Going exponential with the IGA The IGA hasn’t been dealing with a single big issue for its members and the wider industry in 2020, it’s been dealing with a multitude. Coronavirus was just the starting point for a whole host of challenges for the entire sector.
Let’s unpack it all. COVID-19 necessitated the lockdown, which led to the furlough scheme. As a result we ended up with the MOT exemption, which eventually provoked a campaign to end it as soon as possible. While this was going on, there was also the problem of getting garages classified as retail so they could claim for business rate exemption. Once we came out of all this, businesses needed to start thinking about how to make the most of a good situation by promoting themselves more effectively and making enough money, while coping with about a year’s worth of MOTs squeezed into three or four months. This is just the headlines. Talk about exponential growth.
Belonging
Heading up the industry fight-back on about five fronts, was IGA Chief Executive Stuart James. He and his team have been pretty busy since March: “During the Coronavirus lockdown period between March and June, we were flat-out. We had a great number of fights, but garages realised that the value of belonging to the IGA far outweighs what we charge in terms of the actual return on investment.”
Reflecting on the impact of the lockdown, he observed: “Lockdown itself was a really difficult time for garages. First of all, the government said garages could remain open to support essential workers, which was a very sensible thing to do.
“The reason the government did it makes sense; to keep people in their houses and to keep them isolated. I understand that, but for garages it absolutely took their workflow away, and crippled a great number of businesses. The garages were furloughing their staff, and about 50% of independents shut down.
“We supported the government’s efforts throughout this whole crisis, because it has never happened before and everybody was learning as they went. Then of course the government announced the six-month MOT exemption, which for 19,500 independent garages means losing their primary source of income.”
Commenting on the IGA’s efforts to resolve the inconsistencies in local authorities’ classification of independent garages within business rate relief legislation, Stuart said: “The other main area of support that the garages needed was of course access to business rates relief. Garages were originally excluded from the list of businesses that were entitled to the rates relief.”
The IGA campaigned for garages operating from industrial premises to be specifically included on the list of businesses eligible for the Retail Business Rates Relief Scheme, enacted as part of the government’s support measures for businesses.
“We really took that battle to the government, and they were very responsive,” continued Stuart. “We supported garages individually who were fighting for the rates relief and we ended up with a very high success rate. It took an appeal, or two or three attempts in most cases, but a great number of councils conceded that they were supporting consumers and that they were retail operations, and they paid out. There were nine councils that were particularly challenging, but on the whole most of them accepted that garages were retail and were entitled to that rates relief.
Strengths
This is of course where a trade association’s real strength is – being able to fight for individual businesses and for the whole sector.
“Yes,” confirmed Stuart, looking at the IGA’s overall efforts over the period, “and for the garages, it was a real time of need. I hold my head up high, in knowing that when our members need us, we are there. It was the whole industry as well though. We really were there for them. We put the battle in.
“We wrote to the Chancellor of the Exchequer and we wrote to the Transport Secretary, who wrote back to us in just over a week! We then sent the responses out to our members, so they could see actually what we were doing. We were very transparent and open about it. I will say that the government has been very responsive. We pushed the Chancellor for a flexible furlough scheme, and again his response was very positive. He introduced the new flexible furlough scheme and brought it forward to July, when it was originally scheduled to take place from August. They took on board our arguments and I applaud them for that.”
Online presence
While the IGA has been flat-out supporting the sector through COVID-19, the organisation has also managed to keep producing material for its membership. In September, IGA members received the Garage Guide to Online Presence, a paperback book produced in-house that shows garages how to take control of their online identity.
The growth of online work providers has been seen as having created a barrier between garages and their customers. While it might not be on purpose, the result is the same. “There is a perception that we have an issue with work providers,” commented Stuart, “but that’s not the case. Our concern is the way they work. As they become stronger and more known to the consumer, they create a break between the consumer and their customer. You have got an intermediary in the middle. The garage will then start to lose its identity, in favour of the work provider.”
“The Garage Guide to Online Presence covers everything garages need to promote their own identity online, whichever way they want to do it – websites, branding, social media, online reviews, it is about their online presence across the board. It is there to help garages from a beginner’s guide to a more advanced level.
“This too is part of the COVID-19 situation,” added Stuart. “It is trying to give garages their own identity. We like to offer our members support and guidance in every aspect of their business.
Labour rates
Another area where the IGA will be providing support to the sector is through the UK Independent Garage Labour Rate Study 2020, which was about to be published as the November issue of Aftermarket went to press.
Giving us a sneak-peek on the soon-to-be-unveiled findings of the study, Stuart observed: “When you look at the results of the labour rate study, in many cases garages are working for less than the net recovery rate. There are other things that have come into the equation over the years, such as work providers, increased costs and things like utilities, salaries etc. When you look at it year-on-year, the net recovery rate a garage brings in has gone down.”
Yes folks, the IGA are suggesting that if you want to stay in business, you need to be making money. It sounds obvious, but if it is, why are so many garages still undervaluing what
they do?
“The one thing that this report absolutely defines,” observed Stuart, “is the outstanding value for money the consumer gets from an independent garage. It is unquestionable that the rates they pay are unbeatable in comparison to other repair outlets, and the abilities of an independent garage are always at a very high level.
“However, our survey shows that while the costs of running a business have increased, at different varying levels, the rates of fee increase have not followed.”
It has to be said, that very often a garage may have worked out their labour rate by picking a number that sounded about right, but was never realistic to begin with. If you don’t go up, you will keep falling behind. We suggested to Stuart that the level of investment needed going forward, if you take into account the government’s all-EV road to zero, and the growth of systems like ADAS, is enormous.
“The level of investment needed has always been enormous,” he accurately countered. “It is very expensive to buy equipment, to dispose of chemical waste, take constant training, implement workplace legislations surrounding things like MOTs and Health & Safety, and everything else that comes with running a garage. If you look at it in the cold light of day and the cost of that, there has to be a margin of profit and a margin of cash left to stay modern. What this shows you is that garages are earning a living, but they are not making the money that they deserve to make.”
Looking ahead
Also as we went to press, the furlough had ended, with the slack in the system being taken up by the Job Support Scheme. Looking towards the end of the year and beyond, with the threat of rising Coronavirus levels and the impact on businesses, Stuart said: “There is pressure on every business, even our own. Children have gone back to school and the winter colds are starting; I don’t think there is a business in the country that has not been affected.
“It is a challenge for any business, but I think the government are doing everything they can. There is lots of work out there at the moment and businesses can open their doors, but we don’t know if the government will ultimately be forced to put in another lockdown.”
There are some positives though as far as Stuart is concerned: “Just look at it this way; The government introduced a six-month exemption of MOTs, and dropped it after four months. We are absolutely delighted that they saw this, realised it was the right thing to do, and revoked it early. We pushed very, very hard for that.
“The feedback we are receiving is that most independents are absolutely flat-out. The MOT exemption has ended now, and a great number of garages are chock-a-block with MOTs and the work that surrounds them. One in three cars fail their MOT anyway, but any person that took advantage of the exemption cannot drive their car if it fails its MOT, which has generated a large amount of additional work.”
Stuart concluded: “From the independent garage perspective, we are coming back together in the best way possible now. The garages have plenty of work coming in, and the people are there. In the state of affairs that we are in, that’s as good as it gets.”
