Archive | January, 2017

LATEST: BRAKEWORLD IN ADMINISTRATION

LATEST: BRAKEWORLD IN ADMINISTRATION

Leeds-based supplier Brakeworld entered administration on January 31. The company had been trading since 1986.

The independently owned braking and filtration supplier started as Blaze Glow Ltd in 1981, but changed name and business model in 1986 to become Brakeworld. At the time of closure, the company supplied over 7,000 lines and stocked brands including Japanparts, FTE and Sofima.

We’ll bring more info as we get it.

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KEEPING CARBON AT THE CORE

KEEPING CARBON AT THE CORE

Christopher Shelley takes CAT on tour around Dymag Wheels production facilities in Chippenham

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Whether you’re a fan of superbike racing or a sports car enthusiast, there’s no doubt you would have come across Dymag Wheels, who have produced wheels for 43 years and more recently introduced some extremely light – and very sexy – rims made from carbon fibre.

The firm has been busy of late with a new Research and Development programme, designed not only to bring the wheels to market, but also implement an efficient and profitable manufacturing process, as Christopher Shelley, Chief Executive of Dymag Wheels, explains: “The product we have developed with the Advanced Manufacturing Supply Chain Initiative – a funding programme to improve global competitiveness, has enabled us to develop a product and low cost high volume manufacturing process, which are our two key things to market”. Shelley has also been working closely with the National Composite Centre in Bristol on the production of these carbon wheels.

PRODUCTION
We were keen to see the production process in action. “Typically we make the wheels to order which includes the colour, style and application before we distribute them to customers” said Shelley, adding that it would not be unusual for a set of four wheels to cost £14,000.

The first stop on our tour was the Machine Shop, home to milling machines whose purpose was forging motorcycle wheel hubs and centerpieces to the wheels, before ending up in the Paint Room next door, which on our visit, had a number of BAC Mono Wheels awaiting a spray job. However, the unit that caught most of our attention was a two- minute drive up the road where the main production is based. Shelley elaborated: “We are looking to develop the manufacturing process here with the help of the National Composite Centre, where we have a couple of other rooms like that over there; developing machines to automate the manufacturing process.” He added: “We lay up carbon wheels individually where we look to bring more semi- automation to speed up the manufacturing process and improve repeatability”. If all goes to plan, Shelley said the facility is hoping to roll out 10 carbon wheels per day.

PROJECTSDymag Wheels in production
Before hitting the road, Shelley wrapped up proceedings by discussing the firms business propositions for 2017, which includes building a UK and international dealer and distribution network. “We have a lot of investment going on where we’re looking to Dymag Wheels in production progressively build up our own distribution company”, replied Shelley. “Dymag Japan has been set up in Yokohama, we are also setting up Dymag USA, and selling directly to dealers in the EU from our UK base”, adding that the Dymag China group will complete the companies plans for ‘world domination’.

Shelley informed CAT that the wheel manufacturer is going through a tooling programme to expand its current range of sizes and fitments and will be presenting its next generation product at the SEMA show in Las Vegas. All of this, plus housing its seven units under one roof in a 20,000 – 40,000 sq ft facility in the Wiltshire area, it’s fair to say the company’s hands are full at the moment. We definitely will roll by for another visit to see Shelley and the team in their new digs later this year.

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IS YOUR GARAGE BUSINESS SITTING ON A GOLDMINE?

IS YOUR GARAGE BUSINESS SITTING ON A GOLDMINE?

Existing customers are the key to reaching that pot of gold, writes Andy Vickery

Andy Vickery is a consultant for the aftermarket

Andy Vickery is a consultant for the aftermarket

If you’re worrying about your garage’s declining MOT or servicing count, or the fact that you’re having to take more and more low value work from online referral sites, did you know that you could actually be sat on your own pot of gold that could be a solution to your worries?

This pot of gold is likely to be in your computer and contained within your garage management system – and it’s called ‘customers’. Obvious really, but in reality, existing customers are very often overlooked in terms of marketing or gaining more business in favour of chasing new customers.

Outside of the garage trade, marketing to existing customers seems to be a recognised and well-implemented method of maintaining and indeed increasing business. But for some reason, many garages are yet to take this on-board.

I know this to be true because I have talked to and worked with many garage owners who have databases of many thousands of previous customers and when I’ve asked them how often they contact them, they say ‘never’. They might send the odd MOT or service reminder, but that’s it. One garage owner I met, who’d been in business for 30+ years, who was recently struggling, and was clearly cynical about marketing in general, actually said to me: “why would we want to waste money contacting customers? They’ve used us before and know what we are like”. Not his fault for thinking this, you would kind of like it to be the case, but consumer buying procedures and habits are now changing, along with technology that is potentially disrupting what we once assumed or could rely on.

A strategy of marketing to your existing customers can be extremely beneficial to your business for many reasons, but before I go into those reasons, I’d like to rollback slightly to the importance of making sure you capture customer information in the first place.

ARE YOU CAPTURING YOUR CUSTOMERS’ DETAILS?

Making sure you have your customers’ ‘full’ contact details is extremely important for your business, but it still seems that many are uncomfortable with asking for this. Along with a customer’s physical address, you need to make sure you obtain an email address and mobile phone number.

This should become standard procedure when booking in a customer or at the point of handing back the car. It’s probably better at the outset as you can state that you may need to contact the customer. You can also make it a standard procedure to email receipts/ invoices to customers, a bit like some large retailers do. If the customer is reluctant to give details, tell them that they will be able to have a record they can file on their computer that will be handy when they come to sell the car. This is just an idea, but hopefully you get the picture – there are ways of gently getting this information, but you may have to counter a customer’s natural objection to disclosing personal info’ – tell them they will be entered into your monthly draw if it helps.

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EXISTING CUSTOMER DATA
So it is a great idea to implement a standard procedure for obtaining all customer information, but what about your existing customer information? Many businesses will have data that is incomplete or lacking email addresses or mobile phone numbers purely because they date back to pre- technology days.

In the first instance, it would be good to go through the data that you do have to try to categorise it somehow for future marketing. Obviously if you don’t have email addresses, you won’t be able to email those customers, but ‘lost’ customer letters and mailings are still a good technique of bringing business back in. You can then update the customer details when they come in.

WHY MARKET TO EXISTING CUSTOMERS?
Let’s try and answer the question raised by the garage owner who didn’t think it was necessary to market to existing customers. Customer long-term value: In the first instance, customers should be viewed in terms of their ‘long term value’ – not just a one-off sale. In terms of marketing, maximising the long- term value of a customer is much more cost-effective than trying to obtain new customers. If you consider the value of a customer over five or ten years, this will help you understand the value of investing in marketing to retain them.

Customer retention: Is there such a thing as brand or customer loyalty anymore? Yes, this is still alive and kicking, but it has to be worked at and earned. People have very short memories and can be easily tempted by other offers, especially if they are not shown that they are appreciated or important. Staying top of mind is extremely important if you want customers to return year-on-year, especially in this highly competitive and technologically disruptive age.

Upselling other services:
Making sure your customers are aware of your complete range of services is very important in terms of maximising their value. This will also make sure you don’t lose out when a customer goes elsewhere for a service that you could have otherwise provided. You may have recently added services; you may offer tyres, you may be air conditioning specialists – but you shouldn’t take for granted that your customers will know this.

Displaying your expertise:
Customers will often have questions in mind when they need help with their motors. They may have come to you for a service or MOT, but do you offer diesel diagnostics? Can you work on the brand or model of new car they’ve just purchased? Can you work on electric hybrids? It’s easy to assume that a customer would know this, but often it’s not the case. This sort of information must be given to existing customers on a regular basis, that way you will stop them going elsewhere for services you provide.

Justifying prices: When we did a survey a while back, although price was important to customers, it wasn’t the most important reason a garage retained their best customers. In terms of your ideal type of customer, you stand a better chance of justifying your particular level of pricing when you regularly communicate what you can do and your levels of expertise, that way, customers will understand the value of what they are getting and won’t question price.

Getting referral business: A key reason for marketing to existing customers is to stay top of mind when they need you, but a by-product of this is you also stand a much better chance of getting recommendations and referrals from your existing customers. You can even use this as a reason to contact existing customers, telling them that they will be rewarded for referrals.

TURNING YOUR EXISTING CUSTOMERS INTO GOLD
So whilst you might be sat on a goldmine, you will have to work at it and ‘mine it’ to convert its value. This can be achieved by regularly staying in contact with your database of existing customers. By doing this you will make sure they keep coming back to you year-on-year, buying more services from you, whilst also recommending you to others – that’s the gold!

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A1 ACQUIRES NEW MEMBERS AND WAREHOUSE SPACE

A1 ACQUIRES NEW MEMBERS AND WAREHOUSE SPACE

A1's Simon Salloway

A1’s Simon Salloway

The A1 buying group has added Hinckley Motor Spares, Auto Bitz (Worle) Ltd and The Motorcraft Centre (Northern Ireland), to its motor factor membership.

The new appointments brings A1’s total to 174 members and 250 stores nationally, with further plans to increase numbers thanks to a 3,000 sq ft. extension on its distribution centre, opening in March.

Simon Salloway, Head of Operations at A1 Motor Stores, said. “The initial purpose for extending the existing 13,000 sq ft. warehouse, was to allow members to choose a single pick item across their basket spend of products; so if they only need one friction line, along with all their oil, they can purchase this at A1, instead of going through a supplier to put a minimal carriage order together”. He added: “We are now extending our original offering by putting a core range of items in the warehouse including friction and filtration products as well as paint lines and ancillary oils”.

Building work will commence in February, where the firm will start collaborating with its supply customers to move wares into the new space after completion.

Commenting on the new membership, Peter Lippett, Director of Auto Bitz said: “We’ve known about A1 Motor Stores for a while now. We sort of used them in their warehouse before, so we decided to sign-up”. He added: “The benefits of joining will allow us to receive rebates from companies affiliated with them, however, A1 is currently finalising the terms of our contract with them”.

The group also confirmed it will be exhibiting at this year’s Automechanika Birmingham show.

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FOUR YEAR MOT PROPOSAL FROM DfT

FOUR YEAR MOT PROPOSAL FROM DfT

Junior transport minister Andrew Jones

Junior transport minister Andrew Jones

The government has launched a proposal to increase the time for new cars to have their first MOT from three years to four.

“New vehicles are much safer than they were 50 years ago”, said Junior Transport Minister Andrew Jones, “So it is only right we bring the MOT test up to date to help save motorists money where we can.”

Unsurprisingly, this has not gone down well with aftermarket trade bodies. Stuart James, from RMI,’s Independent Garage Association said: “This proposal would, without doubt, cost consumers more in repair costs, incentivise “clockers” and be detrimental to the UK’s excellent road safety record for no particular gain.” He continued: “At the three year period alone this change will see 400,000 unroadworthy cars on the road for another 12 months and no official mileage recorded until year 4”. James also mentioned that a fine and three penalty points for a ‘blown’ tyre exceeds that of a £54.85 MOT test if the car had been checked by the garage prior.

Wendy Williamson, Chief Executive of the IAAF, concurs with James. She said: “40 percent of all cars fail their MOT currently but even with improvements in vehicle technology, the main causes of MOT failure is still brakes, tyres and lights.”

“That is something clearly down to use of the car and we would oppose the DfT’s proposition on safety grounds”, adding that Britain has the safest roads in Europe on record with the current 3-1-1 MOT reinforcing this.

The IAAF has opened the statement up to its members for comment as both the IAAF and RMI prepare reports to respond to the DfT’s consultation before the proposed deadline on 16th April. If all goes to plan, new rules will apply from 2018.

Interestingly, the government statement was published in error two weeks before it was officially announced, giving trade bodies and road safety groups plenty of time to prepare their ammunition.

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UP-SELLING ON OILS AND LUBES

UP-SELLING ON OILS AND LUBES

There’s a profit to be made on oils and lubes if you have the right strategy in place

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A market trend has started to form with the introduction of very low viscosity oil grades, designed to improve fuel efficiency and oil change intervals; opening up-selling opportunities for oils providing you can find exactly the right grade.

MARKET TREND
Mike Bewsey, Comma Oils Sales & Marketing Director, says that while 5w-30 remains a popular grade; this could be subject to change. “5w-30 products remain dominant as OE spec, but the future market trend as signaled in applications for the latest fuel efficient and hybrid engines is moving towards even lower viscosity oils in the 0w-20/- 0w-30 range” he said.
Chris Wall, Marketing Manager at Total Lubricants, concurs, saying: “It’s all about optimising engine efficiency: a balance between engine performance, engine protection and even fuel saving”.

INCREASING SALES
Our oil experts suggested a couple of ideas that will sweep those products off the counter and into the customer’s hands. Bewsey advises technicians to offer top-up cartons when the vehicle is being serviced, so the motorist will have a litre of the correct grade handy for service intervals, by recommending a ‘top up’ with the correct specification. He said: “As far as engine lubes are concerned, the most straightforward and profitable method is to offer your customer the correct top-up oil for their vehicle. Sell your customer the appropriate 1 or 2 litre top up oil pack (s) at the time of the oil change service interval, and urge then to check their vehicle’s oil level regularly, whatever its recommended oil change cycle”. Steve Dunn, Sales Director of Exol Lubricants, agrees, suggesting that workshops should be stressing the importance of buying high quality oil grades to customers. After all, the last thing a technician needs is a dissatisfied motorist returning a few weeks later to find they have poured in the wrong formulation, causing damage to the engine. “Garages should ensure customers check their oil regularly and raise the awareness to some of the pitfalls of incorrect oils”, said Dunn. “By encouraging garages to promote the importance of good quality oil, motorists are more inclined to use premium products of greater quality that offer long- term benefits rather than a cheaper alternative”.

OIL SELECTION
The influx of oils and lubricants available for petrol and diesel engines can cause a cloud of confusion among technicians when distinguishing the correct specifications for the job, particularly for businesses servicing a diverse range of vehicle models. To jump over this hurdle, most suppliers have a VRM look-up system in place to help choose the correct formulation first time round. Martyn Mann, Technical Director at Millers Oils, elaborated: “Our website has a facility called Which Oil? Users can enter the vehicle’s details in to find out the correct oil and quantity for the engine in question”, Mann continued: “We also have helplines where people can speak to a member of our technical team or alternatively, e-mail their query to us”. Similarly, Chris Wall from Total Lubricants says the supplier utilises a tool called ‘LubAdvisor’, what does what it says on the tin. He explained: “This easy to use tool allows technicians to look up the specific make and model in an instant, enabling them to make the right choice with confidence every time, with the information also available through industry cataloguing systems adopted by some of the big motor factor groups”. Les Downey, Managing Director of Lucas Oil adds: “The garage only needs the VRM, a PC and access to any one of a wide range of online tools and the specification is there on the screen. Alternatively, the motor factor can provide the advice”.

DEVELOPING ADDITIVE PACKS
Developing additive packs in house is a very expensive and time-consuming business, but as the number of VM-specific oil references grows it is necessary for oil blenders to either develop their own additive packs (which then need to be approved by the VM) or buy directly from additive suppliers. One company that buys ad packs in this way is SCT, which produces and distributes the Mannol brand in the UK. Jevgenij Lyzko from the firm says: “Our factory uses Infineum as additive supplier, as we highly trust their quality and professionalism”. He notes that his firm now produces various VM-specific lubes, which are easily identifiable by the black packaging, which have seen strong sales in the UK since being introduced two years ago.

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CHANGING TIMES FOR BRAKE PADS

CHANGING TIMES FOR BRAKE PADS

Overseas’ and EU regulations has seen a range of old and new braking technologies come into play, writes Daniel Moore

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The steady growth of the UK parc along with VMs’ consistent goal to downsize engines in line with emission laws, has contributed to numerous technologies being changed on the vehicle’s braking system.

EMISSION LAWS
There is a law that will soon be introduced in the US, which bans the use of chopped copper wire as a binding agent. There’s a perfectly good reason for this: Jonathan Allen, Motorparts Regional Manager at Federal- Mogul, explains: “Heavy metals build up in the water table. You can’t just remove copper from a component for one state or one country, it applies to a vehicle platform on a global basis where the copper has to be progressively removed from the brake pads”.

Federal Mogul removed copper from its pads some years ago, before the threat of legislation had become real, as had Delphi. SJ Sarkar, a Manager for Braking at the firm, “We have removed the copper from our brake pads, years ahead of the 2025 legislation but whilst still meeting the same rigorous safety standards” he said. “Our new formulation offers improved fade performance, and unlike some other brands, retains all its life too”.

It almost goes without saying that it is fundamental for brake manufacturers to conduct test protocols to evaluate the strength and performance of the replacement part, making sure it measures up to a prescribed tolerance of 15 percent of the OE part it’s replacing. Julie Boardman, Product Manager at Quinton Hazell, elaborates: “Any references introduced to the aftermarket from 1st November 2016 are now subject to this approval and our Quinton Hazell brake disc suppliers are 100 percent committed to this”. Dr. Keith Ellis, a Braking Director at Comline points out that R90 will no longer just apply to pads. “R90 regulations will become applicable to brake discs in the very near future, and Comline is already well down the line in certifying its product range. Again, as with pads, each disc is put through a uniform set of tests to guarantee the quality of
the product” he said, adding that all brands would take time to be fully compliant.

CORROSION PROTECTION
Of course corrosion is inevitable, but workshops can apply metal-free greases to prolong the service life of old and new brake parts entering the market as Scott Irwin, Technical Manager of Mintex highlights, “We can counteract corrosion by using a metal-free grease like Ceratec and apply it to the moving parts such as the calliper sliders and pads abutments.” He continued: “We can also stop the build up of corrosion by applying the grease to the underside of the abutment shims once the pad carrier has been cleaned down”. With the new standards and suppliers using different methods of producing high- quality products, the stage is set for a range of improved products that motor factors can tell their customers about.

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ECP REBRAND AND EXPAND FORMER HELLA IRELAND SITE

ECP REBRAND AND EXPAND FORMER HELLA IRELAND SITE

Euro Car Parts has re-branded a former Hella Ireland branch in Dublin. Now sporting the company’s familiar blue and yellow logo, the Dublin outlet is the chain’s first ECP-branded store in the Republic of Ireland.

Apart from the new signs, the branch has enjoyed significant investment to grow the services on offer. This includes increasing the number of vans from four to twelve and doubling the physical warehouse size to 90,000 sq ft. A modern racking system has also been introduced along with a new trading system.

Headcount will also go up from 31 to 48, with the ultimate goal for all of the improvements is to increase availability and reduce lead time.

Martin Gray, CEO of Euro Car Parts, said: “The business has been operating in Dublin since 1979 and has very experienced staff, some of whom have been working in the industry for over 30 years.

“We’re retaining this expertise and adding Euro Car Parts’ full product range to deliver service that goes the extra mile and continues to support existing customers. We’re expanding what is on offer by investing in additional infrastructure and resources.”

“We successfully partner with tens of thousands of independent garages in the UK and we are thrilled and delighted to extend that support to the Republic of Ireland.”ecp_stocked_shelves

Through parent company LKQ Corp, ECP took over Hella Ireland in August 2016.

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THE GREAT CONSOLIDATION OF 2016

Mergers and acquisitions in the aftermarket are an opportunity as much as a threat says Nexus CEO Gael Escribe

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If there’s a word to describe the aftermarket in 2016, it must surely be ‘consolidation’ and when we bring up the topic, it’s one that animates Gael Escribe, the charasmatic CEO of the Nexus trading group. “You are right” he said. “There is a consolidation happening and it is having implications on how a distributor is treated by a manufacturer”.

“Whatever alliance he [the distributor] is in, it has a price differentiation that is increasing between the large consolidators and mid-size players. That’s where the ‘phase two’ of the Nexus project will focus on”.

As the group was established just three years ago, we are surprised that there is a change of direction already, but it is one that Escribe is keen to talk about.

FOUNDATIONS

Founded three years ago, Nexus became established as a trading group in an arena filled by the members of groups like Temot, AAG and ATR [See December CAT – ED] Offering suppliers the chance to deal with distributors in markets that they were not currently active in, and member companies the chance to buy on a global scale gave it enough difference from the other groups to make it seem an attractive proposition for some. “Copy and paste doesn’t work,” Escribe explains, adding that there have been other attempts at starting trading groups, but simply being a ‘bonus collector’ doesn’t work. “Exposure to emerging markets is our ‘killer app’ and our big thing”.

Despite this, Escribe believes that the model that has been used over the past three years is becoming out of date. “I think the whole model has to evolve and we have to be one to generate and then to accelerate change in this old-school trading group style” he said.

“In the meantime, financial consolidators that are busy and I see that they are one more incentive for trading groups to evolve and provide our members with the right conditions to operate” he added. “My new obsession is to focus on providing our members with the economics that enable them to operate professionally and with growth plans, as they have in front of them a number of ‘consolidators’ that have emerged since 2008” he explained, elaborating:

“We will enter into central sourcing activities and migrate from listing suppliers to basically becoming a buying force. We wish to leverage the huge volumes we have to target the best price in Europe, whatever consolidator we have in front of us”. Escribe is careful not to talk about consolidated companies by name, although you only have to think of ECP and Page in the UK and WM and Trost in Germany as some of the larger examples of the year just gone.

Gael Escribe at Nexus Conference 2016

Gael Escribe at Nexus Conference 2016

FUTURE
So the question is, what can be done about changing the model CAT’s lead story from December issue that he views as being dated? Escribe says that Nexus is building a sourcing team in Hong Kong where an office has been opened. As has been an often been the case with this particular trading group, the timeframe is ambitious.

“We have a three year timescale, so I want to see some results in 2017, but in three years I want Nexus to be providing our members with the economics not only to survive, but able to pursue their growth plans” he said.

Although Escribe describes his strategy in modern business language, it seemed to us to be similar to the old buying group model, where a group of distributors would club together to get the best price out of a supplier. If this is the case, the number of suppliers that the group buys from must surely decrease in order to get the best collective price. This is not necessarily the case, Escribe assures us. “We will increase our compliance ratio that our members have with suppliers, that is essential. We have over 60 suppliers that are supporting us and that is where we are going to maximise our volumes”.

An increase in volumes means in turn suppliers will be leaned on to provide a more attractive price, something that Escribe does not deny. “Of course I’m going to ask more of suppliers – that’s logical” he says, as if he was surprised we asked. “By obtaining more, the numbers of Nexus will keep on growing. That’s the theoretical mechanics that will be our obsession for the coming years”.

BREXIT IMPACT
Moving parts around the world is well and good, but here in the UK Escribe is of the opinion that the referendum result will be felt in the aftermarket. “Brexit will have implications, let’s be clear” he said. “By having potentially less central European logistics in the UK, it might give a bit less comfort to UK distributors when they are leveraging the logistics side of the manufacturers”.

Escribe refers to one manufacturer that has a historic base in the UK, but he tells us it has taken the decision to re-locate to the Continent. We’ve been unable to confirm if this is the case with the company concerned, but Escribe believes this will be the first of many. “Unfortunately, that’s a perception I’m receiving” he told us.

“It will probably be bad news for the smaller and mid-size players who were relying on the high level service they were getting from those manufacturers. It’s an opportunity for Nexus and Parts Alliance, but I won’t make a final conclusion yet as it’s too early”.

While it might be an opportunity, we wondered if the Parts Alliance would have to change its business model. As you’ll see in the news section of this issue, the PA has started some sort of clean-up operation, with traditional brands including GMF being liquidated on paper. Nexus is not a member of the PA of course – in fact the opposite is the case, but we ask if the PA has a plan for change anyway. If Escribe knows, he keeps his cards close to his chest. “I think Parts Alliance over the past year has had a plan and that was to gain more leadership in the UK” he says simply, adding that it might have to adjust its logistics to counter what he sees as a likely movement by suppliers away from having bases in the UK.

DIGITAL ECONOMY
Any analyst will tell you that the next few years is likely to see great change, not only in the type of components purchased, but in the way in which they are bought. This is a point that Escribe is well aware of. “For example, the website Auto Butler is a Danish company that was sold to Peugeot and it wants Escribe at 2016 Nexus conference to be like Booking.com or Trip Advisor for the independent garage” he explains, adding that the group has invited a number of speakers to it’s winter conference (an event described by Escribe in his usual business hyperbole as the ‘Davos of the aftermarket’) where the issue will be seriously debated.

Escribe clearly believes that the plan for the next few years is going to work. “We are saying that you don’t have to spend billions of Euros on making acquisitions to lead in this market. Now you know there is another potential way that is less risky, probably less exposed to the digital revolution” he said. “It’s great for LKQ for example to multiply acquisitions, but what happens in five years if digitalisation goes quicker than expected? I’m more in favour in our model, which is less risky – but I have to prove that the economics you can get by spending millions, you can potentially get instead by leveraging the volume and bringing our members into a limited number of suppliers” he concluded.

We’ll be interested to see how Nexus and other trading groups develop over the next few years.

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THE COMPUTER WILL SEE YOU NOW

Data protection rules are changing: Here’s what the aftermarket needs to know

Andrew Gallie is a senior associate at Veale Wasbrough Vizards specialising in information and data protection law.

Andrew Gallie is a senior associate at Veale Wasbrough Vizards specialising in information and data protection law.

Data protection law has recently been updated by Europe and will be in place in less than two years. Despite the Brexit vote, businesses – large and small – need to note the changes as the penalties for breaches will be severe and adjusting to the new rules will take time.

The European Union’s General Data Protection Regulation (GDPR) was finalised at the end of April 2016 after four years of discussion, disagreement and negotiation and will directly affect all member states from May 2018. Firms have no choice – the GDPR is not going away.

But a question arises: Now that we’re scheduled to leave the EU, will the GDPR still matter? The answer is yes – it will. The Secretary of State for Culture, Media and Sport, Karen Bradley, before a House of Commons committee at the end of October 2016, formally stated that: “We will be members of the EU in 2018 and therefore it would be expected and quite normal for us to opt into the GDPR.”

TAKE THE LAW SERIOUSLY
The GDPR is not a monster but it needs to be taken seriously. Changes will be required, and if the required changes are not made then firms risk considerable fines and reputational damage. Indeed, under the GDPR, those organisations that breach the law could face a fine of up to four percent of annual worldwide turnover or €20m (whichever is the greater).

These penalties do seem geared to the larger firm, but a quick search of the Information Commissioners Office (ICO) website – the UK enforcer of data protection law – shows that organisations of all sizes are being taken to task.

PRESENTLY
The present data protection regime, under the Data Protection Act 1998 (DPA), protects a person’s rights in respect of their personal data and is built upon eight data protection principles. These are all common sense and require that personal data is processed fairly and lawfully; obtained and used for specified and lawful purposes only; adequate, relevant and not excessive in relation to their purposes; accurate and up-to-date; not kept for longer than is necessary; processed in accordance with the individual’s rights; kept secure; and not transferred outside of the European Economic Area without adequate protection.

Apart from these there are other points to note about the present law. The first is that there are extra obligations when handling sensitive personal data such as information about ethnic origin, sexual life, trade union membership etc. Further, individuals have a right via a Subject Access Request (SAR) to find out what information is held about them.

computer_data

THE CHANGES
Rights of the individual
Individuals have a right to know what is going to be done with their data, and who it is going to be shared with. A website privacy notice can tell people about this. Under the GDPR there is additional information which must be provided: Firms will need to tell data subjects – users – the legal basis for processing their data, the data retention period, and of their right to complain to the ICO. There is also a requirement that the privacy notice is concise, easy to understand and in clear language.

The GDPR confers new rights such as having inaccuracies corrected, to have information erased, to prevent direct marketing and a right to data portability (because of this firms will have to provide data electronically).

Presently, firms have 40 days to respond to a subject access request but under the GDPR this will drop down to a month. Refusing a request will require a firm to have appropriate policies and procedures in place. There will also be obligations to provide additional information such as data retention periods and the right to have inaccurate data corrected.

Consent for data processing
For many the most challenging area under the DPA is that of “consent”; that consent to use personal data cannot be inferred from silence, pre-ticked boxes or inactivity. The GDPR requires that consent must be freely given, specific, informed and unambiguous. If a firm is going to rely upon ‘implicit consent’ then it must be ready to deal with a challenge as to how unambiguous the consent was.

Other obligations
There is presently no general obligation to report any data breaches but the GDPR radically changes this and creates an obligation to report data protection breaches which could cause an individual harm within 72 hours. Firms should consider how they would deal with this new obligation. They should be asking: How secure are their systems? What training do staff have? Is personal data encrypted? What breaches might result in an obligation to report? How would the harm to individuals be mitigated? Do the procedures in place around data breaches allow these obligations to be met?”

One solution to compliance is obvious – appointing a capable, interested person with the responsibility for ensuring that the obligations are met.

The GDPR is a real and present threat to firms and organisations of all sizes and the financial consequences for ignoring the new rules are severe. However, those that plan and who choose to follow their obligations should have little to worry about.

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