrictions, for me the most important factor is returning a vehicle that is fully fixed and safe. I believe that providing a wage that reflects the mechanics skills and the continuous on the job learning they have to complete is vital, as well as this providing them with the tools required for the job.

I find the salary of £16,000 an insult, to pay that kind of money for a skilled individual is terrible. I hope mechanics in the area know their worth and won’t apply for it, but I also hope that soon the automotive industry can start attracting and retaining more individuals. I will leave you with the saying ‘if you pay peanuts you get monkeys.’  

As the song goes, “When the levy breaks, I’ll have no place to stand.” Well, it doesn’t go exactly like that if you are a spelling pedant, but has the Apprenticeship Levy worked for you? Has it helped your business find suitable young people during its existence. Equally, when it was announced that it was going to be reformed, did you feel the floodwaters rising?
    
Maybe the government did feel their feet getting wet recently. At the Conservative Party conference at the end of September, Chancellor of the Exchequer Philip Hammond announced a number of measures to reform the Apprenticeship Levy, and a review into the scheme, which was launched in April 2017. This followed criticism from business regarding the difficulty of dealing with the system and falling numbers of young people seeking the career option.

Strategy
The Apprenticeship Levy was launched with great fanfare as part of the government’s industrial strategy, but it has been slogging through the mire since then. According to the Daily Telegraph, in the first three months after the introduction of the Apprenticeship Levy, there was a 60% drop in the number of people starting apprenticeships. This fall was subsequently partly made up, but the scheme has still not been providing the service  it was intended to give.
    
The Open University published a report into the Levy in April 2018. It found that of the £1.39bn paid into the system by English businesses, only £108m has been taken. This would seem to suggest that businesses  have been having trouble working with  the system.
    
On the other hand, the study also found that 84%of business leaders in England that were asked the Apprenticeship Levy in principle and, despite some negative preconceptions at the start, 54% felt more positive about the scheme in 2018 compared compared with 2017. That said, the study also found that 40% of business leaders still saw the Levy as little more than a tax, and 17% did not believe it would recoup its costs.
    
Considering the reach of the Apprenticeship Levy, that could be a problem. It is paid to HM Revenue & Customs by all UK employers with an annual wage bill of over £3million via the PAYE process. This enables organisations in England to take funding from the National Apprenticeship Service to spend on apprenticeship training. According to the Open University, there are still a number of barriers to get over for the scheme, including managing apprenticeship programmes, associated costs and apprenticeship content.
    
Not all businesses have to pay into the Levy, but according to the study, those that do have to pay in are more supportive of the scheme than those that do not. 92% of those in charge at businesses where they do pay in agree with the Levy in principle, but 43% of these want changes. Support for the scheme in businesses not covered is lower, with just  72% in favour, and 34% saying it would offer no benefits.
    
While this is not exactly a hostile environment, it’s not entirely welcoming either. Did someone say ‘quagmire?’

Flexibility
It is in this context that Philip Hammond announced changes that will aim to open up access, and make the scheme work for businesses and employers. This would include more flexibility and expand apprenticeship courses in science and other STEM subjects. Specifically, the proposals would  allow large employers to transfer up to 25% of their Apprenticeship Levy funds to businesses in their supply chain from April 2019.
    
In his speech at the conference, Philip Hammond said: “We have heard the concerns about how the Apprenticeship Levy is working, so today we’ve set out a series of measures to allow firms more flexibility in how the Levy is spent. But we know that we may need to do more to ensure that the levy supports the development of the skilled workforce our economy needs. So, in addition to these new flexibilities, we will engage with business on our plans for the long term operation of the Levy.”

Widening
It seems like a positive step. But what are the possible implications for the automotive sector?
    
Responding to the speech, Steve Nash, Chief Executive at the IMI, said: "Philip Hammond has set out the Conservative party’s wish to be considered the ‘party for business’. And the widening of access to the Apprenticeship Levy, to those businesses in the corporate supply chain, is excellent news.  For some time, at the IMI, we have been hearing from businesses that they believed the scope of the Levy was too limited."
    
“But we urge caution when it comes to reviewing the apprenticeship model in 2020, which was also proposed by Philip Hammond. Of course, it’s important to listen to business and address any barriers to apprenticeship take-up. But by 2020 the new reforms will be fully bedded in – wholesale change would therefore be a disaster. The last thing businesses need is to have to start all over again.
    
“Already recruiting 12,500 apprentices each year, the motor industry is wholeheartedly committed to futureproofing apprenticeships and has already engaged as positively as it can with the reforms introduced last year. Indeed, we believe that the motor industry is one of the most engaged sectors when it comes to adopting and promoting the new apprenticeship model.
    
“The IMI therefore urges government to stick with the new model already introduced and to focus its efforts on ensuring businesses fully understand how they can maximise the levy for the benefit of their organisation.” Steve added: “The skills gap in the motor retail sector is already critical. Young blood is, therefore, vital as the rapid development of new technology around electric, autonomous and connected vehicles changes the face of motoring, opening up a world of exciting new career opportunities.”

Summing up
Considering the sheer scale of the automotive aftermarket and the large number of smaller businesses within it, it’s fair to say for a great many of our readers, the Apprenticeship Levy is something that happens to someone else. Widening access to funding for apprenticeships though is vital, so the government has the right idea. It would be great if more garages were accessing the funding. Getting access to the right kind of young talent is a topic we often come back to. We look at it from the school leaver perspective, the employer perspective, the educational establishment perspective, and here we are looking at it from a legislative and political perspective.
    
We end up coming back to the fact that there are just not enough people coming our way, so then we end up asking ourselves again, “are we paying enough? Do the teachers understand what we do?” There is the argument that apprenticeships have not been run right for decades, but of course on an individual basis there are thousands of garages out there providing a solid grounding in the sector for bright and eager young people. It’s a complex picture, but more support would definitely help.

Most businesses need staff to operate effectively and this means that those staff need to be managed. However, what does ‘managed’ really mean and how can the ‘business manager’ also be an effective manager of people?

A good manager of staff should fully understand the roles and responsibilities of all of their team members, but ultimately, each of those team members should be better at doing their own jobs than the manager could. Secondly, the manager should be able to ‘get the best from the team they have and only change it when all other possibilities have failed’. In summary, the manager needs to know how to structure, manage and motivate his team to optimise their performance.

Critical
It is a well-known saying that people don’t quit their jobs, but they quit their bosses, but in reality this means that they left their job because it wasn’t enjoyable, or that their strengths weren’t being used or that they weren’t growing in their careers – and who is responsible for this – their manager.
    
Recent research showed that 31% would swap their manager if they could and 22% felt that they could do a better job themselves if they were given the chance. Ineffective management not only impacts negatively on staff retention, quality of work and morale, but also on customer service and your company’s image. Not good for either your staff or your bottom line.
    
The best managers know what they are doing, where their businesses are going and ensure that they have the right people in the critical roles to make it all happen. They then communicate and delegate effectively to their staff who have been trained, supported and motivated to fulfil their responsibilities. Businesses with well managed and competent employees are the best performers and frequently handle problems before they escalate to become real issues.

Guiding principals
So what are some of the key guiding principles for good people management?

1. Build solid and respectful relationships
Don’t aim to be liked, but aim to earn and keep the respect of your team
Take time to talk to members of your staff. It will show that you are interested, but it will also be both motivational and allow you to better understand their position and any concerns that they may have. Be confident, strong and professional, whilst remaining transparent, approachable and encouraging.

2. Strengthen your communication skills
Your ability to listen and communicate is vital to your success as a manger of people. I don’t just mean your ability to listen and speak on a one-to-one basis, but also your ability to capture people’s minds in order to present your ideas, values and visions as well as your ability to listen and soak up the ideas, values and visions of others; that is true communication. Whether you are speaking with one person, or presenting to a whole audience of people, strong communicative skills are a must.

3. Actively develop your team and be the team leader
As you build and strengthen relationships throughout your team, you should begin to identify the individual talents, abilities and strengths of your employees. Knowing this detail will help you develop your team so that everyone is positioned within a role in which they can succeed and excel. Take time to communicate with each employee individually, as quite often employees will be forthcoming about what they see as their strengths and where they aim to be; they may also spark ideas to strengthen your team and its performance as a whole. Sometimes low morale and performance can be due to a lack of support and training. Ensure that your whole team are up to date with regular training appropriate to their role.
    
To establish what your employees really appreciate and value, or to discover their training and support needs, use surveys, one-to-one appraisals or focus groups to talk through each key area to identify the good points, skills gaps or areas that should be improved. Quite simply, support your team.

4. Be transparent
Hiding things from your employees is a recipe for disaster. Remember that you have spent time building relationships with these people, relationships based on respect. As part of that mutual respect you also need to engender trust. By remaining transparent, honest and trustworthy with your employees you will further develop their respect and loyalty.

5. Take responsibility
This can often be tough, but is a sign of truly exceptional people management. As the manager, leader or head of your company, all responsibility should end with you. You are accountable for the performance of your employees. Remember failure is not a weakness; it’s an opportunity to learn, strengthen and improve. Take responsibility for your team and they will further respect you for it.
    
All of these people management principles are important internal management skills, but these will also be seen externally by customers in a variety of both obvious, and not so obvious, ways.

Perception
When customers experience your business, whether by telephone, e-mail or physically visiting, their perception will be significantly more positive if they feel that they are being looked after by a well run, well managed business with highly motivated and professional staff. Often it is almost imperceptible how this can be picked up, but for sure, if your staff are not working within a well led and motivated environment, it will be reflected in their attitude to their work and frequently, to your customers in a negative way.
    
The reality is good managers are not born, but learn the skills as part of learning how to understand people as individuals. Most of us work much better if we enjoy what we are doing. It has been said that the best qualification for running a business is not an MBA or a qualification in accountancy, but in psychology. Ultimately, good managers plan, monitor and review before delegating the work, but they can only do this effectively if their team is working well.
    
As a small business, it may be a difficult to become recognised as one of the Sunday Times ‘Best companies to work for’, but the same good management practices will still apply.  Work hard with your staff and they will work hard for you.
xenconsultancy.com

We've been talking about Brexit for a while now. At least once in every issue there will be a story about the process of leaving the European Union, and the potential impact on the automotive sector.  
    
While progress is hard to gauge, with every issue there is some new angle. It's difficult to keep up, so that handy phrase "as we went to press" gets used a lot. Using it yet again, as we went to press for the October issue, a deal with the EU seemed more likely. Reports were surfacing of Germany and the UK dropping certain demands that would enable an agreement. A positive development then.
    
Have we been giving a balanced view through the process though, and are we asking the right people what they think? Maybe, and maybe not.

Positive aspects
David Dawson, co-owner at Preston's Car Doctor contacted Aftermarket to express frustration regarding the coverage of Brexit in the magazine. He had this to say:  
    
"You’re becoming as biased as the BBC. this is Project Fear all over again. Try balancing your reporting with some positive aspects and opportunities that Brexit may provide us with. BAE Systems has won a £20bn contract to build frigates that will form the backbone of the Australian navy, beating off rival proposals from Italian and Spanish groups for the biggest naval defense deal of the past decade.
    
"I know it’s not automotive news but there will be many opportunities like this for the automotive industry outside of the EU post Brexit. The Germans French and Italians will still want to sell cars to the UK. It just annoys me that the media constantly go on about how bad it will be when we leave the single market. There will be many opportunities and upsides out of the EU even on WTO tariffs."
    
David added: "I read Aftermarket magazine, both online and the printed version and have done for many years. However in recent times many of your articles paint a dim picture for the industry outside the EU would be nice to read something positive for
a change."
    
Now, as a publication we stand by our reporting, and will cover positive and negative views on key issues as they arise. We do listen to our readers though, and David's argument did make us think. It also raised another issue – one of representation.
    
Having heard from David in the north of England, we thought we might take views from other businesses around the UK, to see what they think the impact of Brexit will be on their business.

Access
Turning our attentions south, we asked Kevin Pearce from 2018 Top Garage winners Cedar Garage in Worthing his views on whether Brexit will have a positive or negative impact on the aftermarket. "I think it could go either way," mused Kevin. "I don't see any positives it can necessarily bring. On the negative side, I think we could struggle to get hold of technical data and manufacturer-specific information." According to Kevin, UK consumer buying choices have built up a car parc that could swing things 'our' way: "Considering the number of vehicles we actually import, especially the German stuff, we should actually be in a very strong position to dictate terms. If they want to continue to sell cars to us, whoever is negotiating for the UK should be able to dictate terms on that. Going forward, in terms of telematics we need to make sure the aftermarket stays on the right side of the manufacturers to make sure we continue to get access."
    
Cedar Garage recently opened a German marques-only outlet, so we wondered if he thought Brexit might have a specific impact on the business's ongoing endeavours: "If it does, not for a long time," replied Kevin. "I think generally it will all come down to how well the negotiations go. We have good access to all the data we need for the German brands. So long as Brexit does not get in the way of that, I can't see how it could cause a problem.
    
"Obviously a lot of the parts that we buy come from Europe. Hopefully the prices won't increase too much. At the end of the day, we import so much, that if these people then do not want to sell to us, they are surely going to be the ones that lose out."
    
We went onto ask if Cedar Garage's customers had displayed any noticeable Brexit jitters: "So far it does not look like that at all. We have not seen anything like that. All of our customers are carrying on as normal. If any of them say, ‘I can't afford this or that’ I don't think it affects our trade that much. Maybe if it was car sales, but definitely not in terms of the repair market."
    
While garages on the south coast might be closer to the continent than most of the other businesses in the market, it's not like Cedar Garage customers are likely to head over the channel to France for their car servicing is it? Shaking his head, Kevin replied: "Of course not." As far as Kevin was concerned, the market is changing and this should mean the supposed consumer confidence hit that might result from Brexit could be over-stated: "What we are finding is that people are looking more and more for a professional service, and are prepared to pay for that. People are becoming more conscious of what goes into a car and are prepared to pay. They would rather pay a professional to pay to repair their car, rather than someone they met down the pub who does it in the car park."

Uncertainty
How you feel about the relative opportunities and threats of Brexit can largely depend on where you are sitting. For businesses in Northern Ireland however, Brexit has its own special issues. Starting with the more general concerns,  Colm Higgins from CH Autoservices  in Magherafelt, Northern Ireland said: "I think the biggest issue for most garages, with the position we are in, particularly the go-ahead guys who are into diagnostics, is access to data. This is the issue we would want to address first and foremost. We rely on the access to manufacturer data that is assured through European regulations like Euro 5, so obviously we are concerned. With Brexit nobody really knows what is going to happen.
    
"Some of the manufacturers, like Mercedes-Benz, had a very good scheme where you could lease a diagnostic tool, but they removed that recently, and I think it is tied to Brexit.
    
"Obviously the price of parts and access to parts, is something to be concerned about as well. MOTs too, as well as emissions. Are we going to establish our own standards? Are we going to be governed by European rules? Or are they going to be similar to the European rules? Is it a chance for the UK to make its own emissions standards. If so will they be similar, or less?  
    
Colm continued: "Also, what affect will it have on the car parc? What cars will we be working on? Are we going to see a change in consumer activity as well? What the good guys seem to do is look at what people are buying and how the market is going and see the trends. Obviously electric vehicles is something we have invested in here. Is that going to be impacted by that? Is it going to be more or less. It is important to get an idea of where things are going to go. The biggest problem is that nobody knows.
    
"Almost everybody has a German or French car in the UK, or at least a European car. What is going to  happen? Are they going to be taxed more? In the second hand car market we are still seeing the effects of years of uncertainty over diesel."
    
"The key thing for any business is to be ahead of the curve or at least be aware of where it is going before it gets there. For any business you would be absolutely crazy to  bury your head in the sand. It gives you a very good reason to read the latest industry news so you know what is going on."
    
One problem that most businesses in the UK don't have to worry about is a land border with the EU. For businesses in Northern Ireland  that is a real concern. Will Northern Ireland motorists head for the Republic for servicing and repairs if prices rise as a result of Brexit?
    
"There is already a lot of that happening in Northern Ireland" said Colm. "We are about an hour's drive from the border. Some of my customers in trade sales, they sell a lot of cars to the south because the Pound is weak. We can make the most of that depending on the situation, as we can buy stuff from down there and sell it up here, or vice versa. I am optimistic, and we can make the most of that kind of situation. Because we are so close to the border,
we can be flexible. Northern Ireland is unique that way, and more flexible if we have to adapt. If Brexit becomes
a complete nightmare there are options in terms of suppliers."
    
Then there's the threat of a hard border: "That's a big issue," opined Colm, "and a complete minefield. We have enjoyed this border-free situation for a long time now, and no one wants to go back to having a hard border. The flexibility would be gone. No one wants to go back to the old days here."
    
Despite these concerns, Colm remained confident: "Anyone who is in the higher end of this business is ready to adapt to change. In the next few years you won't see an engine or a piston as it is all going to electric motors. It is change or get out really. Brexit is another factor in the motor trade, albeit one that is going to affect your life in a big way."

Double meaning
Next, we looked to Scotland, where the issue of exiting a bloc has a double meaning. Pier Garage is based in Ardrishaig, Mid Argyll. Owner Kris Gordon's first concern, like his counterparts in other parts of the UK, is access to data: "My biggest concern is definitely access to information. You can't get all the information from all car manufacturers. Even with the situation we have at the moment, we still struggle. With someone like Ford, they make it quite difficult to get it, and they do charge you for everything, so whether it works worse or better is my
main concern.
    
"I voted to leave at the time, for other reasons. There was so much stuff being put out there that you didn't know who to believe. You just had to pick a side and go with it I think. Nobody knew what chaos would happen as a result of it all. I suppose if you had thought about it, it was obvious what was going to happen. Now we are in a situation where nothing has been answered. It is worrying, because it has been a hard enough few years since the banking crisis in 2008, and now it looks like it is all going to get worse. We will have to ride it out and see what happens."
    
Kris believes Brexit could be leading Scotland into a period of greater uncertainty than the rest of the UK: "I think it will cause a lot of distraction rather than getting people focused on getting the economy in a better place. Political parties will be thinking 'do we have to have another independence referendum and then rejoin the EU?'  Again, I voted for an independent Scotland, but now it has been decided, everyone has made their choice and is getting on with it. Despite this, the SNP is still focused on a second referendum, rather than just accepting the result and getting on with things. If we have another referendum and it goes the other way, where will it end? It could go back and forth, and the same with Brexit, there is always going to be someone who is unhappy. I think they need to accept it and do the best they can."

Your views
We found a mixture of views from business owners on both sides of the argument. Do these views on Brexit chime with your own? Or do you have an opinion not expressed here? We would love to hear from you. Get in touch with us via alex@aftermarket.co.uk to tell us what you think.

Businesses change hands for all manner of reasons, but crucially for family businesses, change has the potential to damage family harmony as well as destroy the future wealth of all concerned. But what happens should no family members want to take on the business and the business has to be sold?
    
In this instance David Emanuel, Partner at law firm VWV and head of its Family Business team, says the family should take advice on the options. He advises seeking recommendations and says to “think hard about engaging people who work principally on a success fee percentage commission-only basis – the overall cost may be higher, although you may be insulating yourself from costs if a deal doesn’t go ahead – but there can be a conflict of interest for people remunerated only if a deal goes ahead.”
    
One step that will ease the process is to undertake some financial and legal due diligence as if the seller were a buyer, to identify any gaps or issues that may affect price or saleability.

Seeking a valuation
Businesses will generally be valued on one of three bases – the value of net assets plus a valuation of goodwill; a multiple of earnings; or discounted future cash flow.
    
Nick Smith, a family business consultant with the Family Business Consultancy, sees some families seeking the next generation pay the full market value for their interest, and other situations where shares are just handed over.
    
“In between the extremes,” says Nick, “there are a raft of approaches and solutions including discounted prices and stage payments. There are also more complicated solutions such as freezer share mechanisms, where no sale takes place but the senior generation lock in the current value of their shares to be left to the wider family and the next generation family members actually working in the business receive the benefit of any growth in value during their time in charge.”
    
What of an arm's length sale? Here David says: “The family will ideally want to be paid in cash, in full, at completion, rather than risk the possibility of deferred consideration not getting paid because the business gets into difficulties under its new owners, or a dispute arises over what should be paid.” However, he says that may not be possible, and there may be many good reasons why the retiring shareholders keep an equity stake or agree to be paid over time or agree that some of what they get paid is subject to future performance. Even so, he suggests starting with the idea of the ‘clean break’ and working back from there if you have to.
    
It’s important to remember that in a succession situation, where one generation is passing the business to the next, and the retirees are expecting a payment of value to cover their retirement ambitions, deferred payment risks may be looked at differently depending on the circumstances – families will be more trusting.
 
Tax planning and family succession
As might be expected, tax planning is important and should always form part of the decision-making process but it should never be the main driver. That said, no-one wants to hand over, by way of inheritance tax, 40% of the value of what they have worked for.
    
Both Nick and David consider tax planning key. Says Smith, “the most important point is what is right for the family members and the business itself.” He believes the UK offers a fairly benign tax-planning environment for family business succession so that most family businesses can be passed on free of inheritance and capital gains tax to other family members. However, the risk of paying a bit of tax pales into insignificance if passing on the family business to the next generation means passing on a working lifetime of misery and a failing business. David points out that if Entrepreneur’s Relief is available, the effective rate of Capital Gains Tax is just 10%.

In summary
Family businesses are peculiar entities, caught by both the need to compete in the marketplace and the need to keep familial factions onside. Whatever course is taken to secure the future of the business, one thing is certain – everyone needs to keep the lines of communication open.

Customer care is vital to the survival of most companies. Without customers we do not exist. This is extremely important in the independent repair sector as we are the
service providers.
  
In the face of ever-growing competition, it is very important for us to portray the image of a professional efficient business that cares about its customers. If you deal with customers and you represent your garage, it is vital that you look after all of your customers, all of the time.

Positive relationships
Without positive relationships with our customers no business can survive in today’s competitive marketplace. Just consider the number of customers you have had up until now, imagine what things would be like if they all disappeared overnight!
Customer care has changed immensely over the years. Customers have become less tolerant and more demanding. It is a huge challenge for us to meet these demands. However, the answers are within us all.

We all know that customers who are happy with the service we provide are more likely to purchase again and recommend us to others. You may even know that customers that are very impressed with our service rather than just satisfied are willing to pay higher prices for our service. You will certainly have awareness of the fact that when you treat customers in the correct way and display a positive and pleasant attitude, you will usually receive the same back from them.

The best form of advertising
Businesses that have developed an excellent level of customer service will usually find themselves in a situation where customers become advocates for their business. In many cases this becomes their best form of advertising. The alternative is a situation where customers feel they must let people know of their negative experience and are quick to do it. The implications of this can be extremely damaging and many businesses struggle to overcome the negative label.

The basics of customer service are actually very simple. We know that being polite, smiling and making the customer feel good about themselves and their service/repair purchase is at the core of creating a good customer experience. However, tthese days that is no longer enough. Customers have become much more discerning, they have a much greater awareness of what is going on in the world, what they should expect from a garage and that it is very simple for them to take their business elsewhere when their high standards are not being met.

Customer care breakdown   
Customer care includes the following elements:

I knew starting a business would never prove easy but we don’t get anywhere in life without taking a risk or two. Having been in the industry for a few years now I have learnt that the two main attributes a successful car repair workshop needs is the skill to diagnose and repair and the ability to communicate with their customers.
    
Modern car repair facilities have seen a dramatic change in recent years with the huge advancements in computer-related faults. The main tool of repair has seen the demise of the hammer and the growth of the diagnostics fault reader. I am a hands-on mechanic and much prefer older vehicles where I don’t need to locate the OBD port before the bonnet release, but I have to move with the times if I am to succeed as a business and that is why I am looking at hybrid servicing and trying to tap into that market. It is tough for me to admit that as I love working on classics and I will still have a part of the workshop for the golden oldies but it is hard to ignore the impact hybrid and electric vehicles are starting to have on the repair market.

Communication
The car repair industry has a pretty bad reputation – lets be honest. My female friends and family dread having to buy a car or go to a garage. Communication for me is so important, as with any business it is crucial that you are able to talk to customers and listen to their concerns without belittling them. The issue with car repairs is that it is a complicated process that is difficult to explain in layman’s terms and which can alienate an individual if they don’t understand. There is also the problem of distrust. If a customer doesn’t understand the problem and how you are able to fix it you risk confusion and doubt. There are so many horror stories of people being fleeced and conned as they don’t understand how a car works that every customer feels like you are going to do the same, it takes a long time to earn a good reputation and just one bad experience to send your business crashing down.

I always like to explain as simply as possible with the work I am doing, I keep the broken part so that I can show the customer what I have replaced and what their hard earned cash has been spent on, I also take pictures and probably over explain everything. It is important for my business that I gain a good reputation as word of mouth is my main advertisement. As busy as a car workshop is always make time to have a friendly chat with your customers, especially if they have a trade, you never know when you might need a plumber!

So, this month has been busy, productive, stressful and hot (I am writing this in July) but the world of car repair stands still for no-one.

It’s a favourite of mine, and one we ask of all garage owners that join the Auto iQ business development programme...
  
“Do you have a business or a profitable job?” Not sure which one you’ve got? Carry on reading.
    
That question is a doozie and is often met with a few seconds of silence followed by a mixed range of answers whilst the questionee arranges their thoughts. The question is designed to be thought-provoking and entice the garage owner to work through the differences between the options.

Different sides of the coin
What’s the difference between a profitable job and a business? It’s a fine line with a BIG difference.
    
Quite simply if you have a profitable job the income from your work (where you spend your hours in the day) reduces when you’re not doing that work. You might be able to get away from the business for a week or two but longer than that will have you sweating, you’ll wonder if your techs are efficient without you in the building, concerned that your numbers are going south.
    
A business on the other hand will run without you being there for a significant length of time. Which one do you have?
    
I can feel the tension elevating as some of you may be rising from you chair ready to give me a good talking-to. Hang fire though and hear me out. In no way am I saying that having a profitable job is wrong. Quite to the contrary. If that’s what you set out to achieve then who am I to say any different? Here’s the deal though. Most garage owners don’t embark on this amazing journey to be ‘self employed,’ they do it to build a bigger and better future for their families. They did it to have more time with their loved ones, the funds to allow this and probably have early retirement thrown in with the business providing the income. Can a profitable job do this or do you need a business that’ll run without you? I think you know the answer.

What’s the difference?
So you’ve decided that a business is preferable to a profitable job. But is there really that much of a difference? Let’s take a look. It often comes down to nothing more than a state of mind that separates these different sides of the same coin.
    
Let’s compare the owner with a profitable job and the business owner. At first glance I’d challenge you to notice the difference. They’ll both have a business that they’re proud of and rightly so, they’ve worked hard to build it. More often than not they’re both skilled technicians, have the respect of their team as well as their customers. Then how can it be that one earns significantly more than the next. One word, focus.
    
Our owner with the profitable job will be very focused. He’s focused on his own ability to fix the vehicles in his workshop often working shoulder to shoulder with the technicians. The technicians respect him because of his technical ability and work hard alongside him. All admirable qualities.
    
Our business owner also has a laser-like focus, his target is a little different though. His gaze is firmly fixed on a vision of the business he’s building and knows that long term success requires not only focus but patience. He’s acutely aware of the one thing that will bring freedom and the time with his family (the reason he started this venture) is the team he builds and trains.
    
This isn’t to say that he doesn’t roll up his sleeves and lead from the front when required, it’s just that his daily focus is on the strategic functions of the business that drive success, rather than the day-to-day tasks that so many owners get caught up in. There’s a huge benefit to this as well. You get to keep the skin on your knuckles.

Dominant thoughts
It’s a proven fact that we all move through our day in the direction of most dominant thoughts. What does your typical business owner ponder?. Now I can’t read minds (how cool would that be?) but I do know that these are the questions that need to be answered:

I work in and around MOT testing every day and yet I am daily confronted with new terms and abbreviations, new rules and guidelines faster that I can possibly keep up.

So, just for fun here is a run through the latest DVSA guidance notes where I have added some more easily palatable descriptions and cleared away some of the ‘noise’. If you are a tester then this should help re-enforce your annual training syllabus and if you are involved in the MOT scheme it with hope expands upon the latest DVSA offerings.

New defect categories
Dangerous defects that are fails and present risk to road safety or the environment. Major defects that are fails and categorised as major within the fail criteria. Minor defects that we used to term as optional advisories, but now must be listed. Advisories can still be added manually.
 
New vehicle categories

According to the Institute for Family Business (IFB), two thirds – 4.7m in total of UK businesses are family owned. Crucially, the IFB believes that around 100,000 of these firms change hands each year.

Although it may be hard to believe given the weather so far this year, but a lot of customers will soon be starting to use their aircon systems only to quickly realise that their system is not working as expected, leaving them hot under the collar! So an ‘exploitable opportunity’ exists as the people in suits might say, but will you be in a position to exploit it most profitably?

Modern systems
With the majority of new cars now having some form of HVAC (heating, ventilation and airconditioning system) fitted as standard, it is no longer considered a luxury, just another part of the vehicle’s array of functions that should work when needed – summer or winter.
    
Many modern systems are designed to be highly efficient and rely on much less refrigerant than previously. Unfortunately, most customers do not understand that the system will naturally leak the refrigerant at a rate of between 10% and 20% per year (depending how often the system is used to circulate oil around the various pipes and seals) and it therefore requires regular servicing and maintenance to ensure continued efficiency. Ultimately, if the refrigerant level gets too low, the system will not operate at all.

Added value
The easy way to deal with this is to offer an ‘added value’ service whenever the vehicle is in your workshop – namely a free air-con system efficiency check. If the system does not perform to expectations, or emits a bad odour, then the opportunity exists to sell the service to your customer. So, make sure that you optimise the opportunity that aircon maintenance and servicing presents ensuring that your customers can keep their cool when summer finally arrives.
    
The fully automatic units available from the leading suppliers will allow full functionality with a minimum of technician’s time – who can still be servicing other aspects of the vehicle while the unit does the work. A printout at the end details what was done and if any problems exist – useful for both the customer and as an activity record for the F-Gas regulations.
    
If a problem exists with the vehicle air-con system then there is a requirement to diagnose and repair. A good understanding of the principle of operation and system design is necessary to both identify and repair profitably, in terms of time and for fitting the correct parts. The typical mathematics for the return on investment (ROI) are something like (prices as of May 2013 for illustration purposes only):

Cost of equipment                     £2,795
Cost of training                         £350
Marketing materials                   £250

        Total costs:                       £3,345

Air-con service                          £65 (net workshop revenue)
2 x air-con services per week     £130 net income

ROI    3345 ÷ 130 = 26 weeks.


This excludes any additional repair/parts revenue and is based on only two vehicles per week. With this in mind I really think the decision to invest in the training and technology is a no-brainer.

I was asked whether expanding a garage business to become multi-site was practical or, indeed, even feasible, which got me thinking.
    
Fundamentally, a business exists to create wealth, both as cash and as an asset. This then benefits the owner(s) and employees, or any shareholders.
    
The basic principles of the business are to provide goods and services to meet the needs of their customers, who pay accordingly. The turnover/cash flow generated then pays for the costs of providing those goods and services (employees, suppliers etc), leaving any surplus as profit, on which tax may be due. Therefore, in a logical process, the greater the turnover and the lower the costs, the greater the profit – simple!
    
So, if a business is working well, surely if you just keep replicating what it does in other locations to other customers then you would just keep generating greater profits? Here comes the ‘but’. This concept applies but only in certain circumstances.

Personal touch
If we look at a successful independent garage, it is often the enthusiasm, commitment and business acumen of the owner which creates the success, frequently based on good customer service at a personal level. The ‘brand value’ of the business is quite literally in the hands of the owner. It is therefore challenging to successfully replicate this if another branch is opened as this ‘personal touch’ is then split between two locations. If three locations exist, this becomes even more thinly spread and increasingly reliant on the quality and commitment of other staff to deliver the original brand values.
    
Therefore, a self-imposed ‘glass ceiling’ is created. It is felt that the maximum number of locations that can be successfully emulated is three. However, if you do plan to expand, how do you know when this should happen and what are the key issues to consider to enable you to create successful clones of your business?
    
The most important point is to identify the key benefit of your business that has created the foundation of your success – your Unique Selling Point (USP). Once you have identified this, it is then imperative that you understand how this can be replicated. It will be important that you can ‘stand out from the crowd’ as any new site will have to establish itself quickly from a standing start. Remember that marketing is not about winning the war to be the best product or service but about winning the hearts and minds of your customers. Additionally, do not be too cautious about setting your prices higher as most customers do not buy on price and carefully selecting your target audience should support your pricing level. Aim to be the leader rather than just another player in the marketplace.
    
So having identified what your new location will emulate, the next critical step is to understand the automated and integrated systems that need to be in place to allow your businesses to be effectively monitored and managed. This becomes increasingly important as any new site is created as your management time will become increasingly shared. You will not be able to rely on manual systems and the various elements of data will need to become ever more integrated. For example, wages, invoicing, workshop revenue, parts purchases and so on, need to be coordinated, otherwise, quite literally, your numbers will not add up.         Any system that you do implement must also be scalable and have multi-user access, otherwise you will lose the support of your managers and staff at this critical time of an expanding business.
    
It will not be possible to retain your original ‘hands on’ management style and this will mean that you will lose visibility of the business as well as having to implement new legislative and policy requirements for new staff and premises.
  
From the purely financial perspective, new businesses rarely fail because of a lack of profitability but fail due to a lack of cash. Any new location will be a cash consumer until it becomes established, so this will require adequate funding and a clear visibility of cash flow from both your existing business as well as the new location as this starts to grow. The key financial elements should include:

•    Direct visibility of the daily results
•    Key Performance Indicators (KPIs) and management information
•    Actual results versus budgets or forecasts
•    Profitability
•    Customer debts
•    Supplier payments (due dates and values)

The better you can demonstrate the financial visibility, control of the business and achievement of your business plan, the easier it will be, both for yourself and when working with your bank.

A strong team
This then leads onto perhaps the most difficult element of growing any business – good quality managers and staff. This creates two immediate problems – firstly, who to delegate your existing business to and secondly, who to appoint to run your new business. In both cases, not only must this individual, or individuals (it could be that you appoint a single deputy and share the tasks) be professionally competent but they must also share your company ethos to ensure that what made your company successful in the first place can continue to be delivered.
    
Finally, if what you have is truly transferrable then ask yourself if it could be franchised.
    
My personal opinion is that this is unlikely unless your USP is based on a specialist niche part of the market. If this is the case, although this may create an opportunity, by definition, niche market sectors offer limited potential. You will also have to ask yourself if a potential franchisee couldn’t just do this for themselves without (quite literally) buying in to your franchise offer?
    
So, if you are considering expansion into other sites, ensure you have the right systems in place, that your existing business USP can be successfully emulated, have competent managers who share you ethos and then it is just a case of finding the right location(s) – which is another different challenge altogether!

The perennial question of ‘price versus quality’ surfaced at the Aftermarket Roundtable discussions earlier this year. From the business perspective, this is more interesting than the ‘price versus cost’ question, which is much easier to answer. So, what are the details behind the quality element?
    
Firstly, let’s start by understanding the definitions of what we are considering – what is price? In detail, it is ‘a value that will purchase a finite quantity, weight or other measure of a good or service’. As this is the basis for the exchange or transfer of ownership, price forms the essential basis of commercial transactions. It may be fixed by a contract, left to be determined by an agreed formula at a future date or negotiated during the course of dealings between the parties involved.

Defining price
In commerce, price is determined by what:

• The buyer is willing to pay

• The seller is willing to accept

Competitors allow a seller to charge. With the mix of product, service, promotion and marketing, it is one of the business variables over which organisations can exercise some degree of control. This is then more commonly known as the ‘market price’.
Importantly, it is a criminal offence to give a misleading indication of price, such as charging for items that are reasonably expected to be included in the advertised, listed or quoted price.

Quantifying quality
Secondly, what is quality? This, perhaps, is much more subjective but is something like ‘the non-inferiority or superiority’ of something or is an inherent or distinguishing characteristic or property. It can also be the nature or degree of the grade of excellence.
    
In manufacturing, for example, a measure of excellence or a state of being free from defects, deficiencies or significant variations. If a vehicle manufacturer reports a defect in one of their vehicles and makes a product recall, customer trust in the quality of the vehicle could be lost.
    
In your aftermarket business, how does all this apply? Actually, in just about everything you do, both internally and externally. For example, internally, your staff need to be able to provide what you need to deliver to your customers, which will include ‘quality’ elements like the work they do, the time needed to conduct the work and the competence to complete the work without faults (even if they develop in the future). This comes with a cost attached (i.e. the wages you pay) and there is probably a certain acceptance that you pay just enough to employ the level of employee needed – which I am sure will be less than a formula one team, who pay the most to get the best – obviously there is a balance.

When you start to consider more expensive elements like workshop equipment, price should not be the first consideration. Capability, reliability and longevity are just as important. These workshop items are acquired to earn you money, so they need to do the job and be reliable.

Image counts
In the direct ‘customer facing’ side of your business, the fixtures and fittings of your premises should not be the cheapest. Look after the design details of your public areas, the quality of the furniture, even something as simple as the coffee or the wi-fi you may provide, should be subject to the price versus quality. It might be provided free of charge but the quality still needs to be acceptable. The perceptions that your customers form will lead to how they perceive the overall quality of your business and, in turn, how your business will treat them and their car. A simple example is how much time, effort and money is spent on the detailed design of many of the vehicle manufacturer’s franchised dealers. They need to portray a certain image of quality.
    
So, externally, the same considerations should apply to your business, including signs that are clear and easy to read, parking that is safe and clean, well lit public areas and the list goes on.
    
When it comes down to the service that you provide to your customers, recent research from the Institute of the Motor Industry (The IMI) showed that although cost remains high on the agenda, with 52% citing it as a key factor, quality of work came in a close second at 44% and rising to 51% amongst women. This was further reinforced by 66% of all respondents and 71% of women feeling that a recognised quality standard was very important when selecting a service provider.

Memorable experience
Customers are also worried about the quality of work but a good overall customer experience will also have a knock-on effect to your business’s reputation and affect how your business is promoted via word of mouth. The value of good customer service is appreciated by most but can be difficult to quantify. Avoid cutting costs if this diminishes the quality of the service you can provide.
    
What are some other key aspects which support the perception of price versus quality from your customer’s perspective? One of the most important will be the price of the work you are charging against the quality of the service you provide. This is not just your hourly rate or the cost of the work but is the complete ‘package’ of what the customer experiences. This will normally include the work being completed correctly and on time but, will also include the choice of parts, the way that the booking-in and final invoice are handled (i.e. a clear explanation of what will be/has been done), also any additional items that are included. These can be additional costs, such as the environmental disposal requirements, or additional items included free of charge, like a check of DTC’s, washer fluid top-up or even cleaning the vehicle before it is returned.
    
As long as all of these customer experiences reinforce their perception of a professional business which employs well trained and competent staff and which delivers a good quality of service, then price becomes a secondary issue. However, the higher the price, the higher the customer’s expectation of quality. The challenge is to deliver what your customers expect at the price they are willing to pay.

Want to know more?
Find out how Neil’s consultancy for garage owners can benefit you please visit xenconsultancy.com.


Aftermarket archive: December 2014 Aftermarket | www.aftermarketonline.net

The rate at which the modern car is developing to include new functions based on new technologies is exponential.

The car owner is often unaware of this, as they see only the ‘HMI’ (human machine interface) that allows them to select and control functions and along with many other electronically controlled ‘things’, the expectation is that ‘it just works’.

Two key elements are changing with today’s and tomorrow’s cars. Firstly, they are changing into more sophisticated, interactive electronic systems, which require high levels of software compliance. Frequently this can mean that the vehicle needs ‘updating’ which may apply to one system or the complete vehicle. Today this is increasingly conducted by using standardised interface (vehicle communication interfaces – VCI’s) and pass through programming by establishing a direct connection between the vehicle and the vehicle manufacturer’s website. This is now being used even at the level of replacing basic components, such as a battery or engine management system components.

Secondly, vehicles are increasingly being connected through telematics systems so that the car is becoming part of ‘the internet of things’. This allows remote communication with the vehicle to provide a range of new services to the vehicle owner, driver, or occupants. These broadly fall into two categories – consumer related services, such as internet radio stations, link to e-mails, finding the nearest free parking space and much more, or business related access to in-vehicle data to allow remote monitoring of the status of the vehicle for predictive maintenance, remote diagnostics, vehicle use, pay-as-you-drive insurance etc.

Increasing isolation
The in-vehicle E/E architecture is therefore not only increasingly complicated and inter-active, it is more vulnerable to incorrect repair processes. To ensure that this risk is minimised, the vehicle manufacturers are increasingly isolating any possible external connections from the in-vehicle communication buses and electronic control modules. Effectively, today’s 16 pin OBD connector will no longer be directly connected to the CAN Bus and in turn to the ECU(s) but will communicate via a secure in-vehicle gateway. There may also be a new standardised connection which becomes a local wireless connection in the workshop as well as having remote telematics connection, but in both cases, the access to in-vehicle data is no longer directly connected.
    
Why is this isolation and protection of the in-vehicle systems so critical? Apart from the obvious protection against any malicious attack, there is an increasing safety issue. Thinking longer term, what happens when semi-autonomous cars or fully autonomous cars come into your workshop?
    
The key question is how to conduct effective repairs on these vehicle systems. At first glance, it may be the basic servicing still needs to be done, but even this will become more difficult, with certain items already requiring electronic control or re-setting. As this develops into more sophisticated systems, the vehicle manufacturer may try and impose more control over who is doing what to ‘their’ vehicles, based on their claim that they have a lifetime responsibility of the functionality of the vehicle and therefore need to know who is doing what where and when. This may lead to an increasing requirement for independent operators to have some form of accreditation to ensure sufficient levels of technical competence before being allowed to work on a vehicle. However, there is also a strong argument in many European countries (the UK included) that this is a market forces issue and that it is the choice of the customer who they trust to repair their vehicle and it is the responsibility of the repairer to be adequately trained and equipped.

What’s coming?
Will this market forces attitude still continue when the autonomous vehicle systems are part of the intrinsic safety of the vehicle? This is increasingly becoming the case as these semi or fully autonomous systems take over more control of the vehicle and stop any driver control.
   
Certainly, anyone attempting any DIY repair will find it much more difficult to access the information or the tools/equipment needed to repair their vehicle, as this will be beyond the knowledge and economic reach of the ‘Sunday morning repairer’, but should DIY repairs even be allowed in the future?

This raises an interesting argument about who should be allowed to work on a vehicle as the correct repair procedures become increasingly critical. Of course, vehicle manufacturers will continue to have full access to the vehicle and it’s systems, which increasingly will be via remote (telematics) access. This may even compromise the access available to authorised repairers (main dealers), but is seen as a necessary requirement to ensure that the vehicle has been repaired correctly and that the in-vehicle software is still functioning correctly.

The counter argument is that this also provides unacceptable levels of control and monitoring of the complete independent aftermarket – so what could be a solution?

Controlling competition
No one is trying to say that safety and security are not important, but there must be a balance as independent operators will continue to need access to diagnostic, repair, service and maintenance information and continue to offer competitive services to the consumer. The European legislator must protect competition, but this may also come with appropriate controls and this may mean that tomorrow’s technicians will need to demonstrate certain levels of competence, together with an audit trail of the work which has been performed in the event of a vehicle malfunction.

Independent operators already need high levels of technical competence – necessary for the consumer and the effective operation of their own business, but in the future this may also mean a form of licensing or certification that is required by legislation. If this becomes necessary, then it has to be appropriate, reasonable and proportionate.

The alternative is that the vehicle manufacturer could become the only choice to diagnose, service and repair the vehicles of tomorrow. I am sure we all agree that it is not what we want or need, so it may be that the increasing technology of tomorrow’s vehicles is the reason that the industry should now embrace change to mirror other safety related industry sectors, such as Gas Safe or NICEIC – qualified, competent and registered. The future is changing and the aftermarket needs to change with it.

Want to know more?
Find out how Neil’s consultancy for garage owners can benefit you by visiting xenconsultancy.com.

Following last month’s article concerning the evolution of the whole aftermarket value chain, based on remote access to a vehicle, the importance of the recently revised Vehicle Type Approval legislation should not be underestimated – and nor should the efforts involved in achieving some of these changes be taken for granted.  

This is important on several levels – firstly on the technical requirements that this new legislation contains, secondly on what this means for both today’s and tomorrow’s aftermarket and thirdly why the UK government needs to be committed to continuing that these new legislative requirements are in place after Brexit.

Vibrant, innovative and competitive
The aftermarket represents over two thirds of the vehicle repair and maintenance sector in the UK and the UK government must ensure that this vibrant, innovative and competitive sector can not only continue how it operates today. The sector must also be able to develop future business models as evolving vehicle technology impacts the different ways of accessing the vehicle, its data and the customer.

The existing (Euro 5) legislation contains important rights of access to repair and maintenance information (RMI). These rights have been (mainly) transferred over into the new EU whole vehicle Type Approval that will come into force in Sept 2020 for new models entering the market. This revised Type Approval legislation (it has not yet been allocated a document number) is based on the existing Type Approval requirements, but also introduces some important new requirements that help the aftermarket. This new legislation will considerably improve the system of access to repair and maintenance information (RMI), for example:

The continued possibility to communicate with the vehicle’s technical information/data via the standardised on-board diagnostic connector, which is now better clarified and which makes clear that third party service providers should not be barred from accessing vitally important vehicle data when the vehicle is in motion (for read-only functions). This is a good first-step towards the adaptation of our sector with the digital economy and the connected vehicle: “For the purpose of vehicle OBD, diagnostics, repair and maintenance, the direct vehicle data stream shall be made available through the serial data port on the standardised data link connector... When the vehicle is in motion, the data shall only be made available for read-only functions.”

The information needed for preparation or repair of vehicles for roadworthiness testing has been included into the RMI definition, as this information was not available via the Roadworthiness Directive 2014/45/EU and new test methods that will use the ‘electronic vehicle interface’ will require more technical information;

An adaptation of the format of the RMI to the state-of-the-art, which means the technical repair information can also be obtained in an electronically processable form – especially useful for technical data publishers and replacement parts catalogue producers;

A new paragraph that recognises the fast-pace of change of vehicle technologies: Technical progress introducing new methods or echniques for vehicle diagnostics and repair, such as remote access to vehicle information and software, should not weaken the objective of this Regulation with respect to access to vehicle repair and maintenance information for independent operators.

A new definition of ‘non-discrimination’ that not only includes authorised repairers, but also now the vehicle manufacturers themselves if they also provide repair and maintenance services, “...so as to ensure that the independent vehicle repair and maintenance market as a whole can compete with authorised dealers, regardless of whether the vehicle manufacturer gives such information to authorised dealers and repairers or uses such information for the repair and maintenance purposes itself, it is necessary to set out the details of the information to be provided for the purposes of access to vehicle repair and maintenance information.”

Empowered
The revised Type Approval legislation will also introduce increased market surveillance requirements that is aimed at not only checking vehicle emissions compliance following the Dieselgate scandal, but also for the Type Approval of replacement components related to both emission and safety related systems.
    
The European Commission will also be empowered to consider the remote connection to a vehicle; “...to take account of technical and regulatory developments or prevent misuse by updating the requirements concerning the access to vehicle OBD information and vehicle repair and maintenance information, including the repair and maintenance activities supported by wireless wide area networks,” (this is using the mobile ‘phone operator networks, as already used for today’s ‘connected car’).
    
So, the EU aftermarket associations – ably assisted by their UK members, have fought to get some important elements in the new legislation. This is good but – and there is always a ‘but’ – this legislative text provides a good basis to address some of the key issues facing the aftermarket today, but there is still work to be done – both in Brussels and here in the UK concerning the government’s position to ensure that the requirements of this European legislation remain applicable in the UK after Brexit.
    
As is often the case, the ‘devil is in the detail’ and in the case of the new Type Approval legislation, this will become part of the ‘technical requirements’ that will be developed and defined in the ‘Delegated Acts and Technical Annexes’ which will be discussed as part of the implementation of this new legislation. This will include important topics, such as using security certificates to access data via the OBD port, which must also include a legislative process to avoid vehicle manufacturers implementing difficult, restrictive, anti-competitive or costly schemes, or simply mandating that you register your customers with your competitor (the VM) before you can offer your services.

There will also be other legislation which may impact the technical requirements of this Type Approval revision, such as GDPR (much vehicle generated data is considered personal data), the digital single market, B2B platforms – all of which will also become familiar aspects of your new business models in the future. [ends]

Clearly, much new EU legislation is on the way and it is vital that the UK Government ensures that these important RMI provisions are ‘carried over’ in the vehicle Type Approval, as well as in other related legislative requirements, after Brexit.

The future of the aftermarket is rapidly moving into being part of the wider digital economy – and the aftermarket cannot survive in this ‘shark infested’ sector without legislative support – so support the aftermarket associations – they have done good work so far, but there is still much work yet to be done.

xenconsultancy.com

You’re never too old to learn, as they say. Well in this industry they should say you are never too old to stop learning. If you do stop learning, you might never catch up, and then where will you be?
    
In June, like much of the industry we were at Automechanika Birmingham. As always it was highly illuminating. We are not going to give you a full lowdown on the event here though. If you want that, turn to page 30 where we have all the info you are ever likely to need. There is one aspect of it we would like to cover though – change, and what the impact can be.

During our three days at the show, we noted all the new technology, factoring in electric vehicles and hybrids, as well as all the ongoing developments within the internal combustion engine. EVs and hybrids might take up the column inches, but it is conventional powertrain vehicles that make up the majority on the roads still, and will continue to do so for some time. It might sound like stating the obvious, but it was made very clear that nothing will stay the same forever, so businesses that work on vehicles (that means you, dear readers) need to make sure they keep up to date.

We’re not telling you anything you didn’t know. It’s just one of those situations where you walk through the various halls, and remember that all that development you spend all your year writing about is a tangible thing, that you can go and touch and see.

Off-topic; On-message
While we were at the show, we were able to speak to a wide range of industry figures. One tries to stay focused on the key issues in these sorts of interviews, but during our sit-down (on surprisingly comfortable stools considering their vertiginous height) with IMI chief executive Steve Nash, we went a little off-topic. We were supposed to be talking about Automechanika Birmingham, and you can see that in the show feature, but we ended up talking about the history of the sector and where technology is going.

"The IMI will be 100 years old in 2020,” said Steve. “There is a real parallel in what was happening then, and what is happening now. 100 years ago,  just after the First World War we had seen that natural explosion in technology that wars create. Before the war, cars were very noticablely horseless carriages. By the 1920s you had sophisticated cars, and it was no longer appropriate to have the local blacksmith tending to them, which is what happened. This is why we were set up.  It was to try and introduce some professional standards to the industry.

“Fast forward 100 years and we are there again at the quantum point we were then, where the technology is moving rapidly ahead of the people in the industry, and we have got to move rapidly to keep up. I don't think it is appropriate to ask people to engage with potentially lethal high voltage electrics without knowing they are properly equipped and trained."

Steve added: "If you look at Volkswagen, they are quoted as saying that from 2019 they will bring out a new electric vehicle to somewhere within one of their ranges every month. We are moving into a different era, and the skills have got to move with the times."

Technology     
Move with the times indeed. It’s a lot to take in, but no challenge is insurmountable. While the various technological marvels and new products on show might seem too much to deal with, if you make sure you regularly undertake training to develop your skills, you should be able to keep up and get a handle on it all.

Through the show, there were many seminars available for free. Some were in Aftermarket’s very own Seminar Theatre, as well as in the various other dedicated venues. Considering the extent of development going on in the sector, we wonder sometimes why these sorts of sessions are not completely overrun by businesses looking to stay up to date. Obviously not everyone can attend, you need to stay up to date.

Continuing professional development (CPD) is something you need to pursue. Training is not just for the young. It is vital for existing technicians, to stay young in mind and attitude.

We regularly talk about training, as regular readers know. We have a standalone section that covers it every month (pages 62-63 in this issue while we have your attention), where we discuss and cover training, both in terms of outcomes and available courses. You don’t just need ongoing training because of changes to vehicle construction and engine type either. MOT requirements mean testers need to undertake annual training, and the new MOT regulations that came into force in May have only reinforced this.

Top idea
Training can take you a long way. We recently held the finals for Top Technician and Top Garage. One thing that we always notice at the semi-finals and the finals of Top Technician is that when you are talking to the contestants, training comes up constantly. They will tell you about all the courses they have been on, and all the skills development they pursue. If they come up across a difficult problem they will research and follow it through to its successful conclusion. Accessing training and looking to find the route case of particularly interesting problems are both goals for participants. CPD is a mantra and a passion here.

This might not always be the best use of time and resources in the moment, but they see it as an investment in the future. It will pay off later for them. Clearly when you are looking at the bottom line and trying to keep pushing forward and push jobs out the door this cannot always be the priority. However, if you can factor this kind of thinking into your day and follow up with training, you will be heading in the right direction.

In the end, it’s all investment whether it is a spanking new piece of kit, or training to enable you to work on the latest vehicles. Equipment will always need to be replaced in the end, sad as it is to admit when you have bought the latest doohickey that really will help you, but knowledge breeds knowledge, sparks new ideas, and helps you and your business grow. Put your money where your life is, and get to it.

Every MOT tester is doing their annual MOT tester exam, and every tester should be doing their annual training which should match the syllabus supplied by DVSA each year.

These days of compliance there is sadly more to be done if you want to remain on the compliant side of the DVSA’s thinking. With a revised Sixth Edition Testing Guide there is plenty to read up on, and oh yes there is just the matter of the new Testing Manual from May 2018. What the DVSA are saying is that we all need to make sure we are fully aware of scheme changes.

Section 6 of the DVSA Guide to MOT Risk Reduction covers tester competence and integrity. In this section, we can see the DVSA starting to underline the need for CPD outside of the Annual Training syllabus, and the need for evidence of ongoing training. In fairness to the DVSA, they do state ‘evidence of’, so if we are not recording our CPD we will start to fall foul of the rules and open ourselves up to scrutiny by DVSA.

Let’s keep going. The Site Assessment Risk Scoring Guide asks if there is there evidence of a regular staff training/improvement programme.It asks for records of regular, staff training covering:

Once upon a time, conventional wisdom suggested that if there was money in the bank account at the end of the month, things were going reasonably well. Book-keeping and accounting were fine, but only for accountants. Servicing and repairing vehicles was for garage owners and technicians – people like you and me.
    That was then and now is now. In a world of declining margins, what was good enough for our predecessors will not be good enough for the competitive and ever challenging business climate you and I face today and certainly not good enough to sustain an efficient garage business in the future.
    In short, understanding your numbers – especially the key performance indicators (KPIs) that tell you at a glance just how well or not so well your business is doing – is crucial.

Know our numbers
Realistically without having a firm grasp where the numbers come from and what they are trying so desperately to show us, we can’t even begin to discuss our financial situation with our accountants. Why should we know our numbers?
    The demographics of most garage owners tells us something. Most are technicians first, businessmen second.  Up and down the country, the story behind most garages will involve a good technician whose core knowledge is based around repairing vehicles all of sudden, waking up to find themselves owning a garage business.
    Most don’t have the skillset needed, the business acumen, or knowledge of marketing, customer service, operational management, reception management etc. Then again, why should they? There is no qualification needed, unlike in Germany where you would have to undertake a three-year graduate programme before you can manage of own an independent garage business. The garage business, like most other service businesses ,is all about raw materials and finished goods. It’s all about commerce – the exchange of goods and services for the compensation of one kind or another; In our case revenue. It’s about creating value, adding value, and creating services and products that we can sell for more than what they cost us, in order to make a profit. Isn’t that what business is all about? Is profit something to be ashamed of? Is it a dirty word?
    As mentioned earlier, the problem with our world is most garage owners and managers lack an understanding of automotive management, especially the labour side of service, given that this is the only commodity that a garage sells, labour. Some may argue that we also sell parts, well we may do. However, we don’t have control over these purchases. These are by-products of what and how much labour we sell.
    More to the point most garage owners and managers fail to recognise the value they add to the process in terms of service, skill, competence, quality, reliability and ability to respond to customer wants, needs and expectations. What happens is that garage owners set their labour rates because it’s the going rate in the given area. The only thing we sell, our only revenue stream – call it what you want – and we decide the value of it by picking a figure from the sky.
    Our numbers come from all the costs and all the revenue associated with operating your garage business. Whether we like it or not, to be successful in our business, understanding the numbers is a good place to start. My experience tells me most of us refuse to take the time or make the effort to really understand what the numbers represent and what KPIs have the biggest impact of our garage.   

Adapt
What do we need to know? I believe you cannot manage a garage from underneath a vehicle in today’s increasing competitive marketplace. You have to adapt to managing the business rather the business managing you. You almost have to be emotionally involved with those numbers to be successful today. Of course, our business is all about repairing vehicles and most garage owners or managers expertise is in this area. However, it is your responsibility, not your accountant’s or book keeper’s, to monitor and manage your numbers. Having the ability to reflect the health and strength of your business at any given time or a specific period is crucial for your success.
    You can only get out of financial reporting what you put in. Your accountant will only advise you on the information you provide. Everything about your garage will depend on the quality of that information the accuracy of those numbers. The numbers are yours, the business is yours so make sure your reporting and analysis are timely and as accurate as possible.
    Your numbers and accounting are only useful if they are used as a means to an end, a catalyst to change your behaviour, your processes, your attitude in order to change the direction of your business for better financial performance in the future. Remember this: All financial data is historic – it has already happened. Time spent gathering and analysing it is massively important so you can draw the benefits of this process. I urge you to monitor your KPIs daily, weekly and monthly and everything else will take care of itself.

Cruical
It wasn’t really very complicated for me even in my early days, as I realised how crucial to my success to stay on top of my day to day data capture was. I made sure it was complete and relevant to what I was trying to measure, whether it was productivity and utilisation of my technicians, the labour and recovery rate, or the fact that every labour hour we sold gave us approximately. another £18 profit on parts.
    Think about how much time you spend learning and understanding and what they are trying to tell you. Determine whether or not your financial professional is helping you to understand these numbers more clearly than you do right. Start the journey right now and I can assure you, your garage business will benefit.  

If you’re a regular reader of this publication then you may be wondering if there’s been a faux pas and why my usual technical article has migrated to the business section.  If that’s the case fear not, all’s well.   

I figured that I’d ring the changes and let you into a secret. Many of you know my love for all things technical but I have another passion - building businesses.

After learning the ropes and being on the tools for 14 years I decided 2018 was the year to bite the bullet and go it alone with starting a new workshop business.

For years I have been working for two or three different garages, enjoying a huge amount of variety and picking and choosing what days I work where. I have been extremely lucky with the people I have met along this incredible journey. Also, working for some real characters of the trade certainly doesn’t lead to a boring work life.

I have always worked for independent garages, the interaction you get with customers and the personal experience you are able to offer is for me what car repairs is all about. I love hearing how much people value their car, not financially but in a kind of ‘member of the family’ way and it fills me with a great sense of achievement when I can get their car back on the road in good working order.

Bright idea
It is not the obvious choice for a ‘young lady’ and I use that term in the lightest possible sense as I can hardly call myself a lady when things go wrong and the air turns blue, but that is another story for another issue. It isn’t a normal career choice but fixing cars is all I have ever enjoyed doing, it is the only thing I haven’t lost interest in and it is the only trade I ever want to be a part of.

So January 2018 came and I had the bright idea of starting up my own business in the village I grew up in. It has been nearly six months now and progress has been slow, trying to keep costs down I am distributing leaflets myself and offering incentives such as 10% off.

Best asset
A workshop business’s best asset is its reputation, and that takes time to build up. I am also finding out that being self-employed requires a million more hours than just turning up to a garage and working.
    
It is not that I am naive it’s just I am rubbish at paperwork, invoicing and doing all the other grown up things that a business needs. To say it is a massive learning curve is an understatement. Before January I didn’t have to bother with business plans and meetings with a bank manager, I didn’t have to spend hours at a computer trying to write down why I am worth investing in and what my plans for taking over the car repair world were.

Passionate
The car repair industry is something I feel hugely passionate about and I firmly believe that when starting a business you make sure it is an area you are knowledgeable in otherwise you will never strive to make it work. At the moment I feel slightly overwhelmed by paperwork and getting on the tools is always first priority but I am hugely excited about the future and what Spanner Tech Services has in the pipeline.

As you will have seen elsewhere in this month’s issue of Aftermarket, Automechanika Birmingham 2018 is upon us. Don’t worry, we haven’t found a way to talk about it here as well- although since we mention it, don’t forget it’s on 5-7 June at
the NEC.
    
Walking around the halls during the show, looking at all the shiny equipment on display that would look so at home in your workshop, and would make such a difference to your business, have you asked yourself how are you going to pay for it?
While some will answer by saying they will get a loan, in that you have to pay it back, ultimately your income will pay for it. For the most part, the income will arrive in the form of what customers are paying you for the work done, which will likely as not be calculated on a by-the-hour basis.

Hour by hour
Stating the blatantly obvious, from that hourly income you pay for the equipment, the training, relevant subscriptions, parts and consumables, staff wages and the roof over your head. On this basis the hourly rate is a pretty serious thing, and it is essential that it is calculated correctly to cover costs and maximise profitability. That’s sound reasoning.

Why then is it often such a source of discussion? How much any particular garage charges for its services can be as controversial for other garages as it is for customers. If you charge too little for the local area you may be seen as breaking ranks and dragging everyone else down. Then again if you charge more than average and get away with it, those who lack the nerve to go so high may still not like it. You can’t win.

Reframing the argument
What about when you take a different path – by reframing the argument?

Aftermarket’s Facebook page recently posted a story about Xpress Garage and Tyre, a garage based in Falmouth in Cornwall. The story came from the local Cornwall Live news site, and was promoting the garage’s services to potential customers in the area. The business was offering a ‘Ultimate car service package,’ which it sold for £60 a year. The package included an MOT test, a vehicle health check and a free puncture repair and home-start, if required. The package also covered £15 off a four-wheel alignment as well as 10% off servicing and repairs and 10% off tyres. The package was available to customers within a 10 mile radius of Falmouth.

The post received a range of comments from Aftermarket readers at the time. Some of these focused on the idea that the garage was pricing itself too low, and took a negative view of the offer. Another way of looking at it would be that the  package itself was actually a smart piece of marketing on the part of the business, as it guaranteed an income and tied in those customers that took it up. While some might be a little sceptical about the idea of a free MOT, you could argue that the customer was actually paying for the MOT at the statutory maximum for a car of £54.85, and then paying £5.15 for access to a range of discounts. No one mentioned the labour rate in the promotion. They haven’t even got to the point where anyone has been charged for time put into a job, and the business already has £60 in the cash register.  

Time in a bottle
Let’s take the discussion back a step. Why are we so focused on the hourly rate anyway? Sometimes we forget this. It has been said before, but like many truisms, it’s worth being reminded of the fact. What business are you in? You think you’re in the vehicle repair trade don’t you? If that’s how you see your business, and you approach each job with this in mind, you are making a mistake every single day.
Believe it or not you are actually in sales. Next question – what are you selling? No, it’s not car repairs, it’s not servicing, and it’s definitely not fault diagnosis. All the tooling and paraphernalia that goes along with a business, all the consumables that go in and out (in a legal and environmentally compliant manner), all the legislative hoopla you have to deal with, and all those staff if you have them, it’s all there to help you transact the essential commodity that you are marketing every morning when you open your doors.

Time. Your time, the time that you sub-contract out and pay wages to staff for, this is the essential stuff that your business runs on. It can run on, it can run short, if you don’t get the customers through the door it will build up and your business will sink under the weight of it. That’s time.

All the investment in equipment and everything else happens so you can sell that time. Your hourly rate needs to cover all your costs to enable this to happen. On that basis, if you would like to charge more but don’t feel you can, why is that?  

Tension
There is of course the tension between charging a realistic price for your time, and making it work in the more tangible context of your local geographical area. The example of the garage that attracted comment on Aftermarket’s Facebook page is a case in point. A recent survey into consumer attitudes to garages performed by Confused.com found that out of the 2,000 people spoken to as part of the survey, 30% believed they had been ripped off by a garage. Going into more detail, the survey found that on average, those motorists felt they had been overcharged by £205.

Part of this perception may depend on how much customers believe they should be charged. This changes from region to region. Of course, for some, it’s all ‘too much,’ and it comes back to trust.

Many of the issues around overcharging relate to the idea of ‘unnecessary work’ being performed by the highly unscrupulous dodgy garage that exists at the fringes of the industry, and often in the fevered imagination of a few ill-informed motorists. The labour part of the bill will have an impact here.

Unfortunately, these ill-informed motorists are often your customers, and you have to take on board that their perception of a garage will be coloured by all kinds of prejudice, hard-baked by a lack of knowledge about how things work. A customer who is immediately suspicious of a garage is not going to want to hear about all the elements that go into a realistic hourly rate. Equally, with these customers, it might be difficult to charge a higher rate, but they are the minority of customers.

Assuming you have the trust of the majority of your customers, you need to consider many factors when setting your labour rate. Many of these factors will be affected by where you are, including the cost of labour, and the rate your fellow garages are charging. Some of these rates in your area will be realistic and cover all the costs. Others will not.

Another survey, this one from Motoreasy in 2017, looked at labour rates across the country. 6,000 businesses were included, and it found that the hourly rates varied widely. No surprises there.  The cheapest found was a Manchester  independent  charging £34 per hour, and the most expensive was a Reading franchised dealer charging £234 for the same time period. Naturally, the consumer press focused on the highest in its headlines, leaving the national franchised average of £99 and the independent average of £56 to nestle half-buried in the body copy of the story. Journalists eh? Going back to our Cornwall garage, its £60 offer was not far above the national hourly average for an independent, and considering the general downward trend of labour rate as you move away from the capital and the major urban conurbations, would be about right for the area. As we said earlier, this was charged before anyone put any hours in. In the end, you need to charge what’s realistic for your business, and attract customers that suit your offering.

Complexity
It’s complex issue. We will not resolve it here,  and we will doubtlessly come back to it – There will always be more surveys to show us why some businesses are charging too much, or not enough, or both at the same time. It’s worth thinking about before that next survey drops though.

If you are attending Automechanika Birmingham with a view to checking out some new equipment, it might be worth checking out the seminars that focus on business too in order to see if you have considered all the variables and have priced yourself correctly. You can always learn a little more, and with that extra knowledge you might make more money. That’s a double win!

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.

Pensions auto-enrolment, the government’s drive to have everyone saving towards their retirement is just over five years old and recently, this last February, completed its rollout. However, while it might be the end of the rollout as far as the government is concerned, for businesses, the process is never-ending as the obligations continue… forever.
    
Ignoring the rules and failing to meet the obligations can lead to very painful penalties being imposed by The Pensions Regulator.

Don’t fall foul of any changes to the rules
The government has done a pretty good job of improving the rules as they go along, even though they may seem rather onerous at first. Nathan Long, a Senior Pension analyst at Hargreaves Lansdown, explains more about how firms can be caught out by the law.
    
Nathan says that there “is a ruthless determination to ensure auto-enrolment remains successful and the government recently made recommendations as to future changes to the legislation.”
    
The two key changes for employers are that staff will need to be automatically enrolled from age 18 as opposed to 22; and contributions will accrue from the first pound of earnings, whereas currently the first £5,876 can be excluded.
    
Nathan says the changes are great for pension savers, but will impact on some sectors more heavily, especially those that employ large numbers of younger people: “These recommendations will not only mean people retiring with more income, it means they will have greater control over leaving work. In fact, someone with average earnings could increase their pension pot at retirement by over £60,000.
    
“Increasing the reach of auto-enrolment is great for the long-term retirement prospects of the nation but adds yet further costs for businesses. The government is clearly mindful of this alongside the ongoing Brexit uncertainty and so opted for a long implementation period, with the changes not due to be rolled out until the mid-2020s.
    
“Even so,” reckons Nathan, “it is widely recognised that 8% contributions are not enough for a comfortable retirement, with a growing consensus that contributions of 12% are more appropriate – the government has also recommended reviewing the minimum contribution levels from April 2019. Small businesses in particular should be alive to the very real risk of increased costs coming down the tracks.”
    Empirical evidence is showing larger employers driving higher levels of understanding and engagement amongst their staff by embracing workplace financial education programmes. Nathan thinks that smaller businesses may struggle to offer these services: “A possible solution to improved engagement could lie in allowing staff to be able to select where their auto-enrolment pension contributions are paid if they already have their own pension plan.” There would still be a company appointed provider for anyone that doesn’t choose, however anyone who has truly got to grips with their pension planning could continue to contribute to their preferred plan. The responsibility would then be on pension providers to engage their customers in order to retain their business.

Nathan thinks this solution need not add more administration for employers: “In the same way that you require an employee’s bank account details, so you can pay their salary, simple details of pension provider and policy number could allow correct payment of pension contributions. The technology to enable this already exists, it simply must be adopted for this revised purpose.”

To finish
The key message for employers of any size is that auto-enrolment is an on-going exercise and crucially requires on-going compliance with any rule changes. First up will be the contribution hikes in 2018 and 2019, but employers need to keep their wits about them. Whilst it may seem The Pension Regulator is out to get small businesses, actually the opposite is true and its website is a great source of information for businesses of all shapes and sizes: www.thepensionsregulator.gov.uk

2015 was a big year for Andy Gravel. Winning Top Technician put him on the national stage, and also made him a local celebrity: "It had a very positive effect, " says Andy, "even to the extent of going into the local paper shop and the woman behind the counter saying 'I've just been reading about you.' She didn't know I was a mechanic - she didn't know anything about me, but she saw the picture and recognised me. It's free publicity. I wouldn't be the best at selling myself, but it made people aware without me having to jump up and down and shout about it."

Futurologists have predicted it for years, but now, it’s actually starting to happen. The impact of the sharing economy on the automotive industry has upended the status quo and companies are scrambling to gain first-mover advantage within a radically reconfigured marketplace.

In the US, in March 2018 alone, an Ohio dealership launched a monthly subscription package that allows customers to switch between different brands of luxury cars, and GM announced a plan to allow their customers to rent their cars directly to each other. Meanwhile, ride-hailing is rapidly taking share from traditional car rental in Certify customers’ business travel expenses.
In the UK, a Mobility as a Service (MaaS) App called Whim is in trial in the Midlands, offering unlimited public transport, hire cars and short taxi rides for a fixed monthly payment of £440. Meanwhile, personal contract purchase (PCP) deals – essentially car rental, with the option to pay off the rest of the car’s value after three years – have already become the preferred method of new vehicle purchase.
    
The problem is that hundreds of companies in the automotive world have set their sights on the same goal: To be the go-to choice for consumers. That’s fine if you have billions to invest in marketing, but if you’re not at the level of Ford, Uber or Google, that fight is going to get ugly. Rental agencies, dealerships, and business leasing providers – all of whom are used to owning customer relationships in the pre-mobility world – are among those who are going to be out-gunned.

The good news is that there are two clear ways for businesses to thrive in this new marketplace in a way that won’t be disrupted by technological advances. Both strategies involve selling to businesses rather than consumers, which means they can deliver sustainably higher margins without requiring a huge spend on marketing and customer acquisition.

Strategy one: Sell a service to the dominant platforms
The most obvious low-risk, high-reward model is to provide an indispensable service to enable the mobility being sold by others. This would involve contracting with whatever mobility platforms dominate, be it Ford, Uber or Waymo, Alphabet’s self-driving car unit. A business might decide to become the leading company that deliver services around.
 

Driving along with the wind in your hair – having a convertible is wonderful isn't it? Well, until there's a noise, or a leak, or the roof seizes up completely. At that point, to coin a phrase, who you gonna call?

The automotive aftermarket is facing a period of great opportunity and change. With sales of new cars in decline, third-party parts providers are recognising the increasing importance of aftersales service. Faced with increasing competition and evolving customer expectations, garages must adapt their processes and adopt new technologies to succeed.

Vehicles are being equipped with advanced driver assist systems (ADAS) in increasing numbers. It is predicted that by 2020, more than 40% of new vehicles will have at least two types of  ADAS system fitted as standard.

Unless you are a one-man business, you will probably have staff to manage. The art of managing your team is one of the most challenging, but ultimately, one of the most rewarding

Following a recent Supreme Court case employees wanting to bring claims against their employers can do so without having to pay any fees. So what steps do firms need to take to protect themselves?

It would be tough to overstate the impact and importance of the automotive aftermarket. Its success not only contributes to the success of its parent industry, but it stimulates competition throughout the manufacturing, distribution and wholesale sectors.
As technology has improved, the aftermarket has only become more versatile and more attractive to customers. The growing trend towards custom vehicle modifications, environmentally friendly cars, and Internet of Things-enabled smart sensors have only contributed to the range and depth of opportunities available to businesses and their customers alike. But with new opportunities invariably come new challenges, and the automotive aftermarket must find its own way to tackle them.

You may have read about some of the challenges that the aftermarket has faced over the last year or two as part of the vehicle Type Approval revisions – with their inherent ‘rights of access to repair and maintenance information’ and the associated fight to maintain access to the vehicle data via the ever-so-not-so-humble 16 pin OBD connector.

The draft vehicle Type Approval document has been agreed by the European Commission and the Council (Member States), but has now to be approved by the European Parliament before becoming the final version which in turn, will become new legislation. However, as many of the key aftermarket amendments were tabled by the Parliament, it seems unlikely that these will be changed, but there is always an uncertainty until the final plenary vote is done.
    
So once agreed, that will be that, as they say. Unfortunately not, as the devil is in the detail.

Legal reference
Firstly, there is the additional problem of existing Block Exemption and Euro 5 Regulations which do not provide the critical legal reference to enable access to in-vehicle data beyond just emissions. The standardisation requirements are included, but not the data and information for the wider diagnostic, repair and maintenance data. This means that vehicle manufacturers can claim that access to the vehicle and the corresponding ‘wider data’ does not have to be provided. This is currently being challenged by the Aftermarket Associations in Brussels, but no solution has yet been agreed for those contentious claims and there will be many vehicles on the roads with restricted access before a workable solution can be agreed and implemented.

As vehicle manufacturers are likely to be in contradiction with these existing Type Approval requirements, it is also likely that they will have to provide access, but this may well be through the use of electronic certificates. As each vehicle manufacturer has their own certificate strategy (process, access criteria, data available etc.), this is still a significant problem and in some cases could mean multiple certificates are needed to work on the different vehicle systems on specific models. It is also important that certificates can be used without the necessity of having to use the vehicle manufacturer’s dedicated diagnostic tool and an online connection to their server to generate the required certificate when using the 16 pin connector.

However, the new vehicle Type Approval legislation should now provide the legal reference for the physical connector and critically, also contain a reference to the data needed for diagnostics, OBD, repair and maintenance, but beyond these important requirements there are still other elements which have yet to be discussed or agreed.

Logical cascade     
These other issues revolve around the secure access for independent operators, together with the exact data that will be made available once access has been granted. This may sound strange, but the 16 pin OBD port is increasingly seen as a high security risk access point into the in-vehicle networks. Consequently, some form of controlled access is highly likely to be implemented, even for such seemingly mundane tasks as checking safety system trouble codes when conducting an MOT test. This is also likely to be a ‘certificate based’ system and this introduces a whole range of new challenges!

To understand these various issues more clearly, there is a logical cascade which starts with the legal requirement for a connector to be fitted to a vehicle. This is covered as part of vehicle Type Approval legislation, and this legislation also includes the need for the connector to be standardised from both the aspect of the physical shape and connector pin layout, but also what data or information is needed for emission systems, as well as the communication protocols that must be used. All these legislative elements have been in place for more than two decades, but the wider use of the 16 pin connector for diagnostic, repair and maintenance requirements had until the current revision of the vehicle Type Approval legislation, not been legally referenced. Now that this has (hopefully) been addressed, the next key discussions will be about who can access the vehicle via this connector, how this can be authenticated and once access is provided, what data, information and functions will be supported.

As mentioned earlier, this is likely to require electronic certificates, but to avoid the ‘wild west’ of different processes, access conditions and data availability, a standardised process should be considered by the legislator which also uses a single and independent point of access for certificates from all vehicle manufacturers. It should also be possible to access in-vehicle data without a certificate when the vehicle is in the workshop, although software updates may require certificates. When the vehicle is being driven, ‘read-only’ data should still be available and a certificate should only be needed if some form of ‘functional’ testing is required, but this should be considered as the exception. As there is an increasing use of ‘plug-in’ devices being used to allow remote communication with the vehicle when it is being driven for services such as insurance, or remote monitoring for prognostics and predictive maintenance, arguably, the importance of the OBD connector is increasing for these telematics services – even if the data it can provide is restricted in relation to what is available via the vehicle manufacturers’ embedded
telematics systems.

Further requirements
Once data is accessed, the new General Data Protection Regulation (GDPR), which comes into force in May this year, will impose further requirements for the use and handling of personal data.  A fundamental issue will be that much of the data contained in the vehicle can also be considered personal data and is subject to data protection legislation. Critically, the customer must give their consent to the use of this data by a positive action or statement – it cannot be assumed.    

As you can see, it may be ‘so far, so good’, but the simple task of continuing to plug into the 16 pin connector and diagnosing or repairing the vehicle is going to be far from simple, with many hurdles and challenges yet to be addressed, but the aftermarket associations, both in the UK and with their pan-European partners, are continuing to fight for the ability to do so.


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This year’s crop of year 11s will be winding up towards their GCSEs over the next couple of months. From there some will opt for the academic route and head onto A-Levels and beyond, while others will be looking to apprenticeships. It must then be time garages to start looking for some new staff to train up?

Well, probably not – we have already lost out on the 2018 school leavers. No, really. If we wanted to attract them we should have been talking to them and their parents during 2014, or perhaps even earlier, perhaps when they were still at primary school in 2012. Because we didn’t do that, they are going to choose another industry. There’s a host of reasons why, but what do we do about it?

Things are going to get better?
“The automotive sector does face a long-standing skills shortage, which is likely to worsen with the developments in new technology,” says Steve Nash, chief executive at the Institute of the Motor Industry.  “New government statistics have shown a
15% drop in automotive apprenticeship starts, however we haven’t fared too badly compared to the overall 61%.”

Considering what the industry as a whole has to offer, you’d think young people would be flooding in: “The motor industry has over 250 different job roles that can offer young people a life-long career,” says Steve, “whether that’s in a technician role or management, designer or marketing. Businesses in the motor industry are a shining example of what can be provided through quality training and apprenticeships. We’ve had plenty of practise in providing these training programmes that have allowed us to grow to be one of the largest sectors operating in the UK. Businesses in the automotive industry are certainly well-rehearsed when it comes to adapting to any new changes that are introduced, whether that’s the Levy or Standards that have recently been implemented.”     

Young people are not going to come our way if they don’t know that however: “The government has removed nearly all careers advice available in schools around the UK,” Steve points out, “and this is having a huge impact on young people. The IMI surveyed parents and young people to find that over 80% of parents said they would choose the university route over an apprenticeship for their children, so it’s clear that transforming apprenticeships alone isn’t enough to breakdown the stigmas associated with vocational learning.

“Government are continuously reviewing the apprenticeship model, and automotive businesses like Rolls-Royce remain at the heart of these changes. It’s important we’re doing our upmost to transform apprenticeships, and the IMI are confident that the dedication shown by businesses will help attract more young people.”

So what about technician licensing? It’s already on its way to being reality in one corner of our industry: “The IMI is currently lobbying for a Licence to Practise for vehicle technicians working on electric and hybrid vehicles. Without regulation and a minimum training standard, there are significant safety risks for technicians who may not have any form of training before coming into contact with high-voltage vehicles.

“The motor industry deserves recognition for their individual training and skills when it comes to working on such advanced technology. The licensing scheme would provide that credibility, as well as offering other benefits to the individual technician who are trained and qualified to work on low-emission vehicles. Benefits include the fact that businesses would be keen to recruit them in order to allow the business to service and maintain these vehicles, and as we’ve seen lately that the appetite for electric and hybrid vehicles shows no sign of slowing down considering their has been as increase of 35%
this year. Businesses must make the investment in training their staff in order to provide them with the skillset that’ll allow them to service customers who own high-voltage vehicles.”

Grow your own
Is licensing the magic potion that will fix all our problems? Industry consultant Andy Savva isn’t so sure: "I'm all for some kind of licensing, but it has to have meat on the bones, not be just some kind of tick-box exercise. Even if we went down that route, I don't think it would have any significance at all on recruitment. This has been an issue for a few years now.

"We have quite a few problems as an industry. Firstly, the push towards university-based futures from 10-15 years ago took almost all of the young talent away. At the same time there was a lack of decent apprenticeships so there were even less young people contemplating a career in automotive, specifically in the garage repair sector. Coupled to that is the lack of upward mobility for those dynamic young people who want to progress and not just stay on the tools or the front desk. Thirdly we pay very low as an industry compared with other sectors.”  

Do we need to think bigger?

“If we don’t raise the status of our industry collectively, then how are we going to recruit the next generation of people regardless what side of the fence you’re sitting," observes Andy.  “In Germany you can't own or manage a garage unless you have completed a three-year degree in Automotive Engineering, which combines business modules too. People in these roles are held in
the same esteem as solicitors and accountants.”

Outside of the lack of careers advice, those working in our educational institutions tend to have a very narrow view of the industry that does not help says Andy: "When I speak at schools and colleges, and I get given a group of youngsters, the teacher usually says something like 'these are the kids that are not going to go to university we thought the motor trade may suit them.’ It's not like that now, it's men in white coats. There is probably more computer power in a car now than in most general offices, but people don't look at it like that.

“The outside world seems to think that if you are not academically minded, and there is nothing wrong with that, then the motor industry is fine for you. They are given the impression that it is low skilled career, but it is far from that.”
Once someone is in the sector, they are not always handled well either: "At the moment, collectively we have disregarded proper recruitment strategy. How many garage owners understand where recruitment starts from? How do we recruit? Most of them will do the same thing. They will put an ad in the paper or go through a recruitment agency. Now I have nothing against recruiters and there are a handful around the country that offer a wider set of services. I’ve seen at first hand how they are trying to engage with young people at an early stage through a variety of ways up and down the country and I applaud them for this.

“On remuneration, most garage owners will then pay the same as everyone else because it is the going rate, or even cap technician salaries regardless of skill, age and knowledge. This attitude limits the pool of people who can attract and usually means a whirlwind of the same people going around for a few hundred quid extra or a couple of hours off during the week.”
Andy adds: “We need to be going into schools at an early age, as a collective automotive sector. It's about growing your own and taking on apprentices and nurturing talent and having a proper personal development plan for each individual and providing proper clean facilities with the correct tooling to enable these youngsters to blossom.”

All or nothing
Glen Shepherd, co-founder at automotive recruitment specialists Glen Callum Associates also thinks technician licensing might help with recruitment, but agrees it would not be the end of the story: “Technician licencing may fulfil the wants of the younger generation by allowing them a career option of a ‘professionally skilled job, recognised nationally with continued professional development and training’, however I believe the key to ensuring awareness of the offering to entry level generations would be wholly determined by the promotion of the licencing scheme.   

“Having attended many recruitment seminars on ‘attracting the millennial and Gen Y generations’ the consensus of opinion is that younger people are on the whole attracted to careers that offer personal development, training, transparency of duties and ‘an employer that holds and demonstrates good values and ethics.’  Licencing, if promoted correctly via schools, colleges and through successful marketing could aid recruitment from emerging generations into the aftermarket.”

How does this help the skill shortage and awareness of those generations already rooted within the workforce though? “The image of the aftermarket doesn’t mirror the actual modernisation that the sector has undertaken. So, how do we address image and increase awareness of the aftermarket offering?  My view is to inject new blood into the industry, not necessarily at entry level, but by reaching out to talent within comparable industries that carry similarities such as the industrial and engineering sectors. Introducing the outside world into what the sector has to offer and thereby expanding and utilising skills from other sectors.   

“Companies are trying to employ from a reducing talent pool of traditionally skilled staff, thus pushing up current salaries and increasing demand. By opening out to new skill sets, albeit within periphery sectors, allows increased awareness of the aftermarket, the introduction of new ideals and ideas and a wider pool of skilled staff from which to engage.  

“We can do this by educating companies within the aftermarket who have historically only recruited within the sector to help broaden their expectations and to promote the benefits of working within the industry. Do we need ‘technician licencing’ to be able to do this?  I think not, however all a positive initiatives promoting recognition of the professionalism within the sector is surely helpful.”

Don’t stop what you’re doing
How the industry is viewed is a key issue clearly: “The perception of the motor industry by those outside it creates an image problem that exacerbates many of the issues facing independent garages today and the skills shortage is just one of these” says Terry Gibson, head of member services at the Independent Garage Association (IGA). “However, whilst attracting young people into the industry will solve the problem in the longer term, there is also a need to upskill those already in the industry. This is not limited to hybrid and other new technologies, we face an equal problem in replacing retiring MOT testers where there is an equally pressing need.”

The IGA is working towards helping widen the net: “The IGA is working with the Armed Forces to consider how best to address the particular need for MOT testers by helping to retrain skilled and experienced military vehicle fitters to aid in their transition to civilian life and this will work alongside an initiative with a major recruitment company.”

While careers advice in schools has been found wanting as we have seen, Terry believes the industry itself is going in the right direction promoting the importance of training and development, so at least existing staff in the sector continue to upskill: “The messages spread by trade bodies and by the specialist trade press focuses heavily on training and development and this article is a good example of that. The opening of the RMI’s Academies of Automotive Skills shows that the industry is promoting training and development for existing technicians.

On licensing, Terry observes: “While blanket licensing might, over  time raise the perception of the technician role,  we do not believe it would be a major influencing factor in deciding on an automotive career for young people today – although in the absence of such licensing anywhere in our industry makes it difficult to predict its effects.”

Terry adds: “We must continue to stress the high-tech nature of modern motor vehicles and ensure that the industry is presented in the best light to those outside. To that end the IGA is working with television producers to ensure that the portrayal of the garage trade in popular drama is realistic and representative.”

The shortfall of skills in the UK automotive industry is not new, but with the industry poised for continued growth coupled with the fact vehicles are becoming increasingly computerised and more electric cars are entering the market, the situation has become more pressing.

No longer is the career path of a vehicle technician a matter of looking over the shoulder of a patient mentor. Progressing in the motor industry today demands digital skills — a diagnostician who can solve puzzles without physical clues, like an engine knocking or an oil leak.

This is all putting tremendous strain on an industry which is already struggling to find the talent it needs and, while in 2016 pockets of the country were feeling the pinch, in 2017 garages across the whole of the UK were left feeling the pressure as the skills crisis deepened.  Significantly, the impending Brexit is likely to deepen the shortage as, according to The Society of Motor Manufacturers and Traders (SMMT), at least 10% of all people employed within the UK automotive industry are from elsewhere in the EU.

Highly skilled
Consequently, garage owners and dealerships are increasingly seeking to recruit the most highly skilled technicians, and there is a growing pool of proficient candidates ready to fill workforce shortages on a temporary basis.
As the economy thrives on supply and demand, and we are functioning within an industry where the demand is high, but the current workforce supply is straining under the weight of it. For the temporary contractor, there are plenty of opportunities for work. However, the pendulum swings both ways. For the aftermarket business owner, who is looking to increase productivity and ensure they do not suffer any financial losses due to empty ramps through staff shortages, relying on temporary contractors can provide an extremely efficient, quick win solution.

From reducing the administration requirements, to having less payroll responsibilities, hiring contractors consumes less of a business owner’s time than hiring full-time employees does, and there is growing evidence to support this. With two of his permanent workforce due to attend training days last September, Krunel Patel, managing director of Cambridge Coachworks, a member of the AutoFirst Network, realised that he could face a potential loss of £2,000 per day without cover. “Initially, the thought of taking a temporary worker on was impractical. While I realised the financial loss I would make, and also the fact that my customers would go elsewhere, the prospect of vetting candidates to work on such a short time scale was daunting. However the whole process from requesting support from Autotech Recruit to the arrival on site of the technicians was seamless. Both technicians were not only a pleasure to have as part of the team, but worked extremely hard
and helped immensely during a busy period.”

Forward planning
When should owners be tapping into this growing pool of highly-skilled contractors? Quite often it will be a reactive call, and temporary technicians are frequently being called upon with just a few days notice to cover shortfalls. However, for garage owners who want to run at optimum capacity with the flexibility to meet periods of high demand, forward planning is essential to cover any anticipated workforce shortages.

While all businesses experience economic highs and lows, demand will generally follow a similar pattern each year. For instance, March and September are traditionally both busy months for MOTs and last year there was a 10% increase on MOTs due to the 2014 car sales boom, which, through consecutive annual sales, is forecast to be repeated this year. Relying on temporary technicians to plug the gap requires deliberation to ensure the right person fits the bill. Therefore it is essential that recruiting temporary technicians is built into an annual business strategy.

Investment
For temporary technicians, to ensure the work flows in, it is vital that they continue to invest in training and up-skill to be proficient in all areas of vehicle maintenance. While this requires an investment in both time and money, inevitably it leads to greater flexibility when taking on new work opportunities, allowing them to hit the ground running. Significantly, when faced with reports that the number of jobs in the automotive aftermarket sector expected to rise by almost 17% to 400,000 roles by 2022, there is plenty of scope for work. Couple this with the fact that many of the present workforce do not necessarily hold the required skills to carry out the work, temporary workers can help bridge this gap.

It is vital that training becomes an integral part for all automotive workers in 2018 to ensure the industry has a flexible, highly skilled and productive workforce. Garages need to stay one step ahead of the game and ensure that any shortfalls in manpower are identified early enough so they can take on highly skilled contractors to safeguard efficiency, and maintain the
bottom line.

Before July 2013 individuals were free to bring Employment Tribunal claims. However, in July 2013 the government introduced Employment Tribunal fees for anyone wanting to make a claim or appeal a judgment.

The fee to lodge a claim was £160 or £250 (dependent upon the nature of the claim) and the fee to pursue the matter to a final hearing was a further £230 or £950 (again dependent upon the nature of the claim). If employees won their claim, the tribunal judge could order the employer to pay any fees incurred.

According to Chloe Themistocleous, an associate at Eversheds Sutherland (International) LLP, after the introduction of tribunal fees the number of claims being brought fell by 80%, but the ratio of claims being successful did not change and so the introduction of fees did little to deter spurious claims. “Clearly,” says Chloe, “some individuals were deterred from making claims due to the cost. Whilst a remission system was in place to help the poorest people, by reducing or waiving the fees, those who missed out on a remission had no choice but to pay the fees or not make a claim; many simply did not want to take the risk.”

Supreme Court decision
It appears that while claim numbers were dropping, unrest in trade unions was growing and so Unison decided to challenge the government’s implementation of the fee regime, claiming not only that it was unlawful but that it indirectly discriminated against women.

Chloe says this was not by any means an easy task as both the High Court and Court of Appeal rejected the claim. “However, at the end of July 2017, the Supreme Court quashed the tribunal fee regime giving judgment that it was both unlawful and indirectly discriminatory.” Effectively the Supreme Court decided that the government acted outside its powers when it introduced fees at current levels, because the fees effectively prevent access to justice.

What does this mean?
The ruling means a number of things. Chloe explains: “As a result of the judgment no further fees can be charged by the Employment Tribunal until a replacement scheme is introduced.” This means new claims can now be brought for free again and no hearing fees will be charged claims already lodged.

She adds that as for those who have already paid tribunal fees, the Ministry of Justice has undertaken to reimburse fees already paid.

Of course, without the deterrent effect of fees, employers now face an increased risk of employment-related claims from current and former staff. Worryingly, Chloe says it is also possible that some individuals might now try to claim they should be permitted to bring out-of-time claims in respect of past alleged breaches of their rights, “arguing that the now found to be high and unlawful
fees prevented them from bringing a claim.”

When a replacement system will be debated and passed by parliament is unknown - it could be months or even longer. The Supreme Court ruling gives parliament a lot of ‘food for thought’, but so far, it is unclear
what shape a replacement scheme would take.

As Chloe sees it, while there is a window of opportunity to submit a claim without paying a fee, it is likely that employees will take it. “Claim numbers are expected to rise, but whether they will rise to the levels they were at prior to the introduction of tribunal fees is unknown. If they do, it is unlikely that the current tribunal system, with a reduced number of hearing centres, judges and clerks, could cope.”

With time, if a new fees regime is introduced and once the media attention has died down, the number of claims will level, but, in the meantime, employers must watch and wait.



 

Facing a new Brexit world in the automotive aftermarket was the overarching theme of the IAAF Conference 2017, held just before Christmas.

There is nothing particularly festive, or easy, about reversing out of the world’s largest free-trade area without mirrors, so keeping a clear head is vital.

IAAF CEO Wendy Williamson’s opening remarks were as clear headed as you could wish for. They had a Yuletide feel, themed around the 12 days of Christmas. Among the issues covered were Brexit, emissions, the proposed MOT changes, automotive technology, consumer lifestyle changes.. On tech, Wendy observed: “Automotive technology is moving at a rapid pace, and this is yet another challenge we have to face.” Talking about lifestyle changes, she said: “Consumer expectations are changing, ownership patterns are changing, and there are new entrants to the sector like Google and Apple, along with changes to the distribution structure.

"With reference to impact of Brexit, Wendy said: “What a journey we have ahead of us. I don’t think anyone thought it was going to be easy, but now we know how difficult the process will be.” On emissions, Wendy commented: “Yes, older vehicles emit NOx, and yes some manufacturers were less than honest, but we were encouraged to buy them. Cars with newer Euro 6 engines are much cleaner, and yet diesels are demonised in the press. Meanwhile ships, planes, wood-burning stoves are all far worse for the environment. We need a concerted effort to confront this.”

“The UK’s infrastructure cannot support a  major move away from the internal combustion engine,” she added.

On industry as a whole, Wendy highlighted the resilience of the aftermarket: “We must continue to invest in equipment and training to stay ahead.  All we ask for is a level playing field and the ability to continue to access information. There is a role for our industry in the future, and that future is bright despite the challenges we face.”

Economy
Following the introduction to the morning session by F1 legend Johnny Herbert, the first presentation of the day provided an opportunity to re-examine the impact the aftermarket has on the overall economy. Dr Julia Saini, vice president consulting at Frost & Sullivan looked at the importance of the UK aftermarket to the UK economy and the impact of Brexit on the sector.
On the economy, citing the SMMT figures launched earlier this year at Automechanika Birmingham, Dr Saini said: “2016 was another year of growth, up 2.4% to 21.6bn, delivering £12.5bn to the economy and an extra 1,400 jobs.”

On Brexit, she commented: “The impact of the decision could be manifold. Consumer impact could be higher prices for parts and decreased spending on car maintenance. Introduction of WTO trade rules and tariffs of between 2% and 4.5% on imported components would have an impact.

“The current lack of clarity between the UK and EU is another area of concern to us. The aftermarket is suffering from a considerable trade imbalance – it imports twice as much as it exports.” It was not all bad news however: “Although we are running a trade imbalance, the UK is delivering a wide variety of parts and components into Europe and other markets like Asia.
If UK companies could compete on price there are opportunities for the sector in emerging markets.”

"Moving onto e-retailing trends, Dr Saini commented: “It is likely even more consumers will buy parts online.”

On the evolution in personal mobility, Dr Saini said: “The way we are using cars is changing. Car sharing and e-hailing could remove up to 460,000 cars from UK roads by 2025.  Businesses should capitalise on this and target car sharing and e-hailing operators as potential new customers for the aftermarket. Also, working with fleet companies enables businesses to service more vehicles, and also offer some fleet operators who in-source servicing significant savings. It is worth looking into which companies have in-sourced capacity that cannot meet the demand and make an offer.”

In conclusion, looking ahead at the need for the renewal of the workforce and the entry of new talent to the sector, Dr Saini added: “The industry  must work with schools and government to attract more young people to the industry.”

Next up was Quentin Le Hetet, general manager at GIPA, who was examining the impact of global influences on the UK aftermarket.

Looking at global sales trends, Quentin compared the 137.9% growth in car registrations in China between 2011 and 2017 with the situation in Europe. “Every year, 25m new cars are registered in China. That’s almost the equivalent of the entire UK car parc, every year.”

In the same period, the whole of Europe saw a 3.7% increase. “The car market we are in is not going to greatly increase in future.”
On Britain, Quentin said: “UK registrations are dropping. This is the only G5 country seeing a decrease. This means the UK car parc is not going to grow as fast as it used to. It’s not a threat, but it means the average age of cars is going to increase from 7.6 years upwards.

“The attraction of the franchised sector is going to decrease, and this is good news for the aftermarket.”

Consolidation
Quentin’s next topic was the wave of ownership changes still washing across the parts supply sector. Looking at the major factor chains in Britain, he commented: “It is interesting to note that three of them are owned by North American parents, and that two of those have been bought out in the last year. They are part of a consolidation trend that is going on at a European level.”
Looking for a reason behind the Atlantic crossing taking place, Quentin mused: “In North America, a lot is done by the driver, where in Europe it is done by professionals. This is why there is a lot of interest – more margin. Britain is a gateway to Europe as well, as English is spoken.”

Quentin then covered the growth of garage schemes and soft franchises. While Britain is still some way behind the continent in this area, Quentin thought they offered some advantages: “I think the benefit of the schemes is that they make the garage more professional.”

Labour rates were up next, and Quentin pointed out that while franchised dealers, Autocentres and fast-fits had all seen labour rates rise since 2012, independent rates had actually dropped. “Many independents gauge their labour rate by seeing what their local competition is charging, and then charging £2 less per hour. This shows the kind of support businesses need.”
This is a challenge for the wider industry too: “How can we sustain
the sector and provide support and training to help the sector stay in business?”

Online service providers
The challenges didn’t stop in the next session, as Alistair Preston, co-founder at whocanfixmycar.com contextualised the rise of online service providers and showed how garages can increase their customer base by taking the leap.

“The UK consumer is a big car of aggregators, and we have the insurance sector to thank for that. There is an ongoing willingness
by UK consumers to embrace these platforms.”

Commenting on the success of their offering, Alistair observed: “If the garage is paying us money, then their workshops are full of
our customers.”

Alistair went on to point out how garages are making the most of the site, along with industry partners like  parts suppliers. In some cases they are working with garages to promote specialists in certain areas: “This evolution of independent garages getting smarter and more organised is only going to increase.”

Right2Choose
The IAAF’s Mike Smallbone followed, and he provided information on Right2Choose, and highlighted how the campaign will be kicking up a gear in 2018. “The issue is who has the right to service and repair the vehicle in the warranty period, and is also about who has the right to receive data. Right2Choose is all about choice,” Mike added. “If the consumer wants to go to the dealer, then they will. We want to make sure they know they have the choice.”
 
Clearly we will be hearing more about this. Watch this space.

Developments
After lunch, a change of lane as Olaf Henning, corporate executive vice president at Mahle, showed how F1 technology is being used to drive parts developments in the aftermarket.

“What is important is how we use motorsport as a laboratory,” said Olaf. He cited the steel piston the company developed in 2008, that was used in a Le Mans car in 2009 and by 2015 was in series production. “This was in less than a decade. It does not always go this way but shows what can happen.”

Looking at the drivetrain, Olaf cited Mahle’s dual strategy on the issue of EVs and the internal combustion engine: “Do we need EVs that can drive 500kms? I don’t think so. I think we will see drivetrains being more diverse rather than either-or.”

Future technology
Staying with technology, IMI chief executive Steve Nash was up next. Commenting on the proposed phasing out of conventional petrol and diesel systems by 2040 at home and abroad, Steve tended towards cautious scepticism. On the potential impact  on garages, he said: “There will undoubtedly be a change in the market. I do believe there will be more call for people to specialise. If you are a small garage then there will be an advantage to be part of a larger network.”

On the government’s attitude to the EV challenge, Steve said: “They are looking at infrastructure, but the one thing they are not looking at is skills.”

Looking at possible threats ahead Steve said: “There is very little money in selling new cars. The margins are razor thin. All the money is in used cars and aftersales. It is a very important part of the business.”

He then went on to examine how different ownership models for vehicles could put manufacturers firmly in the driving seat: “The future sales model would give them a lot of power over the aftermarket if they kept ownership of the vehicles.”

The last speaker of the day prior to summing up by IAAF president Lawrence Bleasdale was Figiefa technical director and long-term Aftermarket contributor Neil Pattemore. He looked at the latest technical threats emerging from the UK and Europe. Access to the OBD port, the wider issue of access to technical information, the machinations of Type Approval and many other issues were covered.

“It has been one of the most challenging and most difficult of the seven years I have been in Brussels” said Neil, who went on to discuss the gains the organisation has made on behalf of the sector during the year, and where the sector was winning back some ground.”

With that closing statement from Lawrence Bleasdale, the conference ended on a positive note.

The start and the end of a year enable us to ask where we have been, and where we are going. It’s an arbitrary cut-off, but it does provide some punctuation to the stream-of-consciousness that life in the sector can seem like.  

2017 saw wave after wave of big issues battering the aftermarket, from ongoing concerns over diesel emissions, to the challenges represented by the connected car. All these issues were with us a year ago, and they are still with us now. Where should we be in 2019 though, and can we expect any progress on these topics?

Clarity
Commenting on the prospects for the year, Independent Automotive Aftermarket Federation (IAAF) chief executive Wendy Williamson saw cause for optimism: “After the seismic changes that were proposed for the industry in 2017, the IAAF remains cautiously optimistic for 2018. I for one would like to see us build on the progress we’ve started to make, in order to secure a brighter future for the aftermarket. The general consensus is, while there’s still a long way to go in many aspects, by the end of the year we shall see more clarity. Speaking of optimism, Wendy observed that some cold hard reality could be handy for those looking to see some technologies hit maturity far earlier than is likely: “I still believe that, whilst autonomous cars have received a huge amount of press coverage in 2017, they are still a long way off mass market appeal and I can’t see that changing dramatically in 2018. Whilst the vehicle technology has developed at a rapid rate over the last couple of years, the infrastructure required to support a network of autonomous vehicles is still some distance away.”

That isn’t to say the future has been forever delayed: “However, all areas of the aftermarket do need to continue to invest for the future. Whilst this is currently evident in traditional vehicles, newer technologies such as hybrids and EVs still tend to be very much in the domain of the franchised network. With last year’s announcement by the government, that ‘pure’ diesel and petrol engine cars will be banned by 2040, the sector needs to keep pushing to ensure that the relevant parts and technical information are available, so that new vehicle technologies can be repaired by the independent aftermarket.

“FIGIEFA’s call on the European Commission to swiftly implement the ‘interoperable in-vehicle telematics platform,’ following the conclusions of the TRL Report on ‘Access to in-vehicle data and resources’ were fervently applauded by the IAAF. We are hopeful now for swift progress to be made and that 2018 will move us closer to giving the independent aftermarket direct access to in-vehicle data.”

“I’d also like to see more support for new technology and development, so it can reach the aftermarket more quickly,” said Wendy. “The introduction of hybrids and electric vehicles also presents opportunities as well as challenges for independent workshops to invest in the changing vehicle parc. The technology is already there for them to take advantage, but the progression and success of this shift depends heavily on the infrastructure in place. So while we’re on the subject of clarity, in 2018 I’d like to see a clearer strategy on who would pay for this.”

Then there’s Brexit: “We need to establish a bit of sense in the UK/Europe relationship going forward, as we continue to fight the aftermarket’s corner on a number of post-Brexit threats affecting the trade.

“One thing that won’t change, however, and will remain a constant, is IAAF’s continuation of playing a major role in championing the UK automotive aftermarket interests both in Europe and in the UK.”

Top priority
Common sense is clearly shared across the sector, as for Garage Equipment Association (GEA) chief executive, Dave Garratt the MOT is top priority: “I would also like to see the UK MOT brought up-to-date over the next year especially when it comes to headlamp beam testing. Today we are testing using old visual/manual headlamp beam setters in the MOT, which are great on halogen headlamps, but suffer when testing HID and LED systems. Vehicle manufacturers have been insisting that their main dealers use video camera based beam setters for many years and these lighting systems are very difficult if not impossible to
set-up using an aiming screen.”

On the subject of technology, Dave also said he hoped to see some progress on how we deal with connectivity: “It would be great to get some clarity on exactly how the independent aftermarket is going to remain competitive when dealing with the connected car. During 2017 the Automotive Aftermarket Liaison Group (AALG) lobbied the DfT and asked for their support in keeping an open platform on vehicles so independents can have the same access as a main dealer. With Brexit going-on, it’s difficult to focus the attention of the UK government to our concerns. However, the European Commission seems to be sympathetic in maintaining an open and fair aftermarket and our associations in Europe have gained ground when convincing them of this.

Dave added: “Let’s hope that 2018 sees clear regulation on the connected car and that the UK adopts the same as Brexit moves closer.”

Challenging
“As we look ahead into 2018,” observed Institute of the Motor Industry (IMI) chief executive Steve  Nash, “It looks like it’ll be another fairly challenging year for the automotive industry from a sales perspective, although the sales successes of recent years should continue to carry through strongly into the aftersales area of the business.

Emissions concerns loom large in Steve’s mind: “Despite the well-presented case from the SMMT on behalf of the industry, the government have so far done little to address the ambiguity in their policies surrounding Euro 6 diesel vehicles, including those that will have been subjected to the new and more stringent ‘real world’ emissions tests. Therefore the decline in diesel sales we have witnessed in 2017 is likely to continue unchecked in 2018. To compensate manufacturers will put all their efforts behind their petrol, EV and hybrid offers, with plenty of new EV and hybrid models due to hit the market next year.”

Europe is less of a concern than ongoing investment in the sector: “Though Brexit’s deal-or-no-deal will continue to dominate the headlines as we move towards the EU deadline, I doubt the motoring sector will see any drastic changes to the way it currently operates as a consequence; certainly not in 2018. With the developments of new technology advancing at record pace, independent businesses across the sector will need to be considering how they can adapt, by investing in new technology and the necessary training that will allow them to safely service vehicles that have automated, electric and hybrid tech.”

EVs and hybrids
The real-world practicalities of working on EVs and hybrids is something that everyone needs to think about: “Following a busy period in 2017, the IMI has been campaigning for a Licence to Practise for technicians working on the high-voltage systems of electric and hybrid vehicles, as well as potentially on autonomous systems going forward. This campaign made great progress this year by gaining support from cross-party MPs, as well as government ministers. The IMI will be working alongside government to help shape the possible licencing scheme with the support of the sector. Without regulation and a minimum training standard, there are clear and significant safety risks for technicians who don’t have any form of training or aren’t properly equipped if they are coming into contact with the high voltage systems of electric and hybrid vehicles.”

The skills shortage is likely to still be with us at the end of 2018. Considering the alternatives out there for young people, you have to wonder why sometimes: “Recruitment has been a well-documented struggle for many employers throughout 2017,” observed Steve. “The IMI published research that showed many young people wanted to avoid university debt, however they felt it was their only option after leaving school since they’d never received any form of effective careers advice to tell them otherwise. It’s essential that 2018 sees employers become proactive in raising the awareness of the excellent career opportunities available to young people. The advances in technology mean the industry has a real and genuine chance to sell itself as a high-tech sector, attracting talented young people that can bring new ideas and skills but who might not previously have considered automotive as a career choice.”

Ending on a positive note, Terry Gibson, head of member services at the Independent Garage Association (IGA) said: “Despite the doom mongers out there, the IGA is certain that there has never been a better time to own an independent garage. The opportunities for the future are open to those who continue to invest in training, tools and technology. That’s not to say that 2018 won’t be hard. An increasingly complex technical and regulatory landscape means that the new opportunities will be matched by new and evolving challenges.“

Not all changes to the MOT are bad, as Terry commented: “Changes to the MOT as a result of the EU Roadworthiness Directive 2014/45 which come into force on 20 May next year will bring lower emissions standards which will require an update to the Diesel Smoke Meter (DSM), as well as introducing the ‘categorisation of defects’. These changes are likely to feature in the DVSA’s syllabus for the 2018/19 Annual Training year starting on 1 April providing a very small window for testers to get to grips with new concepts.” Some challenges may seem daunting, but are not insurmountable: “Closely following the MOT changes, the General Data Protection Regulations (GDPR) come into full force on 25 May 2018 and all businesses will need to ensure that they are compliant. Whilst the new regulations do not fundamentally change the core principles of data protection and privacy, they do add some significant new responsibilities and requirements for anyone that collects, stores and uses customer data as well as new rights for individuals. This is a subject that garages cannot afford to ignore or treat lightly.”

Then there’s technology: “The increasing proliferation of ‘demand aggregation’ websites – online booking platforms, garage comparison sites and all the other apparently tempting marketing propositions that simply serve to place a third party between a garage and its customers continue to confuse consumers and cost garages money. We must stand behind proper Chartered Trading Standards Institute (CTSI) approved consumer codes such as Trust My Garage which allows garage businesses demonstrate their quality and value directly to customers without the need for middle-men. As well as the issues created by the subjects above, the direct relationship between the vehicle manufacturer and the driver of the car created by the connected and extended vehicle is a game changer for the entire motor industry. The IGA will continue to fight for access to the vehicle and its data to ensure that independent garages can continues to provide the quality and service for which they are renowned.”

Summing  up
These are all vital topics that have the potential to change the landscape of the industry. Will we still be discussing some or all of these issues in early 2019? Only time will tell, but Aftermarket expects to keep the files on a few of these subjects open for some time to come…

With rising energy bills comes the need to invest time in seeking out the best deal. While finding a new energy provider isn’t a money-making exercise, it is something that will lower costs. It is something that can be done alone, but sometimes two heads are better than one.

This is because unlike the domestic market, the business energy supply works in a way that makes a quick online comparison not so simple. While the domestic market is largely based on location, Chris Caffery, an advisor at Utility Options Ltd, an independent energy consultancy, says the commercial market uses a number of elements that determine the tariff cost: “There is a varied mix of wholesale rates, transportation costs, government taxes and levies and, of course, profit for the suppliers. Generators still rely heavily on coal, oil and gas, so actual or anticipated costs of these fuels can create large differences in retail prices.”

Go compare?
Going online to make a comparison isn’t easy. There are a great many more online comparison websites for domestic energy than there are for commercial suppliers. “One of the main reasons for this,” says Chris, “is that domestic tariffs set by suppliers have a longer ‘shelf life’ usually due to a slightly higher margin placed on domestic for this very reason.”

Other factors are considered such as credit rating (because firms are effectively borrowing from the supplier), and the length of contract (a deal may be poorer at first but over time this improves as market prices rise). Using a broker or consultant doesn’t always guarantee price transparency though; it’s not easy to compare the price that’s being offered unless there’s a change in broker, particularly if the negotiations are happening a day or two before renewal. The advice? Don’t leave negotiations until just before the renewal is due as it doesn’t give an opportunity to shop around.

As to what could be saved, Chris offers two examples: “We’ve been helping a large motor vehicle repair specialist in Kent that employs 25 staff. Last year alone we saved 21% for that customer which equated to around £2,800 in monetary terms.”

The second example involves another Kentish firm, a medium sized garage in Ashford. “We consistently save them around 11% over and above their supplier’s renewal prices. This saving works out at around £600 per annum.”

Chris says that using a consultant isn’t just about the rates that are negotiated. It’s about saving time and not to having to deal with suppliers – “sometimes the extra added services can far outweigh the visual savings on the utility bills.”

Clearly, there are a number of lessons that can be drawn. Plan well in advance for benchmarking and renewing (switching) contracts. The energy companies would much prefer customers on standard tariffs, but with some planning and effort, decent savings can be made.

Getting redress
In the majority of instances the energy supply relationship works out well, but where there’s a suspicion of unfair treatment, and the relationship breaks down, there is a natural inclination ask about rights of redress.

There are two avenues of complaint open to firms who think they have been unfairly treated. All suppliers have an in-house complaints process. But having exhausted that route, the next step is to try the Energy Ombudsman to have a complaint taken further. The ombudsman can only help microbusinesses (defined as having an annual consumption of electricity of not more than 100,000 kWh, or gas consumption of not more than 293,000 kWh; or fewer than 10 employees (or their full-time equivalent), and an annual turnover or annual balance sheet total not exceeding €2 million. Ofgem doesn’t get involved with individual complaints but it does have plenty of information on its website that may prove useful.

It is worth noting that help with seeking redress is a service that most consultants and brokers provide to customers. They take up queries with suppliers and use their contacts and knowledge to obtain a swift solution.

Life is always changing and as we all get older we start to remember our younger days and reminisce about how ‘things ain’t what they used to be.’
    
For example, a century ago, horses were still an everyday mode of transport and every village had a blacksmith to re-shoe them. As time moved on, getting to work was done on foot, by bus or by bike – which if you were lucky, may have had an engine. To service these two wheeled modes of transport, every village had a cycle shop who often covered both pedal and motorcycle versions.
    As the UK economy developed, many people aspired to owning a car for improved mobility. I recall how difficult it was for my father being able to afford to buy the family’s first car. It may have had leather seats, but there was no heater, so journeys in the winter were no fun. My father also conducted most of his own maintenance, as did many other vehicle owners, but this gradually started to be provided by the local garage and the aftermarket as we know it today was developed.

Evolution
For the last four or five decades, although the aftermarket has evolved, the basic business models have not fundamentally changed. People and businesses acquire vehicles and these vehicles get serviced and maintained by the main dealer or the independent workshop. Competitive choices exist for locations, labour rates and the spare parts. As vehicles have become more sophisticated with the introduction of electronically controlled systems, the ability to access the technical information needed to diagnose, service or repair the vehicle has become ever-more critical and legislation has been needed to ensure that competitive choices can still be offered.
    
To be able to repair today’s vehicles has therefore been about the appropriate training and equipment, supported by local marketing to attract vehicle owners into your workshop. This is relatively straightforward and more of an education process than a revolution of the basic business model – but this is starting to change.
    
The future is being seen as ‘mobility’ and ‘mobility services’ and the way that this is developing will fundamentally impact the Aftermarket as we know it today.
    
There are a number of key reasons why the future will impose a change to today’s business models. The types of motive power are already evolving and this rate of change will increase. This in itself will change the type and volume of work that traditionally has been provided to vehicle owners. Vehicles may still have an internal combustion engine, but this will be part of a hybrid system, which is more likely to be petrol than diesel – but it will include some form of electric motor – either as a direct drive unit, or as a 48 volt ‘mild hybrid’, but in both cases with energy recovery functions that reduce the amount of braking and consequently the replacement of brake system components. This situation is further increased if the vehicle is fully electric, when there are far fewer service and maintenance requirements. However, these vehicle types will only create an evolution of today’s business models.

Revolution
The revolution comes when you consider the change of vehicle ownership that is increasingly happening and the rate of which it will increase. The ‘good old days’ of aspiring to own a vehicle is no longer the case for the younger generation and a whole new range of ‘mobility services’ are being developed – especially as fully autonomous vehicles are introduced in volume. In many cases this means that the vehicle owner changes from being an individual to become a corporate organisation or even remains the vehicle manufacturer themselves.
    
This fundamentally changes the way that servicing and repairing the vehicle will take place. Firstly, the corporate owner of the vehicle will want to decide where and for how much their vehicles are being serviced and maintained. However, this may rapidly expand into a demand for lower hourly rates, together with a further demand of what parts are used. At best this creates a direct negative impact on your profitability, but it may go further.

Further requirements
There may be a further requirement for specific levels of both technical and management competence, which may require specific standards and management processes to be verified and maintained – increasing costs whilst margins are squeezed. Corporate organisations may also expect a national contact and administration function, which as an individual independent workshop it will be impossible to provide, so now you may need to consider how to be part of a coordinated national group with centralised facilities to be able to be ‘part of the game’. However, on the plus side, as part of a larger group you may also be in a stronger position to negotiate with the larger vehicle operator organisations, so it may not be all bad news.
    
If the vehicle manufacturer remains the owner of the vehicle, then they may also require that you handle warranty work – at the lower warranty hourly rates, together with the specific contracts that the vehicle manufacturer will also expect to ensure that their ‘standards’ are maintained. Ultimately, as vehicle ownership models change and ‘mobility services’ become the norm, each element of your business is likely to be managed by the requirements of the corporate organisations. This is not a legislative issue, but a direct consequence of changes in mobility service models and their commercial impact.

Significant impact
The good news is that independent garages will still be needed, but the most significant impact will be the squeeze on your hourly rates and spare parts margins, in much the same way as insurance companies have controlled accident repair centres. Ultimately, this may also impact your ‘modus operandi’ by imposing technical, management and reporting requirements. This creates the simple question – you may still be the legal owner of your business, but in reality, who controls your actual day to day business – you or the mobility services vehicle owner?
    
Now may be the time to start thinking about joining forces with other independent workshops – probably as part of a national soft franchise or an association – otherwise it may be a case of united we stand or divided we fall.                  

The global automotive industry is experiencing significant growth: a study conducted by PwC found that worldwide sales increased by 5% in 2016. But we must always be cautious not to mistake growth for health or security: a complex, multi-faceted international market will always face some challenges.

The aftermarket has developed for well over a century to provide choices to the vehicle owner concerning how their vehicle is repaired, with an increasing choice of replacement parts and emanating from all of this, ‘affordable mobility’ for vehicle owners and drivers.

Brexit is on the horizon, costs of energy are rising following the fall in sterling and an increase in taxation, and it appears that the UK’s energy generators can only just meet energy demands. It’s not hard to see why firms should be keenly aware of the impact of energy usage on their bottom line.

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?”