A tale of the UK market
In part one, we looked at some of the background to the current shape of the UK vehicle market and especially the policies which are shaping it now. There can be little doubt the effects are profound – and the effect of those changes were explored in part two.
There will be a big change in how customers interact with the aftermarket, driven by recession in 2023 running into 2024 and the transition to pure electric vehicles as a small but growing market segment. There is also the possibility internal combustion engine vehicles will routinely reach 15 years old or more, as owners look to prolong their life.
The market change-over is going to be driven by the vehicle purchase price, confidence in the reliability/performance and dependability/availability of the charger network. Every single one of these aspects is huge. China has strategically seen automobiles as a key export, with the main success confined to building vehicles for ‘foreign’ manufacturers. The domestic manufacturers have had massive state support to create the biggest pure electric vehicle market in the world, and of course, the biggest vehicle market in the world too. That’s right – China is hungry for all types of vehicles with all types of powertrains.
After 40 years of trying, the China domestic vehicle manufacturers are armed with the biggest supply of Li-Ion batteries in the world, scale of economy due to the biggest pure electric market in the world and a government keen to translate that into foreign exchange. This lines up perfectly with the otherwise unsupported vision of mass pure electric vehicle adoption not only in the UK but right across the EU27.
Starting in 2023 the big push to get pure electric vehicles in place in Europe will begin, and the first wave of transporter ships were loaded up at the end of 2022, just as some Chinese provinces came out of lockdown. Apart from established players such as the SAIC MG Motor and Maxus, most of these newcomers will land with almost no product support, a significant purchase price advantage and apparently generous warranty. Will the newly arrived China-built pure electric vehicles have the type of product support they need, or will customers be encouraged to simply buy a new one rather than repair?
Even if take-up is near universal, the rate of change will not be more than 2.5 million units in 2023 unless government in effect pay drivers to trade in their existing vehicles, especially if they are powered by an internal combustion engine.
Further, the traditional service items such as brake pads and discs will require replacement far less frequently thanks to regenerative braking – circa one quarter the existing frequency – but for older electric vehicles the huge torque from stand-still will result in a steady stream of wheel bearing/driveshaft repairs, to say nothing of suspension bushes/cracked links – at about the fourth or fifth year of ownership. So, this will affect the existing automotive aftermarket service.
In the real world
For motorists that cannot afford or will not migrate, the demand for services will continue unaltered. In this scenario we need to be aware of prevailing local economics/taxation, such as the London ULEZ charge, which may force some clients off the road. For most of the UK there will be a mix of work with some new additions:
- Huge emphasis on vehicle software, covering everything from the traction battery control module to on-board heat pump
- The addition of CO2 refrigerants
- Repair of otherwise difficult to recycle traction batteries, including cells/packs inside the module
- The challenges in keeping otherwise conventional vehicles going as traditional OEM and high-quality Tier 1 parts supplies dry up
There will be a drop-off in service work due to the change in pattern of pure electric vehicles, but as these age the type of repair work will be more costly than for an equivalent conventional vehicle of the same age. It’s as if every Vauxhall Corsa F was really a BMW M4 all along, with that famous electric motor start torque as the primary cause of the wear.
For the lion’s share of the parc which are powered by petrol or diesel internal combustion engines, the aftermarket is going to have to go a bit retro – to consider types of repair which were much more common 20 years ago such as engine rebuilds. The objective is life extension by refurbishment, where the customer gets a usable vehicle for a fraction of the cost of replacing the whole vehicle.
Full steam ahead!
There have around 620,000 pure electric cars and vans sold in the UK so far, with around 25,000 units added to the total each month. Already there are viable business opportunities to address issues with those early models, where the owner may not have warranty cover and won’t want to buy something like a new battery or traction motor.
Such repair services are on a tiny scale now, but it is changing rapidly. Similarly, the effect on the vast parc of mostly conventional vehicles will become more noticeable by 2025, with or without government intervention.
The key message is not to assume very much at all, take a look at what is happening with tax/penalty charges in your region, and then figure out what type of powertrain is most likely to be used by your potential customers. This will change year-on-year, and the aftermarket business needs to do exactly the same. Crucially, assuming nothing will change is not an option at all – making a business decision to only go after the type of work that has existed for the past few decades needs strong marketing to ensure all opportunities for work land with your business.
Rest assured, Lord Deben will need no thanks.