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£25m BUSINESS INTERRUPTION LOAN FOR HALFORDS

Halfords has secured a £25m funding package to help the business recover from the crisis.

The money comes from the Coronavirus Large Business Interruption Loan Scheme and was granted by the Redditch retailer’s existing consortium of lenders, including HSBC.

READ: HALFORDS LAUNCH EARLY BOOKING MOT CAMPAIGN

Like all businesses, Halfords was hit by the crisis, although as it is a bike shop most of its retail stores were able to remain at least partially open and its Autocentre garage network stayed open offered a contactless vehicle  pick up and delivery service

Loraine Woodhouse, Chief Financial Officer at Halfords, said: “While our market-leading motoring and cycling businesses have strong macro tailwinds, this additional contingency funding gives us even greater confidence in our ability to trade our way successfully through the current uncertain environment. We would like to thank our lenders for their ongoing support.”

READ: NEW €4bn+ BID FOR OSRAM

Akhil Shah, Relationship Director at HSBC UK, added: “Like all retaiHalfordslers, the business has faced unprecedented challenges. As the lockdown restrictions ease and more of its stores open, this additional funding gives Halfords the confidence and the headroom to continue serving its customers effectively.”

 

 

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BEN BALL CANCELLED

Automotive industry charity, Ben has announced the cancellation of its annual flagship event, Ben Ball, in December. As a result of coronavirus, the event won’t be taking place this year for the first time since World War II, contributing to a potential income shortfall of £1m for Ben this year.

Having asked those who regularly attend Ben Ball if they would consider attending this December, the majority of past attendees said they wouldn’t due to concerns surrounding safety in light of the virus and uncertainty around budgets.

READ: NEW HOME FOR BEN BALL

The charity continues to support more and more automotive industry people with their health and wellbeing during this challenging time. Now, more than ever before, automotive people need the support of Ben to help them cope with anxiety, depression, money worries, bereavement and loneliness. However, this increased support comes at a time when the charity’s income has fallen as a result of the Coronavirus and the impact it has had on the finances of companies and individuals in the industry.

READ: THE HIDDEN COST OF POOR MENTAL HEALTH IN OUR TRADE

The cancellation of Ben Ball, along with the postponement of other fundraising events, as well as a decline in donations, means Ben is anticipating a £1m income shortfall this year, similar to many other charities. This is why the charity is appealing for those who can, to continue their support and keep providing vital funds so Ben can always be there for those who are struggling.

Matt Wigginton, Fundraising Director at Ben, said: “Making the decision to cancel Ben Ball is one of the hardest I’ve ever had to make, however with the uncertainty of the situation surrounding COVID-19 and the impact it has had on our industry, it was, unfortunately, inevitable. 

“We are living through unprecedented times and this means making tough decisions, but also being adaptable, so we plan to run a virtual fundraising event on 9th December instead, which we hope our industry will get involved in. So watch this space, we’ll reveal more in the coming months!

“We would also like to take this opportunity to give our heartfelt thanks to those who have continued to support Ben during this time – your support is more valuable now than ever before. We look forward to seeing friends, old and new, at next year’s event!”

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HALFORDS LAUNCH EARLY BOOKING MOT CAMPAIGN

Halfords Autocentres has predicted MOT bookings will peak at 85 percent over the average in October. The garage network has carried out analysis across the industry which suggests that an additional 1.7m drivers will try to book their MOT in October, on top of the normal demand of about two million vehicles. 

READ: TRADE BODIES WELCOME END TO MOT EXTENSION

Accordingly, the network has launched a campaign to get motorists to book their vehicles in early, regardless of whether they have time left on their MOT extension. The initiative will focus on concerns some motorists may have about their vehicles being roadworthy after a period of idleness. 

READ: HALFORDS INTRODUCE ZERO CONTACT MOBILE SERVICE

Andy Randall Managing Director from Halfords Autocentres said: “We’re urging drivers to beat the rush and book their vehicles in this summer. October and the winter months, are going to be much busier than normal when motorists will be joining millions of others who have held off getting their MOT done. Our research shows that almost half of motorists are worried about the roadworthiness of other cars on the road so those that get theirs done can be much more confident that their cars are properly roadworthy. The MOT test remains the best way to ensure vehicles are safe to drive.”

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CHANCELLOR OFFERS ‘JOB RETENTION’ BONUS

In his Summer Statement, Chancellor Rishi Sunak has pledged a £1000 bonus for all employers who retain previously furloughed staff beyond the end of January.

The Chancellor has also pledged investment into modern apprenticeships, with a £2,000 grant available in England for employers that take on apprentices under 25 years old, and £1500 for those over 25. Additional measures, such as a reduction of VAT on takeaway food will appeal to businesses such as petrol station forecourts, which have been hit especially hard by the crisis.

However, new car dealers and vehicle manufacturers may be disappointed that there was no mention of a new scrappage scheme in the speech.

We’ll bring you reactions to the Statement from the aftermarket as we get them. 

 

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AUTOPROMOTEC POSTPONED UNTIL 2022

The Autopromotec trade exhibition will move to 2022, organisers have confirmed.

Autopromotec entrance

The biennial show, held in Bologna during Frankfurt off years, has now been rescheduled to 25-28 May, 2022 in order for ‘companies to invest their financial resources at a more appropriate moment’.

READ: BREAKING: AUTOMECHANIKA 2020 CANCELLED

“The Covid-19 pandemic continues to register high rates of contagion, and severe limitations to international travels persist”, says Renzo Servadei, Autopromotec CEO. “A proper planning on the part of all the players of the sector is crucial to create a high-level event, but the uncertainty related to the measures to deal with the sanitary crisis makes it difficult to national and international exhibitors and visitors to plan their business travels well in advance.”

READ:  EQUIPAUTO SHOW 2021 CHANGE IN POSITIONING

Other trade shows have also changed schedule out of necessity. Automechanika Frankfurt will now take place in 2021, and Paris-based EquipAuto has indicated that it is considering a change in ‘positioning and format’ of its event.

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CORONAVIRUS AND BUSINESS INTERRUPTION

BY: Susan Hopcraft is a partner in the Dispute Resolution team at Wright Hassall solicitors

Although the social distancing measures are slowly being relaxed, the lockdown has come at a cost for many businesses, with some losing their entire revenue overnight.

Understanding that a difficult period was around the corner, many owners decided to add business interruption (BI) cover to their already expensive insurance, believing they would be covered should the measures disrupt business operations.

Susan Hopcraft, Wright Hassall Solicitors

However, the cover hasn’t had the desired effect for many businesses and the Government has been urged to get involved, as a growing number of refused claims are recorded.

Starting class actions could offer one solution, but businesses must do more to push their claims and the government’s financial regulator (the FCA) is now taking an active interest. There may be policies in place that apply to coronavirus losses, for which additional premiums will have been paid.

 What are BI policies?

Standard business interruption covers a business for loss of income during periods when they cannot carry out business as usual due to physical damage: typically damage to the premises caused by a storm, fire or flooding.

The insurance might compensate the business for any increased running costs and/or shortfall in profits for a set period and financial limit.

Some policies have extensions that might apply to coronavirus losses, for which additional premium will have been paid. There are two main likely clauses:

 ‘Specific illnesses’ clause

Most extensions cover specific diseases, listed in the cover. These are diseases that are well known and understood. Covid-19 will not be named though, and this is likely to lead insurers to deny claims.

Businesses will feel aggrieved by that when they bought cover for this type of circumstance. The argument will be that the clause was intended to cover disease closure and the clause could not have named a disease that did not exist.

Some disease extensions are more general and do not specify certain diseases. In these cases, business interruption cover for Covid-19 is more likely to apply.

Usually Covid-19 must have been present at the premises or within a short radius. This is because business interruption is supposed to cover the short period while premises are shut down for a deep clean.

Access Denial

Another relevant extension is cover for losses as a result of people not being able to access the premises due to specific circumstances such as the police cordoning off an area due to an event such as terrorism.

The clause might cover inability to trade due to a government restriction, which is what has happened now with schools, then bars/restaurants directed by the government to close prior to a full lockdown. These clauses might cover loss, again depending on the wording.

Another issue arising out of businesses being temporarily closed is the need to let your insurer know if the insured premises are unoccupied.

There may be a clause in your property insurance that requires the premises to be occupied. However, the Association of British Insurers (ABI) has suggested that insurers will be more flexible over the requirements around these types of clause under current circumstances.

Current situation

For some businesses, the business interruption extension might be worded to enable recovery of losses due to coronavirus closure. For others, particularly where Covid-19 is not included in a specific list, cover may well be denied.

Insurers will say they do not cover pandemics and do not charge premiums commensurate with that exposure. They might also say that it is for government to bail out businesses, for example, by the furlough scheme because this pandemic is so widespread and unexpected that it falls outside what private insurance ought to cover.

Insureds will say that they were paying extra premiums to extend cover to deal with precisely this sort of risk. Just because the disease was not known, that should not exclude them from cover.

The government has asked the insurance industry certain questions. Mel Stride, the Chair of the Treasury Select Committee, wrote to the ABI on 25 March asking for data and information on the industry’s response to coronavirus.

The ABI replied and, swiftly after that, the FCA announced that it intends to bring action against certain insurers for a decision on whether Covid-19 losses are covered.

 Protecting your business

Given that many businesses have taken steps to protect themselves from such a scenario, there is little comfort that can be given to businesses who have had claims dismissed.

The uncertainty of the current situation means that a successful claim could make all the difference for those companies trying to weather the storm and come out the other side in a strong position.

If your business closes or is otherwise disrupted by coronavirus, you might have business interruption insurance to make up the deficit.

Your insurance broker can give you a preliminary view but, if you have tried that and the insurer has declined your claim, then contact a team of experienced lawyers for advice.

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TYPE APPROVAL FEEDBACK WELCOMED BY IAAF

The IAAF has welcomed feedback from members on the next tranche of type approval legislation.

The IAAFs Wendy Williamson at a previous conference

This legislation, known as 2018/858 covers areas including connected vehicle telemetry, and among the text that the IAAF is campaigning for is the provision of a standard diagnostic port. Currently, some VMs want to run all updates and diagnostics ‘over the air’, thus shutting out anyone other than them from the vehicle. The IAAF argues that this is bad for competition and anti-consumer choice.

Although Britain has left the EU, it is expected that it will continue to mirror legislation as selling vehicles into the EU – or even driving UK registered vehicles in the Continent would become difficult if a different standard is adopted.

 

 

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DON’T CALL IT A COMEBACK…

It was reported in late April that more than 60 percent of garages had shut their doors as it had become infeasible to operate given the sharp fall in customer demand, disrupted parts supply chain and staff shortages caused by the lockdown. 

Now, though, the lockdown is being eased and UK roads are slowly starting to get busier. Alex Lindley, Managing Director of Nottingham-based garage chain Lindley’s Autocentres, told us how he’s gearing up for the new ‘normal’: “There are a lot of strategic challenges now, including making sure that we increase supply as the demand increases – timing is critical to maintaining the health of the company.” It’s worth remembering that, even if a garage has all staff at hand and a fully operational workshop, there are obstacles to overcome in terms of consistently speedy parts deliveries and maintaining a steady workflow as drivers adjust to post-lockdown life. 

Supply chain

The sustained health of factors and suppliers is a critical component in the aftermarket’s bounce-back. One such business, Chesterfield’s Autosupplies Group, is working hard to return to normality. Managing Director David Clarke said that, although “business dropped considerably” when the lockdown came into force on 23 March, it “has continued to grow steadily”, with the firm recording the biggest increase in call volumes after Easter. Garages were allowed to stay open, having been deemed essential businesses, but the situation was murky for suppliers, as Clarke explained: “Many of our van drivers have been stopped by Police and I would like to thank the IAAF for their support in providing the industry with a letter that confirms we are allowed to remain open and trade.” On 5 May Autosupplies announced that its Chesterfield, Barnsley and Rotherham branches were fully open, and that “teams at all three businesses are well practised in social distancing measures and are adhering to government guidelines, which we kindly ask customers to respect.”

Social distancing could be the biggest inhibiting factor in the build-up to ‘business as usual’. Among many other measures, the Best Practice guide – jointly published by IGA, SMMT, IAAF, Scottish Motor Trade Association and Garage Equipment Association – suggests posters are put up around the workshop or warehouse to remind customers and staff to keep their distance, a one-way system is put in place and sanitisers are always available. Euro Car Parts’ Marketing Manager Colin Cottrell outlined the actions of the factor chain: “We’ve made protective equipment like gloves, antibacterial gels and wipes readily available to all and are regularly cleaning our vans, branches and retail spaces. We’ve also set up Perspex screens on our counters and will wear latex gloves to serve customers and while on delivery routes.” 

Touchy subject

The biggest change for many will be the transition to a ‘contactless’ business model, which Autocentres’ Lindley has found ‘relatively easy’ to adhere to “once the plan was in place”. “The key to its success is to communicate with the customer,” he explained. “You need to make it clear what they can expect and what you expect from them. We are calling the customers the day before, followed by an SMS and an email.” Garage bosses would do well to consider how best to minimise unnecessary contact with customers while maximising workshop space. 

MOT extension

Aside from the critical issue of how to actually run a business, the question that industry bodies are now asking the government is if it will now cancel the universal six-month MOT extension that came into effect on 30 March [the end of the extension has of course been announced since this article was written – Ed]

The IMI’s Steve Nash thinks that although “the motives for the initiative were sound at that time, there are serious risks in the extension remaining in place now”. Chief among these, he said, is that traffic levels are beginning to build as people return to work, and it’s possible that some vehicles will not be in a roadworthy condition. “That’s a huge safety risk, but of more commercial concern for our sector is that if all motorists wait up to six months from when their MOT expired to get their vehicle tested there is going to be a big backlog of tests in the autumn and winter [see Alex Lindley’s predictive chart below] which could significantly overwhelm the sector,” he said. 

SMMT Chief Executive Mike Hawes concurred. “With government advice stating that workers should avoid public transport when returning to work, the use of private cars is likely to rise more sharply than it already has over recent weeks” he said. “A reconsideration of the six-month MOT extension needs to be made as soon as possible”. 

The Independent Garage Association and the IAAF have all voiced similar statements and written to DfT ministers. However, it is highly unlikely that a decision that has already been implemented will be changed now. 

Take the initiative

There are two schools of thought, however, and David Hoad, MOT Manager at Ashton-Under-Lyne’s Guide Bridge service centre, reckons a pragmatic approach could mitigate the effects of any custom lost to the extension. “The scheme has allowed key workers to stay mobile without worrying about the statutory requirement of having to have a current and valid MOT,” he said, noting that these individuals are the only ones who should have been driving under lockdown in any case. So, now that it’s here and shows no sign of being lifted, he advises garages to contact customers and explain to them you are now open and able to carry out the test. “Explain to them it is their responsibility to ensure their vehicle is roadworthy and that they can be prosecuted for not ensuring this, and the only way they can feel secure they have met this requirement is to bring the vehicle to you for inspection,” he advised, adding that it’s worth reminding customers that: “the extension is only there to give them the time to get the vehicle tested at the earliest opportunity.” 

Hoad’s views are backed up by ECP’s Cottrell, who observes that a proactive approach from garage managers could see customer rates quickly return to near-normal levels. He suggests that garages identify customers with overdue services or MOTs and offer them a booking slot of their choice, which, he says, “helps them to define their opening hours, understand the technician resource they’ll need and effectively manage their finances”. As an added incentive, he notes: “One garage owner we spoke to in the last couple of weeks reported a 43 percent uptake on the phone calls he made in a single day, and another converted 11 phone calls into bookings in one day.”

What’s most apparent, speaking to representatives from various sectors within the aftermarket, is that we’re firmly in the recovery stage now. There will be hardship ahead for all, with stringent distancing measures, weakened customer demand and an inevitable economic downturn to overcome, but the ball remains in the aftermarket’s court. Most, if not all, businesses can operate effectively with social distancing measures in place, and now that the roads are getting busier and garages are opening back up, there’s no reason to let the MOT extension stop the aftermarket from returning to rude health and keeping the nation’s vehicles safely on the road.  

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LIMITED MOT TESTING TO RESUME IN NORTHERN IRELAND

Some MOT testing is to resume in Northern Ireland as the crisis-hit system tries to recover from the effects of lockdown, industrial disputes and widespread technical failure of vehicle ramps.

READ: 12 MONTH MOT EXTENSION ANNOUNCED AS NORTHERN IRELAND MOT CHAOS CONTINUES

However, it will be sometime before the general public will be able to get their own vehicles certified as being safe. Initially, the test will be available only to taxis and busses due a first time test, vehicles not registered in Northern Ireland and vehicles where the MOT expired over a year ago (meaning the vehicle hasn’t been tested for at least two years). Balmoral and Newtownards test centres will not reopen as they are in use as virus testing facilities.

READ: LATEST: NORTHERN IRELAND MOT TEST CRISIS

Testing for all other categories remains suspended and motorists should get a Temporary Exemption Certificate, although DVA phone lines and counter service remain closed.

READ: MOT STRIKE ACTION LIKELY IN NORTHERN IRELAND

Prior to coronavirus, NI’s state-run test centres were already creaking, with reports of motorists booking four months or more in advance, only to have them cancelled at the last minute. 

 

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TRADE BODIES WELCOME END TO MOT EXTENSION

The news that the MOT extension will end on August 1st has been welcomed by the main aftermarket trade bodies. 

Stuart James, Chief Executive of the Independent Garage Association (IGA) said: “We thank the Government for listening to our views. The news will give clarity to garages and allow them to plan for the busy period ahead.

“This is a welcome retraction of a policy doubtless designed to provide relief to motorists. However, this additional month will allow at least one million unroadworthy cars to remain on the road for an additional six months, as well as the 1.6 million dangerous vehicles that have already had their MOT extended.

MOT EXTENSION TO END FROM AUGUST FIRST

“With road traffic increasing, people being encouraged to use their cars rather than public transport, and further lockdown measures easing on 4 July, we believe this additional month will leave a number of motorists with an accumulation of faults and repair costs when they are least able to afford them. Even though this scheme has only been in place for four months, it has been detrimental to the roadworthiness of many cars, taken away the bread and butter of the independent garage sector and left a great number of consumers confused.

“We will continue to work with Government departments and support independent garages to ensure that all safety measures are upheld, playing our part to prevent further coronavirus cases across the UK.”

READ: 12 MONTH MOT EXTENSION ANNOUNCED AS NORTHERN IRELAND MOT CHAOS CONTINUES

The IAAF has also welcomed the news, Wendy Williamson, Chief Executive, said: “The entire automotive aftermarket needs this news and it will have a positive effect on many businesses. As people begin to head back to work, the number of cars on the road will inevitably rise, with more people set to avoid public transport and rely instead on personal mobility.”

The IAAF is now urging the industry to encourage drivers who have previously made the decision to extend their MOT to bring their vehicle in as soon as possible.

Williamson added: “We’ve already been hearing from members who have experienced concerning issues first-hand, whereby customers have been driving around in vehicles that are a threat to the safety of the driver and the general public.

“Most importantly, this move will reduce the number of motorists driving unroadworthy vehicles and will benefit the aftermarket as more cars are brought in for essential testing, service and repairs.”

 

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