Evolution or bust

Paul Black, CEO of sales-i explains why independent garages must adapt to the changing face of the automotive industry

By Paul Black | Published:  03 January, 2018

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 test for the automotive industry will not be how big it gets, but how well it adapts to the issues in its path – whether they happen to be older, seemingly-intrinsic issues, or newer, technologically-driven problems
and obligations.

When the industry is feeling the squeeze, it really feels it: trends that impact the upper end of the supply chain inevitably trickle down to local garages. Independent businesses, especially those in the aftermarket, must do more than ever to catch
up – and even more to stay ahead of the game. But which challenges are the most pressing, and what can garages in particular do to tackle them?

Adopting e-commerce Digitalisation has had a transformative effect on many – if not most – industries. Amazon’s rise has led to the decline of bookshops; Blockbuster had the chance to acquire Netflix, and was instead destroyed by it. Examples are innumerable and varied.

Automotive parts and services are no exception, though it’s perhaps taken longer to arrive at this point. Traditional field sales are losing ground to e-commerce, and it’s not hard to see why. Those who embrace this approach are only getting stronger. Productivity, market reach, and customer service are dramatically improved by it.

When a business can serve a customer without sacrificing an employee’s time, it has immediately made a considerable cost saving. When a business can resolve queries online, it can ensure that employees spend less time on the phone. When a customer analytics function can be integrated into your e-commerce platform, it makes it far easier to identify and justify up- and cross-selling opportunities using real data, rather than simply guess at them.

This is not to say that e-commerce will not come with challenges: the wide range of parts and services available and the continuously evolving nature of technology should preclude any transition from being completely smooth. That said, the principal obstacle for small garages will be their reluctance to embrace it. Many will see e-commerce as an experiment; ‘nice to have’ instead of critical to their business model. This will invariably lead to the competition – with no such hesitance – earning more market share and stealing an insurmountable lead.

The internet is the single most important consumer channel. Even if they don’t complete a transaction online, customers will often conduct research and compare prices on product websites.

Small garages must promote their brand or risk alienating their customers. E-commerce can be an opportunity for success or failure. Businesses need to embrace it, but it will only serve them well if they throw all their weight behind it in the long and short term.

Establishing competitive differentiation
Commoditisation is rife in the automotive aftermarket. In some respects, it’s understandable: a customer may not easily be able to tell the difference between the very best version of a particular part and the most affordable. In response to commoditisation, many simply opt to slash their prices: customers, after all, are apt to snap up a bargain. This impulse should be vigorously resisted.

For one thing, a garage can only offer the lowest prices for so long: bigger, more moneyed competitors will sense that they’re losing business and simply lower their prices – eating their losses until the garage goes out of business. For another, lowering prices greatly diminishes brand reputation and perceptions of quality. If a business becomes a discount brand, it cannot easily ascend to the high-end or midmarket. Discounting assures it of a lifetime in the bargain basement.

Garages must therefore look for other ways of diversifying their offering and increasing its appeal to customers. Where a company cannot compete on price, it can compete on value. Bespoke maintenance and repair plans, free consultations, add-ons: these things can matter as much to customers as the regular retail price. If a garage can offer free tyre comparison guides, if it can cultivate a reputation for excellent service, if its staff are the very best, it will build faith in its brand and in the expertise of its people.

Improving delivery and personalising an offering are a better way to differentiate a company and forge strong customer relationships than slashing prices.

Improving productivity
Though we have already mentioned digitalisation in the context of
e-commerce, it would be remiss to forget its application to back-office functions. The administrative tasks that characterise this function are mundane, repetitive, and occupy a lot of employee time: reporting, accounting and financial management, scheduling, and even some customer service functions.

Garages that hope to remain competitive must begin to automate as many of these tasks as possible using software systems – another key asset in the digitalised world. Productivity has a direct impact on profit: the less a company spends on simply running, the more it takes home. Time diverted from mundanities can be redirected towards strategic, value-adding operational tasks. Business management software can manage day-to-day activity such as reporting and financial planning. Customer relationship management software can help companies drill down into the patterns, trends, and preferences that characterise a target audience.

In 2018, the automotive industry will face a world where digitalisation is abundant, technology is rapidly evolving, and competition is fiercer than ever. How they face this world is ultimately up to them, but they would be well-advised to move with the current. Garages that stay abreast of wider automotive industry challenges are better placed to tackle them, and those which keep ahead of the times are unlikely to be overwhelmed
by them.

Like us on Facebook for more info: @aftermarketmagazine

Related Articles

  • Pro-Align receives award at IMI Annual Dinner 

    Kathryn Beaurain, marketing director of Pro-Align was recently recognised by the Institute of the Motor Industry (IMI) for her ongoing support of the IMI Skill Auto competitions. Receiving one of just five awards presented at the IMI’s Annual Dinner on 7 March, Kathryn received the award for her Contribution to the Work of the IMI, having supported the industry’s Skill Auto competitions for the last six years.

  • Recruitment: What to do about it?  

    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.”

  • Temporary is contemporary  

    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.

    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.

  • Sector organisations back Top Technician and Top Garage 

  • Electric future shock  

    The need to adapt to changing vehicle technology is one of the main challenges of our time in the sector. Increasing connectivity and a vastly more complicated conventional vehicle provide a whole raft of obstacles on their own, before you even get to the rise of electric vehicles and hybrids.

    Add to that a more uncertain legislative environment resulting from rules not quite keeping up with the technology coming in, and you’ve got yourself a whole host of issues that the entire industry needs to stay on top of if it is going to continue to offer a sterling service to customers.

    Let’s look at electric vehicles. For Tom Harrison Lord from Fox Agency, the b2b marketing company specialising in the automotive sector,  Automechanika Birmingham offered a troubling glimpse into the future:  “This summer’s Automechanika Birmingham was entertaining and enjoyable as ever, but it also exemplified a worrying trend in the motor industry today. With the advancement of electric vehicles, there are going to be some rapid and stark changes ahead. The automotive aftermarket, however, seems to be burying its head in the sand.”

    The key, as it has been in the past, is access. In this case, the right to be able to repair vehicles. Think that’s all sorted? Perhaps not:  “The rise of the electric cars and vehicles is something that could hit the automotive aftermarket hard – in particular, independent garages.

    “Many, if not all, electric vehicles invalidate their manufacturer warranty if essential work is carried out on the electrical systems by someone other than the main dealer. What’s more, many cars with batteries, such as the Mitsubishi Outlander PHEV, have warranties on the electrical components lasting up to ten years.

    “Having no choice but to use the main dealer for a full decade shows just why independent workshops will have fewer vehicles coming through the doors in the years ahead.”

Most read content


Sign Up

For the latest news and updates from Aftermarket Magazine.


Where should the next Automechanika show be held?


Click here to submit an event


©DFA Media 1999-2016