Subscription versus submission? Preparing for the on-demand future

Can independent garages survive in a vehicle-via-subscription world?
Published:  19 August, 2019

“Nothing is ever going to change, and everything is going to be alright forever” is usually the last thing said by a business owner, just before their enterprise becomes completely irrelevant. Customers sometimes take a little while to realise that something has happened that is affecting their behaviour, but once they notice they are doing something differently, it is probably too late. Then again, why should they go back? While the customers of our oblivious service provider have happily moved on, he or she is watching their life’s work quietly slip away.
    
This has happened to many businesses across a wide range of industries. If there is a new offering that is a serious disruptor to the status quo, only those who are adaptable and open to change will survive. Keep doing what you have always done and you will go under. Think it won’t happen to you? Then maybe it already has.

Subscription
Alright, let’s take a step back from the brink for a second and think about what could be coming around the corner to change our world. Actually, maybe it is already here. I am sure most of you are aware of subscription-based services, and probably use one or two in your private time i.e. Netflix or Spotify. The principle applies to the automotive sector too. There are quite a few car-sharing services and car clubs. These tend to be on-off options that users will activate when they need a vehicle.
    
Vehicle leasing is probably a better example. This is not a new concept, but it has become much more common and accepted by motorists, particularly in a world where people are becoming increasingly comfortable with using a vehicle without the need to actually own the vehicle.
    
The big issue with motorists not owning the vehicle from our perspective is this: If they don’t own it, who does, and where does that owner expect to get the vehicle serviced? Because, if it is not at an independent garage, or if legislation does not keep up and shuts out independents until amendments are made, you are not going to see any of that business.
    
Let’s get back to subscriptions. We read something interesting recently from Syncron, the provider of cloud-based after-sales service solutions. The company recently released research that highlighted increasing consumer interest in subscription-based services, and the company believes this is forcing vehicle manufacturers to redefine their dealer service operations. If manufacturers look to change the rules of the game, it is always a good idea to make sure independents are still allowed play.
    
As Syncron pointed out, vehicle subscription services are a way for people to access what are euphemistically called ‘mobility services’ as an alternative to traditional car ownership. Through mobility services, a provider’s customer pays a flat monthly fee to a manufacturer or third-party provider in return for on-demand access to several vehicle models. The fee covers insurance, maintenance and roadside assistance. As with music or on-demand TV, this can be turned off or on at will. OEMs already employing these models worldwide include BMW, Volvo, Jaguar Land Rover, Lexus, Mercedes-Benz and Audi.

Submission
As you might already be imagining, in this model where the customer picks up and drops off a car when they feel like they need it, or not, there is not much need for the customer to source servicing or repairs. Where’s the convenience in that? It would be like having Netflix, and having watched the film, deciding to go outside, up the road to Blockbuster to take the tape back. What tape? Also, how can you take the tape back to Blockbuster since it is not there anymore. Aha, but there is always the independent video store…no I can’t get to the end of that sentence either. Can you see where the logical end of all this might go? Motorists that do not own their vehicles do not need to have a vehicle serviced. Neither will they be looking for servicing or repairs on a price point, as again it is not their responsibility. Where does this leave independent repairers?  Should you just chuck in the towel? Actually, things might not be as bad as you think.  

Upside
As far as Syncron is concerned, there could be an upside for service providers like the automotive aftermarket. The change in attitudes brought on by the subscription economy, as far as they are concerned puts the most pressure on vehicle manufacturers in their traditional core business area, i.e. vehicle production. With less impetus to buy vehicles, there will be less vehicles sold. That means they need to derive income from the other end of the chain – namely servicing and repairs. This means manufacturers would need to look to their dealer networks to generate income for them.
    
As some you may have already realised, in many ways servicing and repairs is not where the primary strength of many franchised dealers lies. This is despite the fact that most of them generate more profit from this end of the business than from new car sales. Part of the issue may be that for dealer workshops, most of the work they do will be on cars below three years old, mainly focused on servicing and warranty work. While they do try to keep as much metal from escaping as possible once the standard three years is up, for the most part their workshops do not need to perform the more challenging diagnostic work that many independents will see day-in-day-out.
    
Given the right circumstances, and if vehicles were owned by a third party rather than by VMs themselves, or if consumers still had the same level of choice as if they were the owner within certain parameters, independent repairers could offer a more rounded care offering that would fit with the needs required. There is some good news right there.

Reactive
Overall, servicing aside, vehicle care is often reactive, with vehicles being repaired after something has gone wrong. Syncron posits that in this model, franchised dealers will need to be armed with enough information coming in from vehicles so they can pre-empt failures, effectively repairing the vehicle before it goes wrong.

Experience
Syncron looked into what consumers get from the dealer experience, in a survey of 500 vehicle owners from across Europe and the U.S. The findings were featured in a report; shifting Gears from Reactive to Proactive: How Customers’ Rising Interest in the Subscription Economy is Revolutionizing the Automotive Dealer Service Experience.
    
We are talking about vehicle subscriptions as if motorists are chucking their cars away left and right. However, the report found that awareness was relatively low, with more than 60% of respondents not aware of the concept. Not so much to worry about then perhaps, we can get agitated about this idea further down the line when we have got our heads around EVs and hybrids? Afraid not. Once they did hear about the idea, 57% said they were very interested in the idea. You might need to think about your business model after all.

According to Syncron, additional findings from the research report include the following:

Customers are satisfied with the dealer service experience as it stands today
Nearly 60% of vehicle owners indicated that they use their dealer for maintenance and repairs today, with more than 90% describing their most recent dealer service experience positively.

Interest in subscription services is high, but awareness is low
Around 60% of respondents indicated fixed monthly cost and included maintenance and repairs as the biggest advantages of vehicle subscription services. More than 40% of respondents also indicated they would be willing to pay a premium price for a subscription-based model.

Automotive OEMs must invest in service today to prepare for the future
More than half of survey respondents lack loyalty to a particular automotive brand when making final vehicle purchasing decisions. And, with nearly 40% of these vehicle owners indicating that a negative dealer service experience would sway their perception of a brand, the customer experience at the dealer level is more important than ever.

Game-changer
According to Gary Brooks, CMO of Syncron, subscription services could be a game-changer: “In the coming months and years, automotive manufacturers must optimise their current infrastructure to lay the foundation for a successful future. It’s not so much a matter of if, but when, customers will overwhelmingly demand subscription-based services. Automotive OEMs must begin equipping their dealers today to prepare for a proactive service model where vehicles are repaired before they ever fail. In this new research report, we aim to inspire and motivate automotive manufacturers to do just this as they navigate today’s ever-changing customer expectations and prepare their businesses for the seismic shift to the subscription economy.”

Positive position
What can we learn from this though, and where does the independent repairer fit in? Assuming that our representative organisations, including the IGA, IAAF, GEA etc are able to make sure that independents maintain the rights secured under the Block Exemption Regulation, independents could be in a very positive position.The connected car could provide a whole new income stream for those able to access it – and we want that group to include independents.
    
Garages that thrive need to be proactive to attract business in the first place – they do not have the built-in customer base of owners that dealers can rely on. Given the circumstances, and the access to remote diagnostics, independents could be in a good position. Among the exhibits on the HELLA stand at Automechanika Birmingham this year was information on CarForce, the software platform that provides real-time vehicle health data to garages. While this is not currently running in Europe, it does point towards where we are going.
    
Again, assuming drivers still have the choice, if independents were able to compete on a level playing field information-wise in the brave new future, they could do really well. The best thing to do at this point is to stay on top of the technology, keep up with developments and make sure your business is attuned to the zeitgeist.



TRW's 'True Originals'

Published:  15 August, 2019

ZF Aftermarket is looking to help garages boost their digital marketing. With this in mind, the latest episode in the long-running TRW ‘True Originals’ campaign provides some tips on digital marketing tools and analytics, with the idea being to help garages modernise their communication techniques.

As the company points out, digitalisation within the industry is increasing at a fast rate. Statistics showing the rising amount of time customers spend online, and how online reviews influence purchasing decisions, should be taken very seriously. ZF Aftermarket is suggesting workshops should adapt their communications accordingly.

According to Ben Smart, Global Marketing Director ZF Aftermarket, businesses can increase sales and customer loyalty through digital marketing and social media, without the need to spend a lot of money: “By 2020, an entire generation, Generation C for ‘connected’, will have grown up in a digital world immersed in an online culture and well versed in social networking methodology. Furthermore, figures show that by next year the average person will be spending 84 minutes a day watching videos online.”
Russ Stanley, Director of Revolution Porsche based in Brighouse, West Yorkshire is featured in a video as part of the campaign.  Russ explains how through early adoption of digital marketing he increased loyalty and managed to promote business growth: “Our interactive website means that customers can contact us outside of working hours, and social media has allowed us to grow far more quickly and easily. Every time we send an e-mail we ask our customers to follow us so it’s really easy to organically build up a good database. Sharing links to forums, exhibitions and other websites, together with engaging and relevant information about our team enables customers to interact.

“We also practice video servicing logging, where we send videos to our customers so they can actually see what work their vehicle needs – a good way of sharing information that really builds trust and confidence. Digital marketing costs very little other than your time, but the reach and rewards can be fantastic.”

The video can be found on #ORIGINALWORKSHOPS – a hub of advice, tips, videos and more. New web-based essays include:
 
What is digital marketing and how can it benefit your workshop?


Customer first: Monksbridge Garage

Aftermarket pokes its head into Monksbridge Garage to visit Top Technician 2019 semi finalist Craig Hewison
Published:  08 August, 2019

Like many garages based in small towns, Monksbridge Garage has been a local fixture for longer than the current owners have been in charge:  "It used to be a heavy goods garage back in the 1960s," explained Craig Hewison, Manager at the business, based in Dinnington, South Yorkshire.

Within one fixture is another, one that has found new life in a new era: "As a consequence of the garage's former life, we have got an enormous pit. This means we do a lot of motorhomes because no one else in the area can deal with them."

Alongside this ominous-sounding but actually-useful feature, the business operates two ramps and a MOT bay. The full complement is three full-time technicians, and two part-time that work opposite each other. "We stay busy, but we don't advertise - it is primarily long-time customers that have children who are also our customers, and they are the kids of the customers we used to have."

Efficient
The business has been with the family for 17 years, but their connection goes back further:"My dad, Peter, has always been in the motor trade and he used to be a customer here. He came in one day for an MOT, and Geoff, who was the owner at the time, said he was thinking about packing it in and selling up. My dad showed an interest, so he came to work with him for a few years, to get to know the business and also to get to know the customers, and to get his MOT testing license and what-not. My dad worked with Geoff for four years, and when Geoff retired, my dad took over from him.  As he finished on the Saturday I started on the Monday as an apprentice. It was just me and my dad. It has gone from that to where we are now.

"My dad is still here but he is only part time, just two days a week.” Craig laughed: “He does the MOTs, annoys everybody and goes home!"

The business had to move with the times: "When we started the garage was like the Black Hole of Calcutta. We had the whole place rewired and everything."

Craig moved with the times too: "Early on, whenever anything came in with a management light on, or emissions on MOT or anything, it had to go to another garage in the area- the one where the guy was known for doing that sort of stuff. Everything just got sent there. One day I said 'instead of sending it out all the time, what would it take for me to learn all this stuff? ' My dad said 'find yourself whatever you need to do' and he supported me through whatever courses I needed to go through.

"I'm not saying I did it in the most efficient manner, I probably did the wrong courses in the wrong order, I did what tickled my fancy as opposed to learning the basics first. However, he never once said you can't go on that one. Over the years, with experience, I have learned more and more.  We have invested in quite a few of the dealer tools. Word has gotten around and now we are the go-to-place for the complicated faults." How the wheel turns.

Different way
While he had his hand firmly on the technical side early on, it was only in the last few years that Craig found himself on the business side of the business, and he had to learn quickly: "Four years ago, my dad had a heart attack, and he had to have about three months off work, which dropped me in it. I had to suddenly learn how to run a business, and I wanted to run it a different way. My dad used Excel, whereas I brought in Sage. We have moved onto QuickBooks since then. We moved onto an electronic diary, because just working from a paper one you couldn't work out what you've got in for a day and what you haven't. Five lines could be a 20-minute job, and one line could be a full day's job. I basically started automating a lot of things. It has changed a lot as a result.

"I know the way round cars like the back of my hand, but I didn't know much about running a business. That is why I have started doing training on running a garage. I am on the business accelerator programme with John Batten for example."
Craig is continuing to use technology to help the business:  "We have just had Garage Hive installed this week. Give it a couple of weeks to get used to it and it should increase the efficiency within the garage which should then free up more appointments for customers. Obviously then we might have to look at advertising to fill those spaces, but at the moment we are at capacity."
For someone who said they didn't know how to run a business, he sounded like got on top of it pretty well: "It’s sink or swim isn’t it!" Typical Yorkshire understatement.

Wisdom
A little wisdom also goes a long way: "Garage Hive is new, but the ethos behind it has never changed. My dad was a good mentor. Our motto has always been 'customer first'. it is something my dad has just drilled into me since I first started.
"Without the customer you haven't got a business, have you? Everything we do is orientated to make the customer happy. My dad taught me that from starting out on my very first day. We have never used cheap parts - we use quality ones because we don't want to do a job twice. It is messing the customer about and they might not come back. We don't bodge anything. If something is not right we sort it. If we have not included it in the quote then we stand to it - the job has got to be done right.  You can't afford to upset customers, especially when you are a small business because word gets around too quickly. Kwit-Fit can probably afford to lose a couple of customers, whereas we can't.

"Just this month, we have taken a courtesy car on. This is because people ring up and ask for an appointment for Saturday, but we are fully booked, Saturdays are booked weeks in advance, so they go elsewhere. Now we have the courtesy car. We had a call this week; ‘Have you got a slot on Saturday?’ No. ‘Ok I will leave it’. Well can you bring it down mid-week and have our courtesy car. ‘Oh fantastic I will book it in’. It is just providing that extra service.

"We will soon be able to take online bookings for MOTs, and we now do automatic MOT and service reminders. We are having a new website built too."

Craig believes this is crucial: "I don't want to be like the other garages that don't have the knowledge and don't invest and are falling behind. I don't want that to happen to us. I don't want people coming in and we are not able to help them. I am trying to get it all working so it just flows.  It is better for technicians as it keeps them happy, it is better for the business as it keeps the money coming in and it is better for customers as we can provide them with a better service. My focus is to make sure that all three are right, that way the customer should have a great experience "

Top Technician
As well as within his own business, Craig is doing pretty well in Top Technician, year-by-year: "I have been a semi-finalist twice, and I have only entered it twice. The first one I entered out of curiosity and I ended up in the semis. I let the pressure get to me though. I don't count it as a big loss as I was a nervous wreck when I went into it. The second time I knew what to expect. I did not expect to go through to the finals because of the hybrid, so I came in a lot clearer minded and I was a lot happier with what I had done." Craig laughed again:  "I don't see it as two attempts, I see it as one and a half!

“I would definitely recommend Top Technician. You learn where your strengths and weaknesses are.”

The fundamentals
Looking forward to the future, Craig commented:  "At the moment I am trying to continue improving the efficiency. With my dad semi-retired, and all this new technology coming in, we need everyone at a high level. One of my lads is my right-hand man now. He is fantastic. He can run the workshop without me, so I am trying to get him technically where I am at, that way the business can continue to operate flawlessly when I’m not here."

Craig is also looking to upsize the workshop in the long-term: "I would like to have something double the size in the next few years. At the moment the main focus is getting everything running properly so we have a good brand out there and so that we are the go-to-garage in the area. The immediate future is trying to get the fundamentals right. It is the little details that make it look professional. They inspire confidence.  I need to get my foundations laid so I then have something stable to build on. If you have good foundations, you can build it as tall as you want."





Days of future past?

Andrew Marsh considers the future of UK-based vehicle manufacturing, suppliers and the impact on the aftermarket in the UK towards 2025
Published:  31 July, 2019

Some of us remember the 1970s, where the prevailing feeling was that automotive sophistication usually came from abroad unless one spent a huge amount of cash, that our industry was led mainly by endlessly upset activists, and that our biggest vehicle manufacturer – ‘British Leyland‘ at some point – represented what the UK was all about. This was for the most part utter rubbish.
    
Of course, much of the above does not stand close scrutiny, but it is true that British Leyland kept giving Fleet Street a continuous supply of headlines which money simply could not buy. Red Robbo, for example was an odd man, who sincerely believed in his cause and did not apparently connect that disruptive work patterns simply made poor manufacturing processes (the cause of the dispute) much, much worse. Who could forget the geniuses who placed a brand-new manufacturing line at Cowley (now called ‘Oxford’ by the present occupiers) where the established time for people to work underneath vehicles was gloriously exceeded? Or the star who invested in the Rover 800 based on volumes of 400,000 units, yet failed to sell a fraction of that even with a facelift? Or that the very same star would later arrive to drive the rump of British Leyland (MG Rover) into the ground?
    
It has taken decades to shake off the implosion of UK automotive manufacturing, even though in reality the companies that needed to shape up or fail were mostly shaping up. Our national preoccupation with failure seemed to eclipse the success of the UK building 1.6 million vehicles and more than 2.7 million powertrains in 2018, even though it did take quite a few years to build those volumes back up.    
    
Behind vehicle manufacturing is a series of suppliers, and suppliers to those suppliers. When vehicle manufacturing disappears from a country – or in the case of many – was never present, the aftermarket becomes 100% reliant on imported components, as well as vital expertise. We need to be aware of what is happening in vehicle manufacturing even though the changes in manufacturing take place over several years.

Brexit and deals
Much is made of the uncertainty around Brexit.  Some of that is very real, but as Her Majesty’s Government knows full well the impact may be mostly concentrated on taxation. Those who remember past events will recall, the government can impose new tax levels or even new forms of tax at lightning speed. Effectively ‘such is life’.
    
The Brexit ‘negotiations’ have taken against a backdrop of significant international financial instability, namely the USA’s insane debt bubble and the combination of China’s vast debt bubble combined with significant over extended state investment. You can add to this potent mix long-standing internal company issues. Nissan, for example, really do not like to be reminded that they exist today thanks to the investment and technology from Renault.

Anarchy in the UK
For fans of anarchy, we seem to have apparent utter anarchy. There were three important developments.


Future-proofed: Training technicians for the long-term

Continuous progression and education allow automotive professionals to stay abreast of the latest technology in the rapidly evolving aftermarket
Published:  18 July, 2019

While experience in the day-to-day activities of a workshop is vital in building a technician’s knowledge and skills, it is only one piece of the puzzle. For example, a technician who has been servicing solely petrol and diesel vehicles for the past 15 years will unlikely be able to help a customer with a hybrid or electric vehicle. What’s more, given the safety concerns involved, it would be dangerous for them to try. What about servicing the latest safety-critical systems, like ADAS? Certainly not a worthwhile risk without the appropriate knowledge or equipment.

Systematic training in new technologies is, therefore, the best way to ensure a workshop will continue to successfully serve aftermarket customers, even in times of rapid change.

“The Auto Education Academy portal from Euro Car Parts brings IMI-approved online and practical courses together with a database of over 500,000 resolved technical queries, with an average of 600 new repairs added daily,” observed Adam White, Workshop Solutions Director at Euro Car Parts. “It provides technicians with one of the largest technical training and knowledge resources in the independent aftermarket.”

“Training is an integral part of ongoing success in this industry,” continued Adam. “It allows technicians to further their career and workshop owners to develop a highly-skilled team of professionals.”

While many would agree to education’s importance in principle, it can be difficult to carry out a training plan and accept lost revenue in the short-term. Online learning can provide the flexibility to bridge that gap.

“Repairers can login to their own skills portal to view the content of more than 75 different courses, registering and booking their place on training workshops all over the country at the click of a button,” said Adam. “They can also assess their strengths and identify weaknesses in nine key areas: Petrol engines, diesel engines, engine management and emissions, vehicle electronics, hybrid and electric cars, brakes, powertrain, tyres, steering and suspension, as well as air-conditioning.

“Results are automatically added to an interactive skills diagram, illustrating a repairer’s current skillset and enabling them to set their own training and development targets. Where gaps exist, the learner management system intuitively recommends Auto Education courses that can help increase knowledge in those areas.”

Invaluable
“The platform has been designed so that anybody can complete a skills overview,” pointed out Adam. “This makes the tool invaluable to workshop managers looking to monitor staff skillsets or test potential hires. Our new learning portal represents a significant investment by Euro Car Parts in helping to nurture the knowledge and skills of technicians across the country.
“As with any profession, it is important for technicians to continue professional development throughout their career. It is also the role of managers to identify gaps in their team and commit staff to training that will address shortcomings in the workshop’s capabilities. For more immediate solutions, the programme features a technical helpline that provides fast responses to troubleshooting, repair, diagnostics and technical information queries on any vehicle, from any manufacturer.”
Adam concluded: “For those with an eagerness to learn and evolve, it is an exciting era for the independent aftermarket. “We consider the success of technicians and independent workshops as the foundation of our industry and believe nothing plays a greater role, or makes more of an impact, than education.”


Tomorrow never knows?

Neil Pattemore considers the workshop of tomorrow, and how it will impact on the business of tomorrow
Published:  16 July, 2019

Last year I wrote about the changes facing independent workshops. Since then there have been further developments, and now the rate of change is increasing exponentially. You will be familiar with today’s challenges and probably aware of some of those of tomorrow’s, especially if you are a regular reader of this revered magazine. However, the workshop of the future will need to change significantly to stay competitive as well as being compliant with both commercial or legislative requirements.
    
If I look as some of the likely changes, they are quite wide-ranging, but together they will put increasing pressure on the management of the workshop and the business more generally. The IMI has recently stated that “management and leadership within the sector is not evolving quickly enough” and that “a skilled, competent and professional workforce, able to keep pace with the demands of new technology and changing markets and remain competitive” are necessary, which are being supported through the IMI’s ‘Campaigns for change’ initiative.

Greatest challenge
Looking at the workshop level first, then the greatest challenge remains the access to, and the use of, in-vehicle data. Taking the access to the vehicle first, it will be controlled to meet the needs of cybersecurity – needed as vehicles become ever-more electronically controlled on the way to fully autonomous vehicles. This also means that today’s OBD connector will be both restricted in the way that it can be accessed, already requiring electronic certificates to authorise access and to define what data/functions are then available, but also the width and depth of data which is also being reduced due to the very design of the OBD connector being unable to support the bandwidth needed for high-speed in-vehicle systems. The access for these systems will be via wireless communication, which is both faster and more secure, but also more difficult for the workshop to access – even if this is going to be possible at all. Vehicle manufacturers already deny independent service providers access to data via any of their telematics systems and are restricting the OBD port. To obtain the required electronic access certificates even for the OBD port, independent workshops have to be registered and authorised by the vehicle manufacturer before paying them for the required certificate. This is especially a requirement when working on ADAS systems, as the vehicle manufacturer needs to know if the repaired system is re-calibrated and working correctly, so access to the system, the re-coding of replacement ADAS components, as well as confirming the vehicle is working correctly again, is likely to be certificate based. All these access authorisation requirements are likely to need new legislation to provide independent access to the vehicle and its data.
    
Assuming that access is possible, the next evolution will be the use of data with supporting partners, such as the diagnostic tool manufacturers and spare parts providers. This will be necessary to quickly and accurately identify what work is needed on a vehicle and the corresponding replacement parts on increasingly complicated in-vehicle systems. This will be done by exchanging data with these service providers to provide a ‘just-in-time’ delivery of the technical support and parts needed – without this partnership support small independent businesses would struggle to repair tomorrow’s vehicles, let alone make a profit from doing so.

Vehicle ownership
As vehicle ownership moves away from individuals to ‘mobility service providers’, where the use of the vehicle will be available as short-term rental (i.e. by the hour, day, month etc.), your customer becomes the vehicle provider and they will drive down prices to be competitive in their own mobility services, so workshop efficiency becomes paramount to remaining competitive in this changing market.
    
In a wider context, the way that vehicles are supplied through authorised dealers is likely to change, as direct sales to mobility providers develops. As this happens, the authorised dealers are more likely to become service and repair points, and this is where the difference between authorised and independent repairers becomes more blurred. Both types of workshop will need similar levels of competence and be competitive for the service and maintenance they provide. This brings in another change for the independent workshop, where there will be an increasing need to have business management data reporting that will be needed by the mobility service providers to allow them to work efficiently with the workshops they are dealing with (e.g. financial and process management systems) that today is expected from authorised repairers.
    
The very real threat is that vehicle manufacturers will either fully block remote access to the vehicle and its data (the identification of what work is needed will be conducted remotely before the vehicle comes into a workshop), or will control the access via workshop interfaces, using electronic certificates, and in doing so, control all competitors while imposing their own business models and service/repair methods. Legislators are aware of this but are also deeply concerned about the cybersecurity threat and are still investigating what solution may be needed to ensure true competition is still possible for both the mobility service providers and vehicle repair workshops.
    
Some better news is the imminent referencing into European legislation of the ‘SERMI’ scheme, which will verify and authorise independent workshops to provide access to security (anti-theft) related data, functions and parts. This scheme is now being directly included in European legislation and once implemented, could be expanded in the future to provide a harmonised access and use of electronic certificates for other requirements. Ultimately, the SERMI could help avoid vehicle manufacturers blocking competition ‘through technical design’ – but this remains a legislative decision.

Competitive choices
The workshop of the future will look very different to the workshop of today. There will be much more reliance on the access and use of data. The sharing of this data will enable efficient and timely repair of the vehicle. This will also necessitate increased levels of business management to both fulfil the demands of mobility service providers, but also to ensure that the business has efficient management systems to underpin their ability to remain competitive – and to continue to offer consumers competitive choices. The future moves mechanical repairs into the digital age and the inherent IT skills that this will also require. This will demand changes within the independent workshop business, but will also be directly linked, in every sense of the word, to external partners – so choose your partners carefully, as your future business may be dependent on what they can provide and how this will impact your own business activities and efficiencies. It is also clear that your future business will increasingly be less independent and become increasingly interdependent on the requirements and abilities of others. United we stand and divided we fall – so seriously consider joining one of the UK aftermarket organisations who will fight for legislation that can support your needs. Welcome to the brave new world of vehicle repair workshops!

xenconsultancy.com


Will power: part one

Where there’s a Will, there’s a way for a business to make a seamless transition following a death, as Adam Bernstein explains
Published:  11 July, 2019

Not all business owners have the foresight of the late Richard Cousins, the chief executive of Compass Group who, along with his family, was sadly killed at the end of December 2017 when a pleasure aircraft he was travelling in while on holiday crashed. Cousins’ generosity led to the charity Oxfam being given £41m in a bequest because of a ‘common tragedy clause’ that he had inserted into his Will.
    
Some 60% of the UK population does not have a Will, including a third of those aged over 55. For a business owner, dying without making a Will and/or planning your succession can have a devastating effect, not only on your family but on your business too as having nothing in place can lead to an interregnum in your affairs.
    
Angharad Lynn, a solicitor in the Private Client team at law firm VWV, says that if you die without a Will your estate will be passed on according to the intestacy rules which changed in October 2014 when the Inheritance and Trustees Powers Act came into force. “Under the new rules,” says Angharad, “if an individual dies leaving a spouse and children, the spouse will take the statutory legacy (currently £250,000) and the rest of the estate will be divided equally between the spouse and the children. If there are no children, the spouse inherits the whole estate.”
    
She warns that for unmarried couples it is particularly important to have a Will as the intestacy rules take no account of such relationships: “If the couple have children, they will inherit everything. If not, the estate will go to other blood relatives. The surviving unmarried partner will receive nothing.”

Choosing an executor
It’s an executor who administers estates after death. There is no limit on the number you can name in your Will. However, the maximum number of people who can take the grant of probate is four.
    
Angharad says it’s quite normal to appoint a spouse or children as executors but suggests that it is also worth appointing a professional who can ensure that business assets are dealt with as you would wish. This can be an individual, such as your solicitor or accountant; alternatively, many professional firms have a trustee company that can act as an executor. She adds that the advantage of this is that while your own lawyer or accountant may have retired (or died) by the time of your death, the trustee company will provide continuity for the appointment of executors, enabling partners from the firm to act. The retirement of your own lawyer will not mean that you need to update your Will.

Assets that can be left by Will
In your planning it’s important to not forget a spouse as assets held jointly can be owned in either of two ways. Angharad says that they can be owned as joint tenants or tenants in common – and this is true for all assets, from your family home to shares in your business: “In essence, if an asset is owned as a joint tenancy, it will pass outside your Will, by the law of survivorship. What this means is that if the shares in your business are held with your spouse as a joint tenancy, they will pass automatically to them on your death and not by your Will, regardless of the provisions of the Will.”

Plan to save on inheritance tax
Tax planning after death must be a consideration and Angharad notes that one of the reliefs from inheritance tax is Business Property Relief (BPR) which is available for a business or an interest in a business, as well as land, buildings, plant and machinery used for the purpose of the business and shares in unquoted trading companies. “BPR is currently awarded at 50% or 100%,” says Angharad, “it’s a very generous relief and it is possible that its use will be curtailed in a future budget. So, when planning your succession, ensure your business will qualify for BPR by checking it meets the scheme requirements.” To qualify businesses must be trading, and if the proportion of assets held in investments is too high the business may not be able to use BPR.
    
The charity Will-Aid runs a scheme each November where simple Wills can be written for a charitable donation. Go to: www.willaid.org.uk


Diamonds in the database

There is a treasure trove of information in your customer records according to Andy, the trick is to know how dig out the jewels
Published:  02 July, 2019

One of the biggest mistakes I regularly see within the aftersales garage sector is the constant advertising specifically in local press with ‘come and get me offers’ in order to attract new business. Most of these are by already established business.  
    
Whether they are large or small, they will rarely measure the actual effectiveness of such campaigns, or analyse the type of customers they are attracting. Indeed very few of these businesses actually understand the ‘diamonds’ that already exist within their database.   
    
Too little thought is given to how an existing customer may feel if he or she saw a deal that had never been offered to them, despite the fact that they have been loyal customers over a number of years. This could be a real kick in the teeth.

The perils of transactional marketing
We’ve all seen the larger corporates like Sky, Vodaphone and, of course the insurance industry to name a few, offering far better terms for new customers than any existing customer can get. In my opinion this form of ‘transactional marketing’ does not work in the independent garage sector as it does not lead to long term loyalty and leads to these potential new customers hopping from one garage deal to the next one.
  
There is no point trying to attract vast numbers of new customers and provide them with a sub–standard service based on a cheap price which can cause severe damage to the reputation of your business. Another factor is that established customers tend to buy more and are less price sensitive and may be less likely to defect due to price alone.

Focus on relationship marketing
You have to focus on ‘relationship marketing’ and yes there are many guises however your own database and the ‘diamonds’ within must always be your starting point. It also builds a platform where the business and its customers are more likely to be able to adapt to each other’s needs and reach agreement quickly and easily. So, by getting emotionally connected and regularly engage with your existing customers will only enhance the trust and loyalty you build with them.
    
It can be concluded that relationships with customers help a lot growing the revenues/profits for the business. Relationship marketing is all about creating, building and maintaining the relationships with the existing as well as new customers for the long-term profits. Relationship-focused marketing is not something that will happen overnight. It requires a change in thinking and some discipline along the way. Top level management support is needed for introducing such a change.
   
It's quite obvious that the relationship approach is really successful, because 80% of an organisation's revenues are generated by 20% of the customers. Thus, it is concluded that building strong relationships with customers is very important for any business to grow and relationship marketing is a mantra to long-term success by retaining and delighting the customers.
    
Simply by reminding customers of their vehicles next MOT due date, or service for that matter is the minimum that any independent garage should be undertaking. Reminding them of specific campaigns such as winter checks or health checks if they are planning long journeys will reinforce that you care about them and keep them safe. By expanding this two-way communication with news of any success stories within the business, such as: charitable fund raising by the business or any employee, training and development that’s undertaken, new services/products introduced will reinforce to your customers that you want to build long term relationships with them.
    
This strategy will help you constantly create a small influx of new customers through recommendations as opposed to constantly advertising for a field for new ones. You will also greatly improve the chances of providing and exceeding the high level of service they expect, because you will not be swamped with a mass of new customers rushing to take you up on those ‘come and get me offers’. Therefore, this promotes another selection of new clientele that hopefully continue the cycle and improves the long -term implications for continued growth. Your existing customers will become your advocates; your marketing angels.  

Assets and more diamonds
Quite simply, customers are the organisation’s most important asset (along with staff too). Without them, it cannot exist. To survive, prosper and possibly expand the business, the independent garage owner must continue to acquire new customers but more importantly must never neglect existing customers or take them for granted.
    
Constant database management will build-up and trust and personal knowledge with your customers, which create a far more effective customer retention tool, which in turn will find you more diamonds.


Please visit www.thegarageinspector.com for business training courses and for more business tips.


BER: What next

In part two of his look at the future of the Block Exemption Regulation, Neil Pattemore asks what we might expect to see in a new BER
Published:  17 June, 2019

Following last month’s article about the European Commission’s launching an ‘evaluation roadmap’ to consider if the existing Automotive Block Exemption Regulation (BER) should be renewed when it expires in May 2023, I explained the background and how important BER is to the abilities of the UK aftermarket to conduct their day-to-day business and offer the motoring consumer competitive choices for the service and repair of the vehicles.
    
However, since the original BER was drafted in 2002 and subsequently updated in 2010, much has changed concerning the design and functionality of today’s vehicles, with much more likely to change in the coming years. If you think that 2023 is a long way ahead, just think about the Olympics in London in 2012 – does that seem like such a long time ago - and this is nearly twice the period between now and 2023.

What should the legislator consider? Firstly, there is the fundamental question of why the BER exists and if the original requirement is still valid. The answer is not so clear, as the original BER has already been modified in 2010 to allow franchised dealers to sell outside their geographical area and the way that vehicles are being distributed and sold is changing to different outlets (think shopping centre ‘pop-up’ shops as well as the internet).

It is also appealing for the vehicle manufacturers to oppose the renewal of the BER, as this would provide them with a much more ‘flexible’ approach to supplying vehicles – either directly from the vehicle manufacturer to the new vehicle owner, or as part of tomorrow’s ‘mobility services packages’ on a ‘pay by use’ basis – in both cases avoiding having to pay the dealer margin. It would also release them from the legislative obligations for the provisions for the aftermarket and thus avoid supporting their competitors in vehicle servicing.

Vehicle manufacturers are increasingly selling vehicles online and with the exponential increase of the ‘connected car’ retain a direct relationship with the vehicle owner/driver – again negating the involvement of the dealer. The original ‘vertical agreements’ are changing to be ‘horizontal agreements’. Equally, the legislator may also view this as a natural evolution of the vehicle distribution sector and a valid reason not to consider renewing the BER.

Aftermarket perspective
Most importantly, where does this leave BER from the aftermarket perspective? Clearly, the original key elements need to be maintained, namely the honouring of warranties, servicing in the context of leasing contracts, the supply of spare parts, the use/purchase of tools, access to technical information and access to authorised repairer networks to buy original parts. Some important aspects are also covered in other legislation, such as the access to the repair and maintenance information (RMI) under the Euro 5 vehicle type approval, but this is complimentary legislation and is not a replacement for the BER.

Critically, there are both important changes in vehicle technology and the way that the vehicle manufacturers themselves have become an active competitors for aftermarket services which the legislator should also consider.

At the moment, BER and the guidelines provide protection against a number of distortions. They serve as an important framework which allows OE parts producers the right to supply independent parts distributors as well as the independent and authorised aftermarket. These OE parts suppliers also have the right to brand their OE products with their own logo (dual branding) and the definition of ‘original and matching quality parts’ has had an important effect in the aftermarket helping to demonstrate the true origin and quality of parts to consumers and their subsequent competitive choices. All this needs to continue - especially from the position of protecting small independent businesses – the backbone of the aftermarket.

It is very welcome that the European Commission has rightly emphasized that competition policy needs to "make sure that our markets stay competitive enough to give consumers the power to demand a fair deal." However, this pre-supposes alternative choices exist.

It is therefore critical that the legislator considers how small businesses can continue to compete, as only focusing on the repair level is too myopic and does not capture the influence that BER needs to have on the entire aftermarket and its competitive eco-systems. The complexity of the aftermarket sector and the nature of the respective economic activities throughout this value chain should be taken into account to allow a better understanding of the different competitive conditions at each level of the supply chain and then legislate accordingly.

Examples of this include the trend for vehicle manufacturers to require replacement parts to be re-coded, but then either restricting access to the code (e.g. ADAS components) or charging a inflated price for the code for non-OEM parts to ensure that their own total price for the part and the code are cheaper. This is an example of another developing trend from vehicle manufacturers where ‘software as a product’ is becoming another way that competition can be distorted.

As the vehicle becomes a ‘computer on wheels’, there is an increasing concern that the (already) existing imbalance between OEMs and the independent aftermarket will further increase due to vehicle manufacturers being able to control access to the vehicle data. Vehicle manufacturers have evolved since 2010 into new and additional roles, entering as direct competitors into traditional independent aftermarket areas. Increasingly repairs are being done today directly and remotely (e.g. resetting of fault codes, coding, reprogramming, software updates) via the ‘connected car’ and this also needs to be addressed in any revision of the BER.  
There are also now the first examples of vehicle manufacturers joining forces on a common Internet ordering platform for their original spare parts and consequently corresponding to the role/function of an independent multi-brand spare parts distributor. The main competitors of independent repairers/operators are no longer only the authorised repairers/networks, but are now also the vehicle manufacturers themselves, who have much more power and much more (in)direct technical and commercial means to frustrate effective competition by independent aftermarket operators.

The traditional comparison between the position of the dealer/authorised repairer and the independent operator (the vertical ‘non-discrimination principle’) is no longer valid, due to the proprietary design of the in-vehicle telematics systems, the vehicle-generated data/functionalities go directly to the vehicle manufacturer, who then decides with whom it shares the data, or not and under what contractual conditions.

The proprietary closed design of their in-vehicle telematics systems and the unique access to the vehicle, its data and functions, enables manufacturers to vertically integrate additional services, e.g. to offer bundled telematics services over the life-time of the vehicle, and even ‘free of charge’ (e.g. remote diagnostics, remote programming, fleet management, insurance policies etc.). This has a de-facto competitive knock-out effect on all other service providers around the car.

Clearly a lot has changed since the original BER was implemented - given that it is the vehicle manufacturer itself who is now the privileged controller of the in-vehicle data and resources/function and subsequently the whole downstream aftermarket, so any new version of BER must now consider a different approach and re-assess how a competitive aftermarket can continue to offer consumers a competitive choice.

xenconsultancy.com


The Future’s bright: The future’s… orange

Aftermarket looks in on the new business recently opened by 2018 Top Technician winner Shaun Ferguson-Miller
Published:  03 June, 2019

We have to confess, Aftermarket's garage visit articles tend to follow a formula. We pick long-established businesses, and as part of the piece we will hear about how they got started, and see where they are now. That's great, but sometimes you want to mix things up, do things differently.   

How about, for a change, we go and see a business in its very early days, and see how a garage is built from the ground up? Yes, we like that idea. When we found out that 2018 Top Technician Shaun Ferguson-Miller was opening his own business, we knew we just had to be there.

Fergie’s opened its doors, and unveiled its big, bright and very orange sign for the first time in late February. Based in a converted warehouse on a business park on the outskirts of Thatcham in Berkshire, Fergie’s has been set up as a German marques specialist, catering for drivers of the VAG group output, as well as cars from BMW and Mercedes-Benz.
With Shaun is a small team covering marketing, sales (front of house), finance, and of course Shaun’s area of expertise, all things technical in the workshop. The technical team will grow as the business picks up. All being well, he’s looking to take on two more technicians this year.

Differentiation
Starting out is hard, particularly if you are aiming to start at the top, but Shaun was upbeat about the businesses potential: “We’ve had a great start. Each member of the team is very focused on their individual roles and we’re hitting our targets that were set out in the business plan. It’s very early days but we’re all putting in the hours and committed to making this a success.”

They are getting the customers they want too: "The marketing team are busy behind the scenes. From day one we’ve had a defined focus on who our clients are and we’ve built a marketing plan based around that. We’re very keen to get off on the right foot and build a strong reputation based around outstanding customer service. It’s the part of the business the customer sees and touches. It’ll be our point of differentiation.”

A new chapter
Readers may remember that when he won Top Technician in 2018, Shaun was head technician at Millers Garage in Newbury. What a difference a year, and a big trophy, can make: "I have been on a journey over the last three or four years, and have met some great people in the industry. Like they say, It’s good to talk, and my new network gave me a different perspective.
“I’ve fancied going it alone for a while and it seemed like the perfect opportunity. I started planning at the end of last year, and got the keys for here on 1 January."

Winning Top Technician was a factor: "I realised that I had to do it this year. If I left it for three or four years, I couldn't advertise that I was setting up, and that I was the winner of Top Technician. It would be old news. I was speaking to a lot of people in the industry about it, and I just decided it was time to go. I set about doing the business plan, looked at what I wanted to do, arranged additional finance on top of the money we had, then set about finding the right equipment to meet our budget.  I started planning in November and into December, got the keys on 1 January, and that was it. From that point we were here full time. This was a warehouse that had been used by a parts supplier. It was just a bare shell. We turned it into this within three months, and opened on 25 February, and we have been open a month now.”

Shaun was thoughtful for a moment, and then said with a laugh: "When you look back, you think 'how did this even happen?' I still don't know how it happened!"
    
That was then, and this is now. Let's look at what Shaun has set up: "We have four two-post service ramps, a dedicated wheel alignment ramp, and a Class 7 MOT ramp. We are setting up as an MOT station at the moment too. In the meantime, are working with a local garage that is carrying out the MOTs for us. In return, we are doing their diagnostic work. It’s a system that works well for both of us currently.

“On the tooling side, as we are a German marques specialist, all the diagnostic tools are for the VW -Audi Group, Mercedes and BMW. We have to have that as a specialist. We have some generic scan tools as well as a backup but, factory tooling is a must.”
Shaun and the team are thinking long-term. One of the things he wants to create for Fergie’s is a positive working environment. With this in mind, upstairs, we found the bones of a staff lounge: "We’re focused on building a great team and staff retention is a big part of that. Having a great place to work as well as the right culture in the company is really important. You need somewhere they can relax, and eat in comfort.”

Next door, Shaun has set aside a room for training. Training is really important to Shaun and having the right environment to do that is essential. “When we do training in the evening, they will come up here. Treating the staff right is the biggest thing for me. I want to get great techs here, so they need to be treated well.”

The staff are not the only ones getting good treatment. Shaun also became a father for the first time last year, and they have found room for a little creche for son Quinn also. We told you it was a modern place didn't we?

Customers
Apart from the technical stuff, you always need to remember that a garage business needs customers. When they arrive, Shaun has presentation covered thanks to a comfortable, warm-wood-and-armchairs reception that could be an upmarket high-street cafe: "I initially wanted it to be all white and fresh and clinical, but I had my mind changed and this is so much better. Everyone who comes in says how nice it is, and wants to chill out, read a paper, have a hot drink, they love it. Because we are a little bit out of the way, we wanted to create somewhere people can wait."

To have them waiting, you need to have them in the first place. With this in mind, Shaun sought out advice: "I did a lot of business training with John Batten at Auto iQ and he has helped me massively. I didn't think advertising was important before I started the business. As far as I was concerned it was all word of mouth. Starting a new business, that is not going to happen though. We are literally at the bottom of a road with no passing trade. I’m too busy in the workshop to give marketing the focus it needs which is why we bought in someone to do this from the start. That and our front of house team are every bit as important as the technical ability we have in the workshop.”

It's a hard slog starting from scratch, but with a young family, a big vision and a great team, Shaun is on his way: “I am doing long hours at the moment- I am here until 11pm every night. I just want to set everything up, systems, equipment, etc. All of that effort will be worth it in the long run, getting it all right from the beginning. Doing this, I have learnt almost everything in one go, from a business point of view, which is really cool. Luckily my mum is an accountant with a massive company, so she has helped with it as well. With mum's, my wife’s, and my friends support as well as a great team, it was the ideal time, and the ideal recipe. Now we’ve all just got to put in the hours and do the work.”
We know he will succeed.  



The art of self improvement

All roads lead east according to Andy, as he points towards some strategies that will help you improve your business
Published:  23 May, 2019

To thrive in today’s competitive aftersales sector businesses, the need to operate more efficiently, effectively and profitably has never been more apparent. Developing problem solvers, increasing labour productively, improving quality and reducing waste are essential factors if you are to succeed.
    
Increasing competition, rising customer expectations, and of course increasing technology are all squeezing already thin margins, while changing competition regulations in Europe bring an uncertain mix of threats and opportunities. Due to increasing product quality and reliability, today’s cars need fewer services (routine maintenance visits) and less service time at each visit. This means that, to maintain workshop viability, garages have to service and repair more cars each day. This has knock-on effects, such as the need for larger car parks and more admin staff to handle the extra number of jobs.
    
To tackle these challenges, you need to adopt a continuous improvement strategy. There are several such strategies and methods to achieve these goals, however I want to focus on two most commonly adopted continuous improvement methodologies that I used in my previous business, Brunswick Garage, and continually use today to help other garage businesses.  

Plan-Do-Check-Act
Plan-Do-Check-Act cycle, more commonly known as PDCA cycle, was developed by Walter Shewhart as a continuous improvement process that can supplement the statistical quality control methodology. The PDCA cycle was, however, popularised by W. Edwards Deming who introduced it to Japan after World War II and is commonly referred to as the Deming cycle. As the name suggests, PDCA is a four-step process:
    
In the plan stage you establish what you want to accomplish and also establish the metrics and measurement system that can help you verify whether you have been able to accomplish what you set out for.
    
In the do stage you carry out or ‘do’ what you have planned. This is the step where the actual work happens.
In the check phase you compare using the measurement system that you have put in place, how you are progressing towards meeting your accomplishment and analyse any deviations.
    
In the act phase deviations are analysed and solutions implemented to ensure they do not happen again in the future and the gains are standardized. This is also the phase where a debrief or lessons learned exercise is carried out.
PDCA cycle is one of the oldest forms of continuous improvement methodology and almost all of today’s improvement methodologies.

Kaizen 5S/Gemba Kaizen
Kaizen is a term that was coined by Masaki Imai who founded the Kaizen Institute. The Kaizen Institute still holds the copyright to the term ‘Kaizen’ and ‘Gemba Kaizen’. Kaizen is an everyday Japanese word often translated into English as ‘improvement’. Kaizen is actually made up from two words. The first being ‘Kai’ or to change continuously’ and the second, ‘zen’ meaning ‘to improve’ or ‘to get better’. Therefore, a more complete understanding of the word Kaizen would be to continually make changes to get better.
‘Gemba’ means ‘real place’ – the place where real action occurs. Japanese use the word Gemba in their daily speech. Whenever an earthquake occurs in Japan the TV reporters at the scene refer to themselves as ‘reporting from the Gemba’. So, for our purpose, we would classify our reception, workshop, car parks etc. as our Gembas.
    
5S Kaizen is an improvement method that brings together these tools and techniques into a unified whole with 5S forming the base that links all other methods together. For many who have heard of 5S before you may be forgiven for regarding it only as a simple housekeeping exercise. Indeed, when some people first learn of the 5S method they find it hard to understand its power and strength as an improvement tool.
    
In other words, 5S Kaizen allows us to change our whole method of working and develop a culture focused on continuous improvement. It can contribute towards:


Hello can we talk?

Neil Pattemore looks at the importance of effective communication for businesses – in several contexts
Published:  16 May, 2019

I have been known to say that “Communication is a wonderful thing." Usually the context of this statement is that there has not been good communication and it has resulted in one or both of us missing something or being agitated with one another for not communicating well to the other what was intended.
    
Probably sounds familiar to many of you, but in the business context it is vitally important that you can communicate with your customers in a way that conveys professionalism and instils both confidence and trust. This is ever-more difficult against a background of increasing vehicle technology and decreasing levels of technical understanding from your customers.
    
At its most fundamental level, effective communication is the exchange of thoughts, information, ideas, and messages between people. However, it’s not communication unless the transmission is understood. Communication can happen verbally, nonverbally, in writing, and through behaviour as well as by listening and using feedback.
    
No matter who or what audience you address, the art of communication can be a daunting task – as indeed, it is an art form. The good news is that there are seven steps to clear and effective communication for even the most challenging conversations with customers when trying to explain what is wrong with their vehicle.

Strategies
So how can you communicate effectively in this increasing technical environment? One of the best ways is to imagine that you are talking to your grandmother – she may be a little slow to understand, is very non-technical and is going a little deaf!
    
Keep it simple: Think about how you can make the complicated simple. Do not use highly technical terms or technical abbreviations and explain slowly and clearly. A good example would not be to say: "Sorry, but your EGR valve is blocked by carbon build up on the pintle needle so now it can’t control the correct NOx requirements." Instead, say: "There is a valve on your vehicle’s engine which is required to control exhaust emissions and it is not working correctly." If the customer wants to know more you could always add: "Because it is blocked by carbon build up from the exhaust system, as it recycles exhaust gasses to reduce the exhaust emissions."

Simples! – as they say.
    
Does it make sense? Always ask yourself; Does what I’m saying make sense to the person I am speaking to and subsequently does the feedback I’m receiving confirm that they have understood?. When both parties in the conversation are truly able to say they understand or that it is all clear  effective communication has been achieved.
    
Failure to Communicate – it’s down to you: Remember, as the primary communicator you are 100% responsible for the other person’s understanding of the communication. In other words, if you don’t feel that you are being understood, you have not completed the job of communicating. Don’t try to change what you are trying to communicate, but how you are communicating it.
    
Stay on Message: Be clear about what ideas you are trying to express or the message you are trying to convey to the other person. What do you most want them to understand?
    
It takes two: Try to really understand where others are coming from. What are they trying to say? What messages are they trying to get across to you? Pay special attention not just to what they are saying, but to what isn’t being said as well as their body language. Finally, if in doubt – ask!
    
Sorry, what did you say? Do you really hear what others are saying? To really listen you should stop everything else that you are doing and really listen to what is being said to you. You should then summarise your understanding by being able to feed back to them exactly what you have understood them to have said. Good communication is a two-way thing.
    
Respect: Recognise that your message is not just about you or what you want. It’s about what’s in it for the listener.  You must mutually understand what is being said and the corresponding implications. After all, they took the time and trouble to hear what you have to say, so it’s equally important to recognise and respect that we each have different perspectives based on our positions, motivations, and needs.
    
Good communication for technically difficult aspects is a combination of both ‘what you say and how you say it’. In summary, keep it simple, keep it short, be a good listener and be both respectful and empathetic. Above all, avoid being condescending.

In writing
When communicating in writing, ensure that you are concise, that you write clearly about the specific point and consider that if you were in the recipient’s position, would they understand what you have written, especially in all the points that they need to know from you. Your audience doesn't want to read six sentences when you could communicate your message in three. Read what you have written and delete any words that are not needed to clearly explain what you need to say. Less is more, as long as you include everything you need to say.
    
Effective written communication ensures that the audience has everything they need to be informed about, and if applicable, take action. If your message does include a 'call to action', does your audience clearly know what you need them to do?

Good example
As an example of good communication, I use a local independent workshop and Keith, the manager, is the epitome of how it should be done. It goes something like: "Hello Neil, your car is in today for a full service, so we will need it until around 2 o’clock. Can I have the key please? Is this mobile number the best to use so we can call you if I have any questions or to let you know when it is ready and finally is there anything else you would like us to know about that we may need to look at today?" Followed by my reply: "Great Keith, no, nothing else, so many thanks and see you later."
    
Quick, polite and concise. When I pick my car up, he uses similarly simple and clear language to explain what was done, advice on any other issues they noticed before explaining the invoice, asking if everything is clear or are there any questions before requesting payment. Importantly, Keith never tries to baffle his customers with technical terms and avoids being condescending – important points in the key areas of creating professionalism, confidence and trust in this increasingly technical environment. It is a bit like your grandmother saying that the simple things in life are often the best and this applies to good communication when talking technical.  

xenconsultancy.com


Niche work if you can get it

Aftermarket pops in on 2007 Top Technician winner Clive Atthowe, to see how things roll at CAT Automotive
Published:  07 May, 2019

It's been a while since Aftermarket has been over to CAT Automotive. They sound out the letters you know - C.A.T. –  It is an acronym, Clive Atthowe Tuning.  The personality of the owner is stamped as firmly on the business as his name.  
"We are specialists, mainly German cars but Volkswagen is our bigger market," explained Clive. Another side is classic cars: "Classic cars are something I've always done, probably because I am a classic age. It is quite a big part of our business. I was brought up with carburettors and have progressed right through to modern vehicles. We also do a lot of tuning and a lot of modification and remapping, I just remapped a car this morning."
 
It is a mixed bag, but all highly specialised, as Clive observed: "We do a lot of what you could call niche work I suppose."
It's a bit more than basic servicing and repairs, but as a previous Top Technician winner, you know he is going to know his stuff.  Clive certainly has the chops, but he had a pretty good grounding early on: "I started in an old fashioned dealership. It had been Talbot and Hillman, and I was working on Hillman Imps, Avengers and Hunters. They changed franchise after a year and became Datsun. That was pre-Nissan. I was  working on Datsun 240Zs 280Cs, Sunnys, Cherrys all the early stuff. I did a five year apprenticeship there which was excellent. We learned to do our own machining, cut our own valves, using lathes, make special tools. It was a very good background. We used to do a lot of classic car restoration there as well.

"I had a very good background in those first five years. I briefly spent two years prepping used cars for a major car sales site, which again was everything from Minis to Rolls-Royces.  After that I started my own business."

For those who don't recall, CAT Automotive  first opened its doors in 1982: "I started by tuning cars, in the old traditional Crypton tuning ways. Financially it was quite tough at the beginning, so it was lucky my wife Jean had a very good job. The early 1980s was a terrible time to start a business actually.  Everybody said I was mad to start a business then, but I come from a family of self employed people and business owners. My father had  a very successful restoration business in the building trade. It is still running now, my brother runs it. It is a background of self motivation I suppose.

"Our original garage was an old fashioned dual-lubrication service bay that had been a filling station, if you can imagine that. We ran in there for 11 years. The tuning side of the business was flying, and I had always had a big interest in modifying cars and rolling road. I ended up buying a second hand two-wheel drive rolling road, but had nowhere to put it. We applied for planning permission to build a new workshop on the site but it all fell through after two years, when the landlord wouldn't give us what we wanted for the lease. So we scouted around and found where we are now, which was pretty much an empty shell and we converted that into a new workshop where we could put a rolling road in. That shows how the business changed over the years."

Workshop
Today, CAT Automotive operates out of a 2,000 sq2 workshop with two ramps. About a third of the space is taken up by a sound-proof airflow cell where Clive keeps his pride and joy; A four wheel drive dyno: "The rolling road is something we have been involved in for 27 years. We started with a two-wheel drive, then four wheel drive, then we built this custom set-up about 12 years ago. As a result of having it we do a lot of classic race cars particularly, and that type of work.

"I just put the phone down a few minutes ago after speaking to a customer who just bought a MGC  that he is now going to race. We are not too sure what has been done to it, it has triple webers and cams in it. He is  bringing it in the week after next for a check on the dyno  to see what he has actually bought and what it is like. There is also a Jaguar race team we do a lot with that has E-types. That is the type of thing we get. We do get ordinary classic road cars as well, but we do a lot of race stuff.”

Specialist
It is one of many niches that CAT Automotive excels within. The business is also a German car specialist, leaning particularly strongly towards the VW group: "Equipment-wise, we have in the last few years gone down the dealer tooling route. We use the Volkswagen/Audi dealer tool. We also have the dealer tool for BMW.

"We used to be a Bosch Car Service Agent. We started off in the 1990s as a Jet-Tronic agent, if anyone can remember that. Then we came out of it and went back into it with Bosch Car Service. We left that about two years ago now. We are totally independent again. However we still use Bosch equipment, such as Bosch KTS. We have also got a raft of other dealer tools which we probably don't use very much now because we have tried to guide the business down a Volkswagen/Audi route. Over the last  two and a half to three years we have chosen to specialise, we thought that was a better route to follow.

As you might imagine, Clive is not alone all day in the workshop. Along with his wife Jean providing part-time front-of-house services, Clive also has back-up in the form of 26 year old technician Dale: "He has been with me about six years now, " explained Clive, I trained him from scratch."

The team was not always quite so bijou though: "At one point there was four of us, including me. In the last four to five years, one key member of staff left and started his own business. We never replaced him, we just carried on. We were quite happy to do that."

The skills shortage is the problem:  "I have looked around to try and find a technician who is skilled enough to come straight into the business, but I have not found one yet. So instead I have just run it very lean.
"The skills gap seems to get wider every year. We do quite a lot of work for other garages and also quite a lot of bodyshop programming on their cars. The standards of work we see coming through the door is quite shocking really."

Top Technician
Speaking of standards, as we mentioned earlier, Clive won Top Technician in 2007. If that's not enough, he also came second in 2011. These days you wouldn't be able to do it in that order.

"I know," laughed Clive, "they changed the rules after myself and John Tinham competed last time, where he won for the umpteenth time, with me as runner up after having already won. We enjoyed it anyway."
Clive was something of a serial winner in his competition days: "I started off doing one of the first competitions that was ever brought into the motor trade, which was Crypton Technician of the Year. I won that twice in a row. Then I went from Crypton to using Bosch equipment, and the business achieved second place in the Bosch World Cup in 2002. That was quite a big achievement for us in quite a small garage. Then I went on to do Top Technician.  I competed quite a few times and I enjoyed it."
Clive is a great advocate for Top Technician: "It certainly makes you analyse your knowledge, and taking part certainly tests your abilities, there's no doubt about that. I think it is a good thing for the industry."

Predictions
Looking ahead, the skills shortage is not the only challenge the industry faces according to Clive: "A few years ago I could usually see which way the trade was going and what was the best route to follow. Now though, it is very unpredictable. Even manufacturers don't seem to know where they are going, apart from that they are going to go predominantly electric. Even they seem unsure."

Increasing specialisation is where Clive thinks things may be heading: "With the onset of so much electronic content, and the sheer knowledge that you need for each individual brand to repair it very well, I can't see how you can cover multi-brand at that level and keep on top of if you are a very small business. If you had a technician for each manufacturer who was trained and had the right equipment, that might work, but you have to work with it and you are talking about some serious investment in time and money. Where do you find those technicians that are trained to that level?  It is very hard at the moment to predict. I think brand specialisation will become a big thing. "

Looking ahead for the business, Clive concluded:  "Our plan is to carry on adapting to whatever the future holds. This has always been my philosophy; Constant improvement through training and investment."


part two: 'You owe me!'

Adam Bernstein continues his look into the the pitfalls of making deductions from staff wages
Published:  02 May, 2019

By Adam Bernstein

There are countless cases on the government’s Employment Tribunal website, a number for garages, that relate to situations where employers have unlawfully deducted monies from employee’s pay packets. The rules are quite clear – employers need prior permission or a legal basis to deduct monies.
    
Andrew Rayment, a Partner in the employment department of law firm Walker Morris, says that even late payment of wages still counts as a deduction. “However,” he says, “if the employer subsequently pays the wages in full, a tribunal would not order the sum to be paid again, although it may order the employer to compensate the worker for consequential loss, such as bank overdraft charges caused by the late payment.”

How to make deductions lawfully
So, given all of the above, how can an employer make deductions from wages lawfully?
    
The first ‘permission’ Andrew notes relates to deductions required or authorised by statute. “This,” he says, “would include deductions for income tax and national insurance contributions under the PAYE system; and deductions made pursuant to the Attachment of Earnings Act 1971 (i.e. where the courts have made an attachment of earnings order).”
    
The next reason for a lawful deduction would be if it has been authorised by a provision of the worker’s contract. This means one that is set out in a written contract which has been given to the worker before the deduction was made. Here Andrew says: “The contractual provision must make it clear that the deduction may be made from the worker's wages and, obviously, the employer must also be able to demonstrate that the event justifying the deduction has occurred.”
    
It’s for this reason that employers should always make sure that their employment contracts contain a specific clause to authorise deductions from wages or other payments due to the employee in the event that the employee owes money to the company.
    
But there is a third ‘permission’ – where a worker has given prior written consent. In this instance, a deduction will not be unlawful if, as the law details, the worker has previously signified in writing his agreement or consent to the making of the deduction. On this Andrew says: “The written consent must be given before the event giving rise to the deduction (this rules out getting the worker to sign it minutes before the deduction is made) and the written consent must make it clear that the deduction may be made from the worker's wages.”
    
From a legal standpoint, it is always advisable to obtain prior written consent from the employee in cases where, for example, the employer pays enhanced maternity, paternity, shared parental or adoption pay but reserves the right to recover the enhanced payment if, for example, the employee does not return to work; loans the employee a sum of money (for example a season ticket loan); or pays an employee’s course fees or the cost of training but reserves the right to recover all or some of the cost if, for example, the employee does not complete or fails the course.
    
Going back to the case of the loan to the worker outlined in part one of this story (Aftermarket, March issue), the employer should have obtained prior written consent from the employee before loaning the money. It would then have been able to rely on this to deduct the loan from the employee’s wages.

In summary
So, to finish, except for deductions made under PAYE or under a court order, it is vital that you ensure that you have workers written consent to make a deduction from wages before attempting to do so. Similarly, ensure that there is an appropriate deduction from wages provision in your employees contracts. And where you make an enhanced payment, offer a loan or cover course fees, it is advisable, before making the payment, to require the employee to sign a form giving their written consent to the conditions of payment and the specific circumstances in which deductions can be made from sums due to the employee.
    
Planning ahead and ensuring all know where they stand will prevent much upset later on.



A tale of two garages

Aftermarket inadvertently mystery-shopped some garages recently, and the accidental exercise reinforced the importance of ongoing training and investment
Published:  25 April, 2019

It was the best of times, it was the worst of times. Well, it certainly was for a member of the Aftermarket team recently, who had a small automotive hiccup in the family.
    
You wouldn’t expect that the need for a fresh set of sparkplugs in a top-selling mass-market runaround could expose the existential crisis facing some garages who are facing extinction as their ability to service cars fades away, but that is what we found. Luckily for our colleague, and for the sector we also found a business who was the very opposite of that type, one that was totally on the ball. A lot can be learned from this second garage in terms of what to do. Even more can be learned from the first garage, in terms of how not to run your business.
    
The only upside was that that business had a local doppelganger who was paying heed to the kind of advice peddled here in Aftermarket every month. There is a happy ending, dear reader, but first you have to travel through the heart of darkness that can be found in a business where trundling along towards obsolescence is seen as sound business planning.

Safe mode
Let’s find out what happened to our colleague: “We have a couple of cars in our household,” she told us, “one is a BMW 3 Series, which I drive, and the other is a an up-until-now spritely 2014 – registered Vauxhall Corsa, which is one of the most popular cars in the UK, and has been in the top 10 highest sellers year-in-year out for decades.”
    
As an aside, according to the sales figures for 2018 as published by the Society of Motor Manufacturers and Traders (SMMT), the Vauxhall Corsa was the third highest selling car of the year, with 52,915 sold during the year.  
    
Anyway, back to the story. After years of problem-free  motoring in the Corsa, a few weeks ago it switched into safe mode – with its service spanner light beaming orange on the dashboard. There were no warning signs prior to this.
    
“As soon as we realised we promptly took it  to a local independent garage.”
    
This is where things started to go sideways: “After a brief peek at the car, the technician announced they couldn’t access the information and that the vehicle can only be dealt with by a main dealer… which was easier said than done, as the car was only capable of travelling at  5mph and the nearest main dealer was more than six miles away.”
    
Now, as she was part of the Aftermarket team, she already knew there was something not quite right here: “When asked the reason why the garage couldn’t access the information, the technician claimed that the manufacturer was withholding access for certain faults, so no other independent would be able to rectify the problem with the vehicle.” The technician then sent our team member off to find the nearest Vauxhall dealer, a business that runs the Griffin franchise alongside a mainstream French brand, in the next town.
    
Now, we know that the Block Exemption Regulation is not a free invitation for everyone just to dig their hands into the big info bin at the vehicle manufacturers, that access might require payment, but withholding access from the independent sector? That would be newsworthy.
    
At this point, our staff member was more concerned about getting the car fixed than she was about the intricacies of European competition law. Like any motorist with a poorly car being overtaken by cyclists, she just wanted it fixed: “The thought of the long slow drive to the nearest dealership, who incidentally said they would not have availability to take the car until the following week, was beginning to cause much anxiety.”
    
Bad news all round at this point. Fortunately for our colleague, this is where the story takes a happier turn, with the entrance of the second independent garage: “Halfway on the arduous journey home we discovered another independent garage offering diagnostics on every vehicle marque. So on the off-chance this garage could help we dropped the Corsa there and they assured us they would do their best to help. An hour later we received a call from the garage to say that they have gained access to the vehicle and that it requires a new coil and set of spark plugs. Within a couple of hours the car was fixed and back to its spritely-self. Not only that, it is booked-up with this second independent garage for its MOT next month.”

Consequences
As we said, we did not mean to perform a regional mystery shop on random garages across Kent, but here we are. Let’s ask our accidental shopper what she though about the businesses she visited: “The first garage should have updated its equipment, especially bearing in mind that a Corsa is one of the most common vehicles on UK roads, then perhaps they would have kept the business. They also lied to us about the reason they were not able to fix the vehicle.”
    
Long term, this was probably the most serious transgression made by the first garage during the whole experience: “By not being honest they lost the trust of the customer and looked as though they did not know what they were talking about. The first independent garage has now lost any future business from us, which includes family and friends too. All because they weren’t honest.”
     
Let’s look at the outcome for garage number two: “The second garage has proven itself to be knowledgeable and efficient and has gained not only the trust of the customer but also additional trade from the customer’s friends and family.”
    
As for the franchised dealer: “There’s nothing to say about them. They could not even fit us in, which again does not endear them to the customer when they are in great need of reassurance and support from a professional business.” Quite.
    
As our mystery shopper points out, this is a market where you can lose your customers very easily, but you can also win them pretty easily, as long as you have made the required investment in training, tooling and access to data: “The independent garage sector is a highly competitive market where customer trust is key, along with the right equipment and training.”

One last word from our colleague, who as a stalwart of the magazine is fiercely loyal to the sector: “I also want to point out that apart from having failed to have the ability to access a five year old mass market runaround, the first garage attempted to take business away from other independents as they tried to  send  the car straight to the main dealer. Whatever happened to solidarity in the world of independent garages?”
    
What indeed?

Conclusions
Let’s look at what we have learned from the misfortunes of our team member. The immediate takeaway here really is the need for honesty. If you don’t have the ability to work on a car for any reason, just tell advise the customer and direct them to someone who can help. You never know who you are talking to, and what they know, and this is a classic example of why honesty is always the best policy.
    
The deeper takeaway though is the need to invest and train, and to train and invest. In the February issue of Aftermarket, in Big Issue, we asked if our readers had paid attention to the sales figures in 2016, as this might give them a clue as to where they need to point their investment. The one thing we know for sure is that the first garage visited did not look at the top sellers for 2014, as if they had they might have realised that a Vauxhall Corsa from that year might come through the door sometime after 2017.
    
Even if you are not marque-sensitive, all vehicles are becoming more complex, and having the right tooling, and the ability to properly use it is absolutely essential. If you can’t interrogate the third most popular car in the country, and you have to send that car down the road, you are heading for the scrapheap, whether or not you were honest with the customer or not. We know it takes money to train and buy equipment, but there is so much support out there, it would be foolish not to reach out to get a grasp on tomorrow.
    
You don’t even have to look far to get support. You do not have to get up and walk to your computer, or even lift your hand to pick up your mobile phone. You just have to turn the page.
    
Every issue in Aftermarket, we have a whole section devoted to business. We have another section covering training courses, and another covering technical advice. In most of the features there will be advice on the kind of tooling required, and on the new tech heading your way. Also, as much as we hate to admit it, we are not the only place to access this information. Many sector suppliers offer training, and there are specialised training companies and courses. You can attend live training courses via the IMI, or the RMI via its Academies, or you can access training online.  We have even heard that there are other magazines covering the sector, although we think that may just be a rumour…
    
The point is, there has never been more information available, online and in print. As our regular business contributor Andy Savva, The Garage Inspector, is prone to say: “There has never been a better time to run an independent garage.” He provides business training, and as part of that training  he will advice businesses to invest in kit, and invest in people. He’s not the only one either. Leaf through and you will see a host of famous names who offer technical content in this magazine. In no particular order, except perhaps alphabetical, you have John Batten, Peter Coombes, Ian Gillgrass, Hannah Gordon and of course Frank Massey. All are either regular technical contributors, or have written for us in recent months. If you go back further there are even more names providing priceless technical content. That’s just Aftermarket. Many of our contributors run courses, and they are not too shy to talk about it, so read their articles and find out. Many of our advertisers also provide training, either at their own facilities or at various trade events like Automechanika Birmingham or Mechanex. We will tell you and point you in the right direction.
    
Despite this, despite the investment being made by thousands of garages that receive and read Aftermarket, there are still those who don’t keep up with the technological direction of travel, let investment slide, and decide against that extra round of training that will help them keep their competitive edge. If you are intending to shut down, we can understand it, but if not, if yours is a going concern where you are looking to operate through 2019 and beyond, then you need to keep up to date with technology, and make sure you are taking all the relevant training.

Summing up
We call this an accidental mystery shop, and in a way it was. We are sharing the experiences of our team in a friendly way to show what a customer might experience, to point you in the right direction. Don’t forget though, there are millions of potential customers out there, and for them it is not a theoretical exercise. They will make a judgement call on your business based on your performance. If you provide a poor service they will make their voice heard by disappearing from your forecourt, never to be heard from again. A garage that can deal with their customers competently and honestly will have them return again and again. You can count on it.


The art of self improvement

Published:  18 April, 2019

All roads lead east according to Andy, as he points towards some  strategies that will help you improve your business 


clear view of the aftermarket

Aftermarket speaks to Clearwater International about the trends affecting the aftermarket, as laid out in their recent report
Published:  15 April, 2019

While many garage businesses in the sector probably have a pretty firm idea of what trends and changes are affecting their businesses, it is always helpful to be able to look at the whole picture and see where you fit in. This means you can see where you are, and gives you an idea of what to expect going forward.
    
With this in mind, a recent report on the global automotive aftermarket from corporate finance house Clearwater International provides a useful view of the trends influencing the sector, taking in the local, regional and global landscape.  Overall, liberalisation of the market, changing technology and shifting consumer habits and expectations are identified as being the key drivers in the way the sector is moving.
    
On liberalisation, the changes have a range of aspects. On one hand there is increasing penetration by OEMs looking to claw back market share in terms of supplying parts to the traditional garage sector. At the same time, OEMs are obliged to provide information about the exact identification of replacement parts, albeit on their own terms. The report pointed to ‘European automotive aftermarket landscape,’ a report from BCG, which observed that independents have been effective in broadening their market share at the expense of the manufacturers and their networks.
    
OEMs are also looking to take back a piece of the market through the formation of aftersales networks. Another part of this trend has been the increasing ability consumers have had to use aftermarket providers to service and repair newer vehicles, as seen through the Block Exemption Regulation (BER).
    
Changing technology in terms of the emergence of electric vehicles and hybrid drivetrains is having an impact. Back in the workshop, key drivers going forward, according to the report, include digitally enabled services, telematics, e-commerce and 3D printing. Remanufacturing is also seen as having a strong place in the future, with OEMs investing in the segment.
    
The report found that the average age of cars in the EU is 11 years, an age that puts a major chunk of the transcontinental car parc firmly in independent garage territory, is certainly good news for garages.
    
The picture looks bright in fact. The report cites a finding from Frost & Sullivan’s ‘Global automotive aftermarket outlook 2018’ that showed global automotive aftermarket demand was set to rise by 4.4% in 2018, a view shared by many sector analysts according to Clearwater’s report. Another forecast that the report pointed towards, ‘The changing aftermarket game’ from McKinsey, predicted that the market will have a worldwide worth of €1,200bn by 2030. On that basis, underlying global growth on a year-by-year basis would be 3%.
    
Speaking to Aftermarket about the report, Tobias Schätzmüller, Partner and International Head of Automotive at Clearwater International said: “There are a lot of challenges out there for the aftermarket, as well as  opportunities. First of all, the liberalisation of the independent aftermarket. I think this gave it a boost. Also, technology-wise, there are new entrants. Some pose a threat but also offer many opportunities. Then, of course, there is the powertrain discussion, connected vehicle, and autonomous driving, which will all change the picture.”
    
One of the aspects the report covered was the ongoing trend of mergers and acquisitions taking place in the sector. The report cited the ongoing purchase activities of LKQ Corporation and Euro Car Parts as an example. It also pointed out the purchase of The Parts Alliance by Uni-Select two years ago, as well as the acquisition of Borg Automotive by Denmark’s Schouw.
    
Tobias thinks the smaller suppliers will continue to gravitate towards larger companies:  “We see from the M&A analysis that there are still a lot of small and medium-sized businesses around, in small units but with a relatively limited range of products. They are now trying to redefine themselves in terms of international reach, as well as in terms of covering additional markets, and product ranges. For some of them, they recognise it is not possible to gain scale on their own, so they are joining forces with others.”
    
Expansion is the keyword: “There have been a host of cross-border transactions. In the report we have published a list of many of the deals that have been completed in recent years. Every month there are new deals going through. We are advising players to grow and refine their strategies, and they are bringing access to new product categories. We also advise those players to invest in technology, into automatic warehousing etc. That is the challenge, but for some of the players it is an opportunity to develop greater professional capability, and grow through investment.”
    
Tobias then pointed out the key trends where businesses need to pay strongest attention: “On the environmental side, it is certainly the change in the drivetrain, with electric vehicles coming in. Nobody knows in the future when, or even if, this dramatic shift will happen but I think everyone still believes we are in a mixed period of combustion engines, hybrids, and electric vehicles. However, if you look 10 or 20 years into the future, the prevalence of electric vehicles will be much stronger. This will of course change the complexities of the engine, and the powertrain. This means less components and less moving parts which is a threat to the spare parts market, although the components in an electric vehicle might have a higher average value per unit. However, this would probably not compensate for the very complex engine that is now in use in combustion engines. There will be a reduction of complexity and, assuming that with the numbers driving there may be less accidents, which will also have an impact on the spare parts business.
  
“On the exterior side, there will be pressure from OEMs because they now see an opportunity. While increasing liberalisation has seen the independent aftermarket gaining market share, with all the e-solutions in the car, it is possible for an OEM to be the first to provide pre-emptive maintenance. If the car has to go to the garage, they are the first to know that and can make use of this information. They are all desperately looking for alternative profit streams beyond the process of selling hardware, i.e selling a car, which is also a driving factor.”
    
For the garage on the ground this may seem a long way off, but there is a way forward. “I think it is important to offer the whole spectrum of products, to be present everywhere and to reach a critical size so the parts can be sourced cheaply, and they have more marketing power. Additionally, they also need to increase their competencies, to be able to offer customers the wider range of products.”
    
On the potential impact of Brexit on the aftermarket, Tobias said it was too early to be drawn on likely outcomes: “Parts supply either comes from the OEMs or tier one suppliers, or it is sourced in Asia. I don't know, looking at the UK market, whether they would have problems sourcing parts from abroad. It depends on what the regulations will be, but Brexit will probably have an impact.”
    
On whether concern over Britain’s exit from the bloc is warranted, Tobias speculated: “I trust that they will find an economical and reasonable solution. Brexit concerns the UK most, but given the highly integrated automotive value chain, it will also affect the continent.”
    
Looking ahead, Tobias concluded: “There will be continued consolidation in the market. In the independent aftermarket there is a lot of activity, with many M&A transactions coming up. We are actively tracking this. Companies will seek to be more international, aiming to cover more markets, and will get a broader cross-section of products. On the technological side, advancements in connectivity will mean more preventive maintenance, and overall professionalism within the market will increase. Transparency will also continue to increase thanks to the impact of the online world, and that will have an impact on price.”


Where next for MOT testing?

Neil looks at the direction of travel on the future of the MOT, and where it might be taking us
Published:  10 April, 2019

The UK Ministry of Transport Roadworthiness test (MOT test to you and I) has been in place since 1960 and has withstood some serious challenges in recent years – both from changes in European legislation that wanted to only allow dedicated test centres that were not directly connected to the repair of a vehicle to conduct the roadworthiness testing, but also from within the UK to try and change the frequency of the existing 3-1-1 test frequency.
    
Thankfully, common sense triumphed in both cases and the UK MOT test soldiers serenely on.
    
The original MOT test was a basic mechanical test and although many other elements have been added over the years, today it still predominately remains focused on the mechanical condition of the vehicle, plus exhaust emissions. However, ‘The Times They Are A-Changin', as Bob Dylan sang four years after the original MOT test was introduced.
    
The future of the MOT test has drawn many diverging views and there are many who champion its continued format and frequency. At the other end of the spectrum there are those who see it as an unnecessary expense for the motorist, as well as being technically obsolete as automated systems and autonomous vehicles impose the mandatory testing  of their functionality. Effectively, in their view, the vehicle safety is self-tested every time it is driven. Somewhere in between are those who simply want to update the test to include an assessment of today’s electronic safety systems.
However, the ‘self-test’ approach is being discussed at the UNECE level in Geneva, both as part of the autonomous vehicle requirements, but separately as how ‘periodic technical inspection’ (PTI) should be conducted. These discussions are not restricted to what the UK does, or even Europe, but includes all those countries who have signed the 1958 UNECE agreement to adopt what is agreed – which includes the UK who signed on 16  March 1963. This all comes under the snappy title of ‘Agreement Concerning the Adoption of Uniform Conditions of Approval and Reciprocal Recognition of Approval for Motor Vehicle Equipment and Parts, done at Geneva on 20 March 1958.‘

There are now discussions to formalise the improvement needed to suit modern complex electronic systems and provide a solid health check for PTI. This may include how a system conducts functional plausibility, performance monitoring and self-healing abilities. This is a long way from today’s visual check of a vehicle! However, for the UK MOT there is also a timing issue to all of this. Although we know that automated systems are being introduced, there are many electronic systems which have been mandatorily fitted to vehicles for many years (e.g. ABS) and have yet to be included in the MOT test as an independent electronic check or functional test. This was the subject of a recent DVSA meeting which questioned what should be included in the future MOT test for systems that are already fitted to today’s vehicles, including how these electronically controlled systems should be tested, but also to consider the cost- benefit analysis to evaluate if there is a greater benefit than the costs involved to implement a specific test requirement. The simple proposal is to use a PTI scan tool connected via the OBD port and communicate with the vehicle and its safety related systems to detect if any faults have been detected. Is this going to provide a better test method and result than observing the malfunction indicator light (MIL) on the vehicle’s dashboard? The answer may be either a ‘yes’, but probably only if a deeper assessment of the system is made, bringing in the ‘cost-benefit’ question of the development of the PTI scan tool software, but also a ‘no’ if it can be shown that the vehicle is effective and accurate in identifying problems itself. However, this is also part of the problem. Where is the independence of the MOT if the vehicle manufacturers can create their own test methods? There is currently an ISO standard being developed that seeks to define what access to what data will be provided by the vehicle during a PTI test and from this, what test method will be possible. However, the data access is controlled through the use of a vehicle manufacturer’s electronic certificate and their intention is to provide the minimum data, probably related to the MIL activation, so this may restrict what test methods can be implemented unless legislation forces greater data access/functional control, which will also be subject to the cost/benefit analysis.

Telematics
Another angle is the ability to use the vehicle’s telematics system to remotely communicate with the vehicle and monitor its status and safety related functionality whenever it is being driven. If a fault is detected, then the vehicle manufacturer is able to assess the seriousness of the fault (effectively ‘advisory’, ‘failure’ or ‘dangerous’) and propose to the vehicle owner that a repair is necessary and direct them accordingly to a workshop of their choice, where the relevant spare parts would also be provided by the vehicle manufacturer. Unfortunately, this may signal one of the real issues here – the vehicle manufacturer is not only able to decide if a fault occurs and know when this happens, but then is also able to propose where it is repaired using their OEM parts. This is not a good scenario for either independent vehicle testing or for the competitive choice of where any MOT failures are repaired.
    
So, although the communication to the vehicle might still be via the OBD connector, the testing of the electronic safety systems may still be controlled by the vehicle manufacturer and subsequently restrict what truly independent testing will still be possible. In the longer term, autonomous and connected vehicles will become much more capable of self-testing, but this still leaves how the choice of their repair being influenced by the vehicle manufacturer who becomes, judge, jury and executioner. If these vehicles are not tested in MOT centres, will the UK government return to enforcing vehicle safety via Traffic Police with the associated cost of police officers in patrol cars? I think not, so where will this leave independent roadworthiness testing and the test centres that conduct these tests?
    
This may well come down to how the use of vehicles changes and the subsequent ‘mobility’ models of who is responsible for the vehicle, but this will also need a change in the law concerning who is responsible for the roadworthiness of a vehicle when it is being driven on the road. As I said at the beginning,  ‘The Times They Are A-Changin'.

xenconsultancy.com


Perception is everything

With another set of school leavers soon to be heading into the world of work, is the automotive sector showing the world its best face?
Published:  08 April, 2019

School leavers are about to become ‘A Thing’ again. In May and June, GCSEs will be sat, and A Levels will be taking place too. There will also be the inevitable angst about how many are going to university, and how many are taking the vocational route.
    
The automotive sector should be a good place to head instead of academia. It’s technical, it’s getting more technical in fact, and there is definitely a future in it. So, why is there still a dearth of good technicians? The answer possibly goes back decades.
    
Back when the year 2019 was still seen as being far in the distant future, and we all (well, some of us) expected bio-engineered artificial human replicants to be doing all the heavy lifting by the time we arrived. There was also a push to put more and more young people down the academic career route. Why would anyone want one of those hands-on jobs when you could go off, get a degree, and end up in the big chair, calling the shots? Presumably the replicants would respond well to instruction from people with ‘a good education.’
    
Well, a few decades later, here we are. Millions of young people heeded the call and trooped into all the universities, which had multiplied as the polytechnics found themselves elevated to a higher status. Can you guess what happens when more and more people acquire what is seen as being the top level of education? Yes that’s right, inflation, and the devaluing of qualifications. With untold numbers of people flooding into the job market clasping a degree, and the memory of the mortar board and gown from graduation still fresh in their minds, those neophytes found that they were not welcomed with open arms. In fact, if everyone has a degree, the competitive advantage it was supposed to give you vanishes. There you are, slogging towards finding a way to be a useful member of society along with everyone else. Of course, prior to the introduction of university tuition fees, it was all part of the learning curve. Then it got expensive. Now it is very expensive, and many young people (and their parents) are going to be looking at the risk-versus-reward equation a lot more closely. Your erstwhile Aftermarket Editor can attest to the fact that it was somewhat deflating to finish a three year degree in 1999, the hardest thing he had done up to that point, only to find his actual course name-checked on an episode of TV’s The Simpsons as a gag. He was lucky though as he was among the last intake to have tuition paid for. Nowadays, you want to make sure your course of study is not a comedy punchline. If not, the cost is high.
    
If you are going to invest a large chunk of your life to become qualified in something, and you are going to do that thing for the rest of your life, and getting that qualification is going to cost you lots of money, you want to make sure that it is going to work for you.
    
According to the Universities and Colleges Admissions Service (UCAS), the centralised body through which university applications are made, in 2018 there were 11,000 fewer university applications compared with 2017, an overall decline of 2%. While there were fewer 18-year olds in the population, the number of mature students applying was also down.  

Rising costs
Some observers have pointed at the rising cost of tuition fees and attendant long-term debt as the reason university applications have dropped, but perhaps there is more to it than that. Of course, the other assumption is that everyone wants to spend another three years, or perhaps more sitting in classrooms. Admittedly things are a bit more informal, but many people just want to get on with actually doing something.
    
John Kerr, Operations Director at training provider Develop Training Ltd (DTL) recently observed: “Instead of racking up student debt, apprentices earn while they learn, and apprenticeships provide other ways of learning for those who aren’t suited to academia. Apprenticeships can also generate social mobility, even beyond what might be expected from gaining a practical qualification and a well-paid job.”
    
This is a good point. Going out and getting a job gets you paid. Upping sticks for university and getting a degree means you have a useful qualification, in theory. Imagine if there was some sort of institution that combined these two things. Hang on…
    
Apprenticeships offer a real and practical way to work towards a career for young people, one that does not involve huge amounts of debt. It also makes you actually employable. If you put this on a side of a bus, you might even get people to vote for it. Maybe it would help if apprenticeships could be accessed in a similar way to the UCAS model, where one applies for a number of positions at the same time, but that is a topic for another article. After all, in a world of rising university costs, a non-academic route should be an enticing alternative. This is also good for businesses providing the apprenticeships, as they get to hone the raw material that is the young person into something that resembles a useful employee. Also, thanks to the Apprenticeship Levy, there is ample funding available What’s not to like?
    
Despite this the automotive aftermarket still faces a skills crisis. This is a serious, and large industry with lifelong learning opportunities. So why are there still not enough technicians?
    
Then we get to the issue of the pitch being made to potential candidates. It’s all about the presentation.
    
Has the automotive aftermarket presented itself well enough as a career option for young people in the past? Probably not. As an industry, it is somewhat diffuse, with thousands of individual outlets as opposed to large monolithic entities that parents can point at and say “This.”  The structure of the industry also went against it in funding terms, and between the collapse of traditional apprenticeships during the 1970s and moves to rebuild the route in the 1990s and later, getting an apprenticeship could be a dicey business, for employer and employee alike. Things are improving however. In the last few months, as covered in Aftermarket, the aforementioned Apprenticeship Levy has seen some reform that makes it more user-friendly.

Development  
Institute of the Motor Industry (IMI) Chief Executive Steve Nash observed: “With a decline of 24% in the number of people starting in-work training, an extra £90 million of government funding has been issued to give businesses the flexibility to take full advantage of the benefits of employing apprentices. The motor industry already recruits 12,500 apprentices each year, and the sector isn’t showing any sign of slowing down. Developments in new technology have meant new opportunities and careers have become available for young people – businesses must adapt to futureproofing their workplace by investing in this.”
    
Of course, just having the facility to run apprenticeships is not enough. You need to attract young people towards the programme, and bring the parents along for the ride. They pay the bills after all. Careers advice is key in this area, so promoting the ongoing learning opportunities available will certainly help the situation.
    
“The IMI’s research found careers advice and guidance about vocational learning opportunities is needed more than ever,” said Steve. “Just 5% of those surveyed on behalf of the IMI were aware that you could earn money while you study – a sharp drop compared to 20% in 2014.
    
“There is also a huge gulf in parents’ perception of the career opportunities offered by the motor industry. Just over a quarter (27%) said they would be happy for their child to become a vehicle mechanic, compared to 59% of parents favouring a career in engineering. And 8% said they would be embarrassed to tell people that their child worked in the motor trade.
    
“Careers advice in schools is worryingly inconsistent and, in many cases, far from effective, yet that is only part of the challenge.  We mustn't underestimate the importance of ensuring parents are equipped to provide knowledgeable and accurate careers guidance to their children because they are still the greatest influencers on the choices their children make. The excellent opportunities offered by the automotive industry are still very largely misunderstood by anyone who doesn't have direct experience or personal contacts within the business.”

Opportunities
It’s not just about apprenticeships though. The long-term journey that a young person will be embarking on needs to be clear, and the opportunities for further self-improvement need to be apparent from the beginning. This is where continuing professional development (CPD) comes into play, and this needs to be promoted as well.
    
“The IMI is extremely proud to be the End-Point Assessment Organisation for the new Apprenticeship Standards that are being provided to the automotive sector,” commented Steve. “Working alongside manufacturers and employers across the industry, we have been able to create a suite of products that guarantee learners are being offered the very best training. Having a variety of new standards that range from customer service to technicians helps to make sure the sector’s training needs are met and businesses are fully prepared for when the old frameworks are discontinued in 2020.”
    
In the end, what we need to know is can the sector offer people the chance of a successful career in a way that they will respond to?
    
Steve thinks the industry is up to the challenge: “The government has made many changes to the apprenticeship system over the last few years, and as the professional body and an awarding organisation for the motor industry we want to ensure that the training for apprentices remains at a high quality. The IMI is continuing to support employers by offering advice and guidance to help them understand how best to use their Levy, whether that’s investing in new staff or upskilling their current workforce.”
    
If we are talking about skills shortages, Brexit may make the situation even better for those looking for new roles, and a bit more challenging for employers. If EU members of staff decide to head south to the continent – assuming Brexit goes ‘well,’ – the sector will face even sharper skills shortages. It would it need to up its game in retaining and  pursuing talent. Steve mused: “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.”
    
If the sector wants to attract the best, we need to show that it is a forward-looking industry that offers many potential avenues for ambitious young people. This is clearly the truth, but we need to make sure that message gets through to those who are supposed to be receiving it. That means working with sector bodies like the IMI and others. It also means working with schools and colleges to make sure that they understand what kind of industry it is. More than once in the past we have covered the issue of educational outlets having a view of the automotive sector that is not exactly favourable. We are not alone in this – many of the more practical industries are seen as a route for the less gifted. This is unfair on these industry, and on those who might gain most from them.
    
GCSEs finish in about three months, and A Levels just before that. Of course, there is not just this year’s crop to think about. There are thousands of potential top-tier techs coming through the system every year. Let’s get the message out there.


The importance of continued training

Andy looks at why ongoing training is so vital for professionals in the garage sector, as well as the businesses that employ them
Published:  26 March, 2019

By Andy Savva


part ONE: ‘You owe me!’

Adam Bernstein examines the pitfalls of making deductions from employee wages
Published:  20 March, 2019

As an employer, have you ever found yourself in a situation where you need to make a deduction from an employee’s wages? Are you confident that you know the legal rules in this area? Andrew Rayment, a Partner in the employment department of law firm Walker Morris, has seen this question arise many times with employers who have made the wrong decision.
    
He offers an example to illustrate the point. A worker has had to take three weeks off work because of a bad back. He is paid statutory sick pay but there is no company sick pay scheme to top this up. He has three young children to support and the employer knew he was going to struggle to make ends meet. The employer ‘topped him up’ to his full wages for the three weeks as a ‘loan’ to help him out. It was agreed, however, that the loan was to be repaid when the worker was in a better situation. The payment was through payroll so the money was received as ‘wages’.
  
 “The problem in this case was that everything was done on trust, so nothing was written down or confirmed in writing,” and as Andrew continued, “a year later the worker resigned after a disagreement. During the interregnum, the period between handing in his notice and his departure, he didn’t repay the money, so it was simply deducted from his final wages payment.” The agreement for the loan was verbal and there was nothing written into his employment contract for the employer to make deductions from his wages.
    
As if to inflame the situation, the worker subsequently filed a claim in the Employment Tribunal for unlawful deductions from wages and the employer was ordered to repay the sums deducted.
    
As Andrew says: “It seems unjust, but these were the actual facts of an Employment Tribunal case. But there is a further sting in the tail. Once an Employment Tribunal has ordered an employer to pay back an amount that has been deducted unlawfully the employer cannot attempt to recover that money later in another way, for example by bringing a civil action in the county court.” This rule, he adds, applies even though the sum may have been properly due from the employee to the employer. The fact that the employer has sought to recover it unlawfully effectively extinguishes the previous debt and the employer does not get a second bite at the cherry.

What does the law say?
Section 13 of the Employment Rights Act 1996 sets out the provisions that protect workers from unauthorised deductions (known as unlawful deductions) being made from their wages.
  
 “Quite simply,” says Andrew, “the law says it is unlawful for an employer to make a deduction from a worker's wages unless the deduction is required or authorised by statute or a provision in the worker's contract; or the worker has given their prior written consent to the deduction.”
    
Worse still for employers, he says that unlike breach of contract claims which can only be brought after the employment has ended, employees can bring unlawful deductions claims in the Employment Tribunal while their employment is ongoing.

Who is protected?
The law applies to all workers and includes not only an employee, but an individual who has entered into ‘any other contract... to do or perform personally any work or services’, unless the individual is carrying on a ‘profession or business undertaking’ and the other party to the contract is ‘a client or customer’ of that undertaking. In practice, anyone who is on the payroll regardless of whether they are full-time, part-time, casual, direct agency hire or zero-hours will be protected.
    
Andrew cautions employers that following a raft of recent cases on worker status many self-employed contractors may be deemed in law to be workers regardless of the parties’ intentions or the contractual paperwork.
    
In essence, workers are protected from having deductions made from their wages except in certain specific circumstances. Says Andrew: “The law puts the onus firmly on employers to obtain authorisation from the worker to any deductions before they are made. The overriding aim is to protect staff from unscrupulous employers, but employers also need to protect themselves against falling victim to the strict legal rules.”




The importance of continued training

Andy looks at why ongoing training is so vital for professionals in the garage sector, as well as the businesses that employ them
Published:  26 February, 2019

By Andy Savva


To train or not to train?

Making sure staff keep up with training will mean your business stays ahead of the curve, where it needs to be
Published:  21 February, 2019

By Andy Savva


part two: Putting a contract out on your staff

Adam Bernstein examines the measures employers can put in place as a part of employee contracts
Published:  05 February, 2019

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.”




Out of sight, but out of mind?

Neil Pattemore looks ahead at the host of legislative challenges the aftermarket faces over the coming months and years
Published:  01 February, 2019

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


part one: Putting a contract out on your staff

Employment rights apply even if there is no written contract, so employers need to read the small print even if it is not there
Published:  14 January, 2019

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.




Will there be an aftermarket after Brexit?

Neil takes a look forward at the legislative landscape that the UK’s exit from the EU could create, and how the automotive sector might fare
Published:  04 January, 2019

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


Miller on a mission: Just say NO!

Top Technician 2018 winner Shaun Miller is one of the brains behind a growing online campaigning to change attitudes on the fitment of customer supplied parts
Published:  19 December, 2018

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


When the stars align: Robertson Gemini

Aftermarket visits Robertson Gemini Ltd to find out how an independent garage is showing the rest of Dumfries and Galloway how it is done
Published:  13 December, 2018

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.


Unfinished monkey business

With her business head on, Hannah looks at the issue of training, staff retention and the skills shortage
Published:  06 December, 2018

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.’  




When the levy breaks

Apprenticeships returned to the top of the agenda last month following announced changes to the Apprenticeship Levy. Is it working for you?
Published:  27 November, 2018

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.




Managing a winning team

Last month, Neil Pattemore looked at the importance of planning for the whole business. Here he examines how to plan towards great staff management
Published:  29 October, 2018

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


Head for the Brexit

Everyone has an opinion on Brexit, so we thought we would see how things look to garage owners around the UK
Published:  18 October, 2018

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.


part TWO: Succeeding with succession

Adam Bernstein continues his examination of how businesses should handle a hand-over
Published:  11 October, 2018

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 in the garage business

Andy takes a look at the importance of customer care. Never forget: If you don’t care for your customers, someone else will take them away
Published:  03 October, 2018

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:


Skills, bills and jaw-aches

Hannah Gordon looks at how a garage owner needs top level skills business savvy and be a talker to succeed
Published:  27 September, 2018

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.


Do you have a business or a profitable job?

If you have a business, are you an entrepreneur in the classic sense or are you just your own well-paid employee?
Published:  24 September, 2018

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:


What’s new pussycat? Throwing light on the new Directive

Barry Babister from MOT Juice takes a look at the changes to the scheme and the Directive EC.2014/45, which forms a large part of the Annual Training Syllabus for 2018-19
Published:  19 September, 2018

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


Part one: Succeeding with succession

Adam Bernstein looks at the thorny issue of handing a business to the next generation
Published:  12 September, 2018

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.


Exploiting Aircon

Air-conditioning offers an opportunity but are you making the most of it?
Published:  07 September, 2018

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.


Bigger is better – right?

There are many things to consider when expanding a business, Neil Pattemore investigates
Published:  03 September, 2018

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!


Price versus quality

Investing in a quality service comes at a cost but is it worthwhile?
Published:  20 August, 2018

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


Certifying your future

As software becomes prevalent so does the need to be up-to-date with how to deal with it securely
Published:  14 August, 2018

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.


Vehicle Type Approval revisions: Threat or opportunity?

Neil Pattemore looks at how the regulations should inspire both hope and caution in the aftermarket
Published:  01 August, 2018

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


Train in vain?

In a rapidly changing business environment it can seem like you are being left behind. How can you keep up? By hopping on the ‘train’, that’s how...
Published:  27 July, 2018

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.




Annual training is sadly not enough

Barry Babister from MOT Juice exposes the deeper needs of the DVSA when it comes to CPD
Published:  21 July, 2018

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:


Financial understanding in the garage business

Andy Savva has joined Aftermarket as a new regular contributor. In his first article he asks how many garages really understand finance
Published:  16 July, 2018

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.  


Your profitability and how to increase it!

Three secrets you can implement today to drive your business forward
Published:  10 July, 2018

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.


She’s the boss

Hannah Gordon tells us what is has been like becoming the boss in 2018 as she starts her own garage business
Published:  05 July, 2018

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.


What’s it worth to you?

Businesses live and die on what they charge their customers. When it is what you live on, why can it so often be such a controversial issue?
Published:  25 June, 2018

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!



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