21 Jun 2024
The voice of the independent garage sector

2024: Live another day?

We look ahead, and consider how some the major issues affecting the sector will play out through 2024

Another year is ending for the aftermarket. 2023 featured a number of dramatic developments, many of which remain unresolved as the New Year beckons. There were even some surprise returns to the sector, and a win in the form of the Motor Vehicle Block Exemption Order (MV-BEO).

The MOT Consultation closed early in 2023, and the Government has still not made clear its position on the wide range of proposals. Meanwhile, the Security-Related Repair and Maintenance Information (SERMI) scheme, through which background checks could be undertaken to allow technicians to work on vehicle security systems, was expected to have significant implications for the sector, but has yet to be rolled out in the UK. Then there is the push-back on the internal combustion engine vehicle sale ban, which was moved from 2030 to 2035. The impact of this decision on the sector is still being felt. We asked a number of the major organisations in the sector their views on all of this, and how they feel 2024 might play out.

Change
IGA Head of Member Services Frank Harvey observed: “As we look ahead, the one thing we can be certain of is change. Even in the last few days we have seen Amazon announce their plans to sell cars; Such a move could be a game-changer. 2024 will also see the long awaited SERMI scheme come in to being, enabling independent operators and remote service providers to register via a trust centre for access to security-related information.”
Speaking of information, Frank said digital service records are becoming an issue for independents: “One of the things that we at the IGA are consistently being asked about is digital service records, and the frustration being experienced by independent garages in both registering to use DSRs and the actual update of DSRs. It is likely that early in 2024 there will be moves to streamline this process for both garages and their customers, thus making DSRs more accessible.”

Moving up the chain, the connected car is another threat Frank identified: “This has the potential to steer consumers away from local independent garages. This is another area covered by the Competition and Markets Authority (CMA) when they consulted on and compiled the MV-BEO. Only time will tell if there will be a viable solution to counter this steerage and maintain consumers freedom of choice and this is something that we at the IGA are monitoring closely.”

Then there is the MOT: “2023 saw the DVSA launch their latest consultation on changes to the MOT system and service, and once again challenge the frequency of the MOT. The IGA and the industry at large pushed back on this due to the potential such a change could have on UK road safety. On the plus-side, we now have outstanding vehicle safety recalls being logged as advisories on the MOT certificate. There is the potential that other changes will come to the MOT that will impact both MOT Testing Stations and the motoring public, especially in the area of NOx emissions.”

Frank added: “We have also seen the government U-turn on the 2030 ban on the sale of new internal combustion engine vehicles in favour of electric or alternative fuelled vehicles, with most vehicle manufactures having already committed to the original deadline. In reality the vehicle car parc is getting older, with Government data suggesting that in the very near future the average age of vehicles on UK roads will exceed 10 years of age, with the vast majority of these vehicles being petrol or diesel fuelled.

“This will mean that the value driven demand for the services of good, local, customer focused independent garages will remain strong for many years to come. However, this will need to be support by a change in emphasis in terms of staff training and recruitment to meet that demand.”

Potential
According to Hayley Pells, Policy Lead at the IMI, the Government’s decision to shift the ban on the sale of new internal combustion engine vehicles back five years to 2035 may go some way to help the industry’s long-standing staff and skills shortages: “The Government’s change of policy on the ICE ban definitely has the potential to help the sector upskill for electric. However – and it’s a big however – that is dependent on more people choosing automotive as a career route. Labour shortages will dominate conversations for as long as they are a concern, with the major new inquiry – Skills 2030 – A World-class Skills System – providing a crucial catalyst. The IMI is also working hard to shift perceptions of the sector to appeal to a wider cohort with our There’s More to Motor campaign.”

Then there is the issue of increasing automation: “Looking at automotive innovation, whilst much has been written and said about electric, the skills need that can’t be ignored right now is ADAS, particularly given its role in the introduction of autonomous vehicles on UK roads. Whilst it’s likely that regulation will place responsibility in the event of an accident with the OEM, the chain of responsibility undoubtedly will include the aftermarket. ADAS already accounts for a significant proportion of the UK car parc and the employers that ensure anyone who undertakes work on these vehicles is appropriately trained, assessed and certificated to do so will be in the best place for the next stage of autonomous mobility.”

Then there is the ever-present and constantly growing issue of data for the sector to contend with: “The role of data in the automotive aftermarket also should not be underestimated. It will be a fundamental component of the evolution of autonomous and connected motoring. In that respect, SERMI is certain to have a greater influence on the UK aftermarket.”

Hayley added: “The last 12 months have seen considerable change, upheaval and uncertainty for the automotive aftermarket. Operating costs – encompassing everything from wages, parts and training to business insurance – have ramped up and it’s unlikely that 2024 will be any easier. However, there is also immense opportunity for those enterprises that can take a forward-looking stance. It is critical, for sustained economic and social infrastructure, that safe and fair private transport can be accessed, and the UK automotive aftermarket can play a vital role in delivering that.”

Competitive choice
IAAF Chief Executive Mark Field said he believes that 2024, political aspects aside, see a carry-over of the trends that are already affecting the sector, largely because the sector is still waiting for clarity on these key issues: “I think 2024 will see a continuation of the same, with perhaps even more uncertainty because of a general election.
“There has been a cloud hanging over the industry with both the MOT consultation and SERMI. Without clear legislation and direction of travel, it is difficult for the industry to move forward. The ban on the sale of new petrol and diesel could be reversed, but that is just an ambition in the face of a reality that the UK does not currently have the infrastructure to cope with a marked increase in EVs on UK roads.”

This is not the only area where garages are facing down the threat of possible roadblocks being thrown up in their way: “More vehicle manufacturers and suppliers are now very focused on a technology-neutral approach to affordable motoring. This raises a further question of a motorist’s right to repair. The IAAF, through its work with UK AFCAR, has successfully gained significant improvements to motor vehicle Block Exemption regulations that benefit the entire industry and motorists.”

Mark added: “Through our Right to Repair campaign it is essential as an industry that we promote the aftermarket as the competitive choice for affordable mobility to consumers.”

Unseen challenges
Technological progress is reshaping the sector as far as Laurence Abbott, Managing Director at Autotech Connect is concerned: “The evolution of vehicles has redefined the aftermarket. While representing opportunities for the sector, as EVs and an increasing number of software defined vehicles roll into workshops, they are also introducing new, previously unseen, challenges.

“EVs are beginning to electrify the second-hand car market. In the second quarter of this year, used electric vehicle sales increased by 80% compared to the same time last year and despite the Government’s five-year deferment of the ICE ban, EV adoption is expected to continue. Consequently, against the backdrop of a skills shortage, a severe need for training, and the installation of EV infrastructure is needed, and this focus will likely sharpen as we enter the New Year, particularly as second hand EVs infiltrate the independent repair sector. For some, however, the investment is still perceived to be a step too far.”

While garages mull the benefits of leaning into the EV revolution, Laurence believes, garages are ignoring a major technological threat: “Regardless of how deeply a garage future-proofs itself, they are all susceptible to a new danger – cybercrime. This is no longer a perceived future threat – the automotive industry has passed the inflection point, and there is today a very clear and present risk. Even the average vehicle contains over 100 control units, opening up a number of potential points for cyber-attacks, and traditional internal combustion engine vehicles with digital interfaces are susceptible to cyber intrusions.”

Clarity
For Peter Lawton, SMMT Head of Member Sections, the future of the MOT is set to continue to be a major concern: “I think everyone with an interest in the aftermarket would agree that the most pressing priority for our sector right now is clarity on the Government’s plans for changing MOT frequency. Workshops, factors, suppliers and motorists would all be impacted by any change while uncertainty makes business planning challenging. Given the consultation closed in March 2023, we had expected an announcement by now, but it seems that this will remain a key issue into the New Year.

“The proposal to move the UK vehicle safety check from a 3-1-1 to 4-1-1 regime has been raised more than once in recent history, and each time we argued successfully against it. The impact on safety, on emissions, on business, jobs and, ultimately, on customers’ pockets as defects go unchecked, simply cannot be justified. Third time around, SMMT mounted its most comprehensive and compelling defence of 3-1-1 yet, marshalling the expertise of our members across the aftermarket and vehicle manufacturing sectors, consumer groups and other stakeholders.”

“We continue to call for the MOT frequency to stay as it is, with the requirement for a first test at year three, and annually thereafter.”

It’s not all foreboding though on this front as far as Peter is concerned: “On the plus side – and officials rightly grumble when all of the talk is about first presentation – Government is also looking at how to improve emissions testing and test advanced electrified powertrains, driver assistance technologies and connected and automated features that are increasingly common on modern cars. SMMT and the aftermarket have a strong and productive track record of working with DVSA and there will be plenty to do on this front.”

Then there is data: “Elsewhere, the SERMI scheme grows in importance. It’s very complicated, yes, but it’s also critical to try and get right in the voluntary way the Department for Transport want it deployed in GB. It is mandated in the EU and Northern Ireland. As vehicles become more connected and cyber security becomes ever more important, the aftermarket needs to be aware of how important it is likely to become.”

Last but not least, there is the issue of skills: “SMMT’s workshop and factor members are training people as fast as they can to handle the latest tech but finding qualified candidates remains difficult. From apprentice to director level, the whole automotive sector faces significant recruitment challenges and that’s why SMMT put skills as a central pillar of its Manifesto 2030.”

Peter added: “We have called for a one-stop national upskilling platform, alongside greater STEM education in schools and a dynamic immigration system that attracts global talent. This will be a huge part of SMMT’s engagement to support the industry in 2024.”

Trends
Andy Hamilton, CEO at LKQ Euro Car Parts, observed: “The aftermarket has faced another year of challenging trading conditions, with a slowing economy and inflation continuing to hit drivers’ pockets. All the while, garages have had to continue to lean-in to the myriad challenges presented by the rapid evolution of vehicle technology and changing legislation. Many of these trials will persist in one form or another in 2024 and we’re expecting three big trends to shape the aftermarket next year.”

Andy’s first trend is the need to continue investing in upskilling and equipment: “Businesses that invest in the skills and equipment needed to meet the future needs of new technology and new vehicles will be well-positioned to not only survive but to thrive in 2024 and beyond. Those that don’t risk falling behind and finding themselves shifting from the mainstream into an ever-declining corner of the market. This is the case not just for EVs and hybrid vehicles, but tech that’s already commonplace in the vehicle parc, like ADAS. It’s important that we offer support to garages and bodyshops to help them accelerate their evolution to remain viable and sustainable. Indeed, at LKQ Euro Car Parts we’ll be doubling down on investment into training courses that can get workshops and their technicians accredited, some which will be free of charge.”

His second trend is the need to keep fighting for the right to repair and the right to connect: “A highlight of 2023 was the release of the UK’s new MV-BEO. It was a real win for the aftermarket, with nearly all our wishes addressed. Sadly, we can’t rest on our laurels. We’ve seen for ourselves this year that there are numerous customers continuing to face some farcical barrier or other to repairing a customer’s vehicle.

“We will continue to collate these stories as evidence of OEM breaches and bring them to the CMA so that it can enforce MV-BEO to its fullest extent, as well as lobbying OEMs to improve access for parts manufacturers and technicians to enable the repair of EV batteries. There are stories of whole vehicles being written off because of relatively minor damage to a battery, with OEMs saying the entire unit needs to be replaced when a fix could do. Major insurers are now getting twitchy about underwriting EVs as a result – and the situation is entirely avoidable. There are some amazingly innovative independent operators that have found work arounds to repair batteries. But it’s been done in spite of OEMs rather than with their support.

“Then, there is the spectre of SERMI, which is coming into force in the EU – and Northern Ireland – imminently. It should have been this year, but it has been delayed. While UK businesses might feel they don’t need to worry, the absence of a universal scheme like SERMI runs the risk of multiple OEMs introducing their own separate processes. I praise the efforts of those in the industry that are working to get an equivalent but voluntary scheme off the ground in the UK. It shows the wonderful spirit of collaboration and depth of innovation in the aftermarket. In time, I hope something with the teeth of mandatory legislation can emerge that captures all OEMs.”

Finally, Andy believes the sector needs to focus on collaboration for the common good: “Congratulations to Sukhpal Singh Ahluwalia and Steve Horne, both of course former colleagues at LKQ Euro Car Parts, on their deal to acquire GSF. Their expertise and knowledge will be a huge asset to that business. Healthy competition pushes us all to continue to innovate and be better for our customers.”

Andy concluded: “With reference to the challenges posed by MV-BEO, SERMI and EV batteries, as well as the pending outcome of the DfT’s MOT consultation, there is a need for us all to act as the champions of independent garages and bodyshops in the face of legislative and market forces they cannot face alone. We saw what happened when the industry came together to challenge regulators on the future of Block Exemption and so need to keep that spirit of teamwork alive in 2024. Because we are much louder and more impactful together than as lone voices.”