22 Jul 2024
The voice of the independent garage sector

“Reasons to be cheerful?” Garage market continues to react to Budget 2021

The automotive sector has continued to give its views on the potential impact of the March 2021 budget.

IAAF Chief Executive Wendy Williamson observed: “The extension to the furlough scheme and increased access to grants and support is welcome. It gives aftermarket businesses more breathing room following a very difficult period. While more details will be announced, the new 130% first-year capital allowance for qualifying plant and machinery assets will continue to assist our members who have continued to invest. Businesses face countless challenges currently across numerous fronts and so it’s important they are provided with the support they need to grow and develop.”

Andy Hamilton, CEO of LKQ Euro Car Parts, said: “2021’s Budget has given the independent aftermarket some reasons to be cheerful after a long and tough year. The extension of furlough until September was a welcome surprise. It will give garages time to get back on their feet after restrictions hopefully come to an end in June, avoiding a possible cliff edge event. Importantly, it will allow the garages that will lose volumes of usual MOT work through April to July to cushion the gap and prepare for the new demand curve that we’ve seen through the later months of the year. The new small business corporation tax rate, business investment tax relief and funding for digital training all also have the potential to be really promising for the industry’s SMEs.

On the measures around training he observed: “Support for apprenticeships and traineeships is also hugely positive and cannot come soon enough. The lasting scars from the pandemic are likely to come in skill shortages as the usual cohort of fresh talent joining the sector every year more or less dried up because of the pandemic, with colleges also struggling to deliver courses. With the aftermarket leaning into some transformational changes over the next few years – from increasing digitisation to the rapid growth of the hybrid and EV parc – it will need all the support it can get to make up lost ground.”

Andy concluded: “It’s rarely the case that garages need an incentive to take on apprenticeships. The aftermarket is one area of the economy where the practice has been embedded into everyday business for decades. But they do need funding when workloads remain suppressed from their pre-pandemic levels.”

Philip Nothard, Chair, Vehicle Remarketing Association, said: “What the remarketing sector probably wanted to see more than anything from this Budget was a continuation of the kind of support needed to sustain the economy as we come out of the Coronavirus crisis and it seems that the Chancellor has delivered on that front. Especially once showrooms reopen in the Spring, we want to see a situation where individuals and businesses can feel confident in making used car and van purchases, and factors such as the extension to the furloughing scheme should play an important part in this.

“The downsides for business were few, such as the increase in corporation tax, and the super deduction is an interesting idea that could genuinely power a degree of growth. We also welcome the new measures to encourage apprenticeships, which could be of interest to companies right across the remarketing sector.

“At some point in the future, we’d like to see more detail about the government’s plans in all kinds of areas directly affecting the motor industry, from road tolls to on-street EV charging, but for the moment, this seems to be a Budget that ticks most boxes.”