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SMMT BOSS SPEAKS ABOUT THE AFTERMARKET

SMMT BOSS SPEAKS ABOUT THE AFTERMARKET

SMMT boss Mike Hawes has said that he doesn’t hear a ‘clarion call’ to support mandatory technician licensing, and that any form of scrappage scheme will be more of a ‘restart mechanism’ to support jobs across  the whole motor industry, rather than benefiting individual vehicle manufacturers.

The Chief Executive’s comments were part of a wide-ranging interview which was part of the inaugural web cast from Autocar Business. 

On the subject of technician licensing, he said: “ We don’t have a clarion call from our members for licensing. It is about being competitive and it is about satisfying the customer and delivering the quality of service, but I  don’t sense an appetite from the government”.

“As long as the market works and that where competition between independents and franchises, in terms of retail as well as aftermarket, that will be where the government is and that is where our members are”. 

Hawes spoke on Autocar Business webcast

Answering a question from CAT contributor Rob Marshall, on whether the work done by SMMT with franchised dealers is to the detriment to the aftermarket, Hawes replied: “We’re trying to be a voice for the industry, irrespective of what part of the industry you are in, and that’s the strength that we would argue we have in numbers and we will always support ever single section”. Pointing out that the aftermarket is the Society’s largest section in terms of membership numbers, he said: “There are very few areas where you will get competitive differences between sections. Yes, there will be some, but you manage them so the market is as strong as possible, so the strongest survive”. 

 Scrappage

On the subject of a possible new scrappage scheme, Hawes admitted that any proposal  would have to be one that benefits the whole industry, and that met the public’s perception of the motor industry and how it benefits from government incentives. Stating that the new proposal to the government would be ‘all about jobs’, he said: “We think we are presenting something that will be beneficial to the exchequer, and in the current climate we would present it as exactly as we would be doing, trying to prevent redundancies”.

 Asked if the uncertainty over Brexit was going to put UK manufacturing at a disadvantage, Hawes answered simply “Yes”, adding: “At the the moment, we’re still in the depths of uncertainty. Ys, we know we are leaving the customs union and the single market, but there is a real need for businesses to prepare to trade in a different way”. Adding that rules and paperwork made everything “fundamentally different and much, much more complicated” Hawes said: “We still don’t know if we are going to get a deal. From the outset when the referendum was first announced, UK industry was very clear. We’re going to need an ambitious trade deal that avoids tariffs and non-tariff barriers, because immediately if you put a 10 percent tariff on an industry that aims for a two to four percent return on investment, then you can’t swallow that kind of cost and still expect to remain competitive”.

Asked about the date moving forward for the ban on petrol and diesel engines, Hawes was of the opinion that the UK could ‘just about cope’ with a 2035 deadline. “The government has made clear it wants to bring forward its 2040 date. I think the majority of the industry could just about make 2035. I think earlier than that you would struggle to get support for.

 Diversity

“The diversity of UK industry will mean some companies will struggle. It’s about how quickly the market will transition, and that’s dependent on how attractive the product proposition is, how much it costs and in particular what the infrastructure is.”

 Referencing a government climate change white paper that was published last year, Hawes explained that the detail says if you are going to move it forward to 2035 or potentially earlier, you have to recognise that there are going to be significant ‘social, industrial, commercial consequences’. “How you manage that is going to be critical” he said. 

“For all the investment you make in these technologies, they’ve still got to be affordable and convenient for the consumer. And that means oversupplying the market in terms of charging infrastructure.”

Hawes’ interview was the first of a series of in-depth conversations with industry leaders, which are part of the new Autocar Business platform. You can sign up to view the seminars and to receive the free newsletter here

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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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MANAGING PROPERTY IN A PANDEMIC: KNOW YOUR RIGHTS

MANAGING PROPERTY IN A PANDEMIC: KNOW YOUR RIGHTS

Adam Pike is a Senior Associate Solicitor and member of the Ansons dispute resolution team

The coronavirus story changes by the day. After the initial shock of the lockdown, people are analysing the support offered to help the UK economy recover from this difficult period.

The headline measure for landlords and tenants was contained in the Coronavirus Act 2020, which came into force on 26th March.

READ: CORONAVIRUS AND THE AFTERMARKET

Currently in place until 30 June, this act introduced a moratorium on forfeiture of commercial leases due to non-payment of rent in a bid to deal with the issue of commercial rent arrears. However, there is strong evidence to suggest the measures will be extended past the original June deadline.

Many commercial tenants have praised the move, saying that it offers them breathing space to take stock and come to terms with the changes that have been made.

However, the measures were not as extensive as some tenants will have hoped. Rent is still payable during this period of moratorium, and landlords can rely on other enforcement measures to recover payment.

UNEXPECTED CONSEQUENCES

In the rush to protect tenants, landlords have been placed in a difficult position for which they could never have prepared. For many, a large part of their rental income has vanished in the space of a month, and measures like the Coronavirus Act 2020 have limited the number of available remedies.

Commercial landlords, at time of writing, have not been granted the kind of loan repayment holiday offered to other sectors of the business world. There is a significant chance that large numbers of landlords will face insolvency in the next few months and beyond.

The questions to consider are what insolvency means for the landlord and for any tenants who thus far have managed to keep their business operating.

READ: IGA LAUNCHES COVID-19 COMPLIANCE SCHEME FOR GARAGES

EFFECTS OF INSOLVENCY

In the first instance most landlords will probably opt for a Creditor’s Voluntary Arrangement (CVA) rather than full-scale liquidation. This will take the form of an agreement between the landlord and any creditors and can be entered into as long as 75% of those creditors agree.

Any tenant of a landlord taking this course of action will not be involved in the process itself (being a debtor rather than creditor) and will only discover it has happened after the event.

The impact a landlord CVA might have on a tenant is difficult to predict, but under the supervision of an insolvency practitioner, it is likely that the attitude of the landlord towards their tenant will harden somewhat in respect to lease obligations being met in full and on time.

As such, the kind of flexibility needed for the negotiations between a landlord and tenant in the current climate are likely to be absent once a CVA has been put in place.

If a landlord enters into administration rather than opting for a CVA, the impact on a landlord and tenant is likely to be reduced. As the administration will be attempting to rescue the landlord company, the administrator will work closely with existing management, which should ensure that existing lines of communication continue to operate as before.

Administration will usually cover the whole of the landlord’s business and all properties let. There are more complex circumstances however, which can arise from a landlord holding a number of profitable properties, and some which are not. Loss-making properties could pull the otherwise profitable business into insolvency, a risk which is intensified during the current coronavirus crisis.

The solution is often pre-pack administration, which sees the profitable element of the business sold off to form a new company, and the loss-making aspects becoming part of a CVA.

A tenant of the profit-making element of the business will take the new company as their landlord, which will often involve working with the management and admin team of the original company.

The new landlord company will not be able to vary any of the obligations under the existing lease. If, however, there is new management as part of the new landlord company, they may well take a more hard-line approach to negotiating lease renewals, rent reviews, end of term dilapidations, etc. with a view of maximising income for the new company.

READ: THE GUARDIANS OF THE ARCHES

COMMUNICATION IS KEY

However the scenario unfolds, it is in the interests of both tenants and landlords to keep lines of communication open and remain transparent throughout.

Beyond the pandemic, it is to nobody’s advantage if either landlords or tenants find themselves being forced out of business rather than being able to weather this storm.

If you have any concerns relating to insolvency, or a landlord and tenant dispute, it is important to consult an experienced team of lawyers who can help you achieve the best possible outcome.

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OPEN OR CLOSED? BUSINESSES REACT TO LOCKDOWN

OPEN OR CLOSED? BUSINESSES REACT TO LOCKDOWN

The message from Prime Minister Boris Johnson was nothing if not clear: stay indoors and only commute if you have absolutely no appropriate means of working from home.

It’s a stark warning, and one that will have been anticipated by many SMEs in the automotive sector that were unsure how long they could remain open. Most, in fact, have now shut down, save for garages and some suppliers that operate on a primarily contact-free basis anyway. The UK aftermarket is in a state of suspended animation, and many owners will be considering how best to sustain their businesses without any money coming through the till for several weeks.

READ: CORONAVIRUS: MORE THAN 60 PERCENT OF GARAGES HAVE SHUT

Despite the clarity of the Government’s position, there is an element of doubt about just what constitutes an ‘essential’ business – one that is allowed to continue operating. Lee Jones, Operations Director at York Motor Factors, thinks components suppliers fall under the ‘Transport’ banner, and should remain open. “One of our buying group members contacted their local MP who agreed and stated that they will also be tabling a parliamentary question for further clarity on this point,” he said, noting that those companies “working on transport systems through which supply chains pass” have been included in the Government’s list of essential firms. The parliamentary question may have to wait however, as MPs have taken the decision to bring the Easter recess forward, and at time of writing it is uncertain as to when they will return.

STILL OPEN

It’s a popular school of thought; larger chains including ECP and Parts Alliance remain open at time of writing, with both reporting no significant disruption to their supply chains. The Parts Alliance’s dedicated Covid-19 web page says: “We have strengthened our hygiene practices in every site, communicating best practice to all team members and providing them with the products and equipment they need to remain hygienic.” This is key; the government’s decision to shut down non-essential businesses was primarily driven by the risk of interpersonal contamination, so it’s essential that those still in operation make every possible concession to cleanliness. Similarly, ECP has made its click-and-collect service available only to key workers including roadside recovery workers and NHS staff, and an email from CEO Andy Hamilton asks customers firmly not to visit a branch “unless you have received a telephone call to let you know that your item is ready for collection”.

READ: LKQ PLOTS GROWTH AFTER CORONAVIRUS PANDEMIC

From comments on social media and on catmag.co.uk, it seems that professionals in the aftermarket are divided as to whether factors staying open is a wise decision. “All remain open because all are frightened over losing a pound to the competitor,” said Jerry Stenning, posting on the website, adding that factors should consider the health and mental wellbeing of their ‘scared’ employees.

Not all factor chains are staying open though. Melksham Motor Spares has shut for three weeks, with a joint statement from the directors that read: “The government was very clear in its message last night about the importance of staying at home and we want all our employees to follow this advice as their welfare is of paramount importance to us.”

Glasgow-based chains Autoparts-UK and rival Pentland Component Parts have also closed. “We understand that this is a concerning time for everyone,” Craig McCracken, Group Factor Manager at Autoparts UK said. “As we enter into this unchartered territory, we want to ensure that our suppliers are provided with as much information as possible and that any questions you may have are answered.” A similar short statement from Pentland Component Parts thanked customers for their patience, but said the decision followed from the announcement from the Prime Minister and Scotland’s First Minister.

YMF’s Jones thinks that offering a contactless service is ‘reasonably feasible’. He explained: “For retail or counter customers the only issue is payment and the collection of the items ordered. This can be done online via our retail website, or payment can be made by contactless or by card with the items being left on the counter for the customer to collect as long as suitable distance is maintained between staff and customer.” Small or large, factors and accessory shops can clearly maintain operation with minimal disruption by adhering to the measures outlined by the Government’s newly imposed ‘social distancing’ policy.

READ: CORONAVIRUS: FACTORS TO REMAIN OPEN

GARAGES ESSENTIAL

The news that factor chains will continue to operate, albeit with these limitations in place, will be welcomed by Britain’s network of independent garage operators. “We were waiting for confirmation from ECP and Andrew Page before we decided whether to open or not,” said Kamran Saleem, Managing Director of Solihull’s Motorserv garage and dealership, which has imposed a ‘two-prong protection system’ to avoid any of its team members or customers falling ill. “We’ve said if customers aren’t comfortable coming in, we’ll pick up their car,” he explained, adding that “three times a day, we’re conducting a full sweep of the workshop, cleaning every contact point”. The garage has channelled efforts into crucial repairs for essential vehicles and the office is closed -keys are handed though a window while staff are regularly checked and PPE is worn.

The measures put into place at MotorServ match the guidance issued to workshops by component supplier First Line, which advised garages to “consider every possible contact point with their customers and ensure that, where possible, this can be replaced with zerocontact alternative solutions”. Realistically, the workshop floor should be out of bounds to customers, and PPE must be worn while moving vehicles.

While nobody wants their business to suffer as a result of a global pandemic that’s out of their control, Saleem notes that, if it was going to happen, “this is the best month for it to hit”. March is traditionally a busy month for garages anyway, seeing the largest number of post-winter checks and MOT tests carried out, so the 20% drop in revenue recorded by Motorserv is not enough to make it feel like a ghost town.

READ: SUPERCHIPS IN ADMINISTRATION FOLLOWING COVID-19 CLOSURE

This won’t be the case for everybody, however: now that UK drivers have been granted six months of MOT exemption, smaller test centres will really start to feel the pinch. Saleem said he has already had to start turning away vulnerable customers and non-essential workers – “we tell them to come back when all this has died down” – but there will be many businesses across the country that depend on such custom.

Aside from health and safety, one burning issue for employers and employees alike is that of pay in the event of a closure. Chancellor Rishi Sunak has pledged to cover 80% of contracted hours for employees who are categorically unable to work. Jones said: “This will give businesses a huge confidence boost to hold on to their staff and to fight to keep their businesses afloat. Hopefully with this backing the majority of businesses will survive.” But, as Saleem noted, these costs still need to be initially covered by the employer, who can then claim to be reimbursed at a later date – potentially leading to huge cashflow problems.

“I haven’t heard of anyone getting the actual fund through yet,” he said, adding: “Solihull council knows as much as we do,” in terms of any arrangement concerning business rate postponement.

It’s still early days, and there are innumerable mechanisms to be constructed between the Exchequer and businesses, but two things remain clear: many firms will be forced to close – at least temporarily – during this pandemic, and those that remain open cannot adopt a ‘business as usual’ approach.

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CORONAVIRUS AND THE AFTERMARKET

CORONAVIRUS AND THE AFTERMARKET

Note: This article was written in mid February 2020, when the world was a very different place… – Editor

 

You will have heard all about it: the virus that migrated from species to species in China before spreading around the world. Thousands of column inches have been written, mostly about the human cost and how it has affected the way that people meet and travel, but how will it affect the parts supply chain, and more specifically the aftermarket?

Here’s what we know for sure: factories in China closed as usual for the Chinese New Year celebrations, but didn’t reopen for weeks afterwards. When they eventually did start up again, there were reports of many of them having a fraction of the usual number of staff, due in no small part to many being in isolation, be it voluntarily or at the behest of the state.

Then of course the virus spread, with huge tracts of Asia, including South Korea and Japan, implementing an array of preventative measures to control the outbreak. Closer to home, Italy was accused of under-reporting known cases and parts-producing towns in the country’s ‘motor valley’ have been belatedly shut down.

READ: BREMBO SHUTS ITALIAN SITES AMID CORONAVIRUS CRISIS

SHY RESPONSE

Yet when we asked companies who must surely be exposed to supplier shortages, the answers we got were surprisingly coy. Halfords, for example, wouldn’t answer our list of questions, but did respond with the statement: “We are monitoring the Coronavirus situation carefully. To date, the virus has not had a material impact on stock availability but we are continuing to work closely with our partners across the Far East.”

Similarly, Euro Car Parts answered our request with the simple sentence: “To date, we’ve not experienced any issues with stock availability because of the Coronavirus outbreak. We’re aware of the risk of disruption it still poses, and our supply chain team is working on contingency plans and is in regular dialogue with our suppliers to ensure we’re prepared to mitigate against any potential impact.”

Some other companies simply declined to discuss the issue at all. However, the fact that parts and accessory supply chains have, at the very least, been interrupted is not in dispute.

READ: IAAF BOSS: GOVT. MUST HELP THE AFTERMARKET

TYRE SHORTAGE

Tyres are known to be in short supply at the moment, especially budget products which are typically produced in China or Malaysia. The problem has become such a concern that TyreSafe, a body set up by wholesale distributors and tyre dealers, has issued a release advising motorists to fork out a bit of extra cash for mid-range or premium tyres, and not to buy part-worns, of which the organisation has a low opinion, as it has repeatedly voiced.

Stuart Jackson, Chair of TyreSafe, said: “The vast majority of [budget tyres] are imported into the country from China and across South East Asia where the outbreak of Coronavirus has led to governments closing facilities such as schools and factories to limit the spread. As a consequence, the level of supply the UK has become accustomed to for many products has been reduced.

PHOTOGRAPH BY Feature China / Barcroft Media

“Our advice is to seek a good deal on a mid-priced tyre and carry out regular checks to get the best out of that tyre over its full potential lifespan.”

National Tyre Dealer Association Chair Stefan Hay said that most members had a good stock of mid-range tyres, but added: “There can be no doubt that we could see a potential shortage of budget tyres if quarantine and export restrictions are maintained.

“This will affect all manufacturers with an interest in China and other South East Asian countries. For example, I’m aware that production at two of Pirelli’s three factories in China remains suspended in response to the spread of coronavirus. Pirelli has also reported that its entire expat workforce has left the country along with their families. Goodyear Tire and Rubber Co. ‘temporarily’ closed its headquarters and factory in China and the beginning of February and it is uncertain as to how temporary that is.”

Hay added that restrictions in supply can soon bounce back, citing a shortage of tyres a few years ago due to a trade dispute between the EU and China, which was swiftly resolved.

SHUTDOWN

It isn’t just tyres that are affected. The widest range of factory closures is in southern China, which is the heartland for manufacturing electronics, as well as the site of numerous foundries for making hard parts. Murray Silverman, Director of Streetwize Accessories in Manchester, is candid about the impact that factory shutdowns will have on UK business. “ALL businesses will be affected,” he emphasised. “Some might not realise it yet.”

“All suppliers that we have spoken to have advised at least a three week delay as it stands today,” Silverman told us when we spoke in mid February, adding that the date was ‘moveable daily’ and that at the time of speaking, his company could not even contact many of the factories that had not yet returned to work.

A big question mark hanging over the whole situation concerned just how long these delays might become. “Nobody knows how long these delays could go on for,” said Silverman. “We contacted all our customers to advise them that there will be shortages that will escalate during the summer months or earlier and advise them to order whilst we have stocks available. Some customers have reacted but unfortunately there will be those who will realise too late despite warnings.”

One company reacting to the situation is battery charger manufacturer Ctek. “Our suppliers have restarted their production and supply following Chinese New Year,” company spokesperson Stig Mathisen told us. “We are mindful however, that there is a risk that the outbreak could worsen and will continue to monitor the situation closely, introducing contingency plans if there is a requirement to do so.”

Sourcing products from elsewhere is not an option for many, particularly given that northern Italy, a major European production centre of parts, is arguably in a worse state than China at the time of writing. In any case, for the majority of companies it isn’t simply a case of switching production – new suppliers need to be tested, pricing and quantities have to be agreed and then go through any relevant type approval. “Sourcing product elsewhere is not an option, even if we could find the resource and the pricing was acceptable, it takes time to go through our QC and graphics teams,” explained Murray Silverman, adding that in any case a lot of UK and European-made products would also be in short supply, due to the amount of raw material and components that come from the Far East.

A situation that no-one two months ago could have foreseen is the possibility that UK companies might have to let employees work from home if the number of infections in the UK continues to rise. Quite how this could work for a parts distributor or a service and repair garage is anyone’s guess, but if the outbreak spreads further and there are more fatalities, who knows what might happen in the future?

Inevitably, the world will return to normal, and when this happens a new set of challenges may arise. “Even when factories do return, there are likely to be transport issues from the factory to the port and a lack of vessels to cope,” commented Silverman, adding that: “Another eventuality that may occur is that shipping companies and freight forwarders raise their rates to try to pull back the enormous amount of business they have lost.

“There will be further impact in the future,” he concluded.

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A BUDGET FOR OUR TIME?

A BUDGET FOR OUR TIME?

Politics aside, it takes a brave man to become Chancellor of the Exchequer and then, within 27 days, write and present a budget at a time of global crisis brought on by the smallest of enemies, a virus.

But present Rishi Sunak did and with gusto too. Only time will tell whether or not his speech goes down in history as one that ‘got things done’ – to reuse the phrase that he repeated some 26 times – or is just another where brave claims made rot in the cupboard.

Call for national unity

Sunak rose to the dispatch box and went straight for the topic that’s on everyone’s mind at present – coronavirus and how the government plans to tackle it. Touching on what everyone is hoping, that the outbreak is a serious, but temporary, disruption to the economy.

The Chancellor commented, “for a period it’s going to be tough” and announced a series of “temporary, timely and targeted” responses to support those who cannot work while helping businesses that are struggling through no fault of their own. The measures announced follow on from the Bank of England’s ‘surprise’ action in the morning – namely an immediate 0.5% cut in interest rates from 0.75% to 0.25% and billions of pounds of extra lending with ‘additional incentives’ to help banks support otherwise healthy SMEs.

Back to the budget, Sunak announced a three-point plan at a cost of £7bn. The first granted the NHS whatever resources it needs to cope with the virus, irrespective of cost.

Next, aside from those absent from work who will receive Statutory Sick Pay (SSP) from day one, those who self-isolate regardless of showing any symptoms are to get the same. The self-employed eligible to claim Contributory Employment and Support Allowance will be able to claim from day one too.

The last element involves enhanced support for businesses through the full refund to SMEs with fewer than 250 workers of SSP for 14 days; HMRC scaling up its Time to Pay scheme for firms in trouble following the outbreak; and a new, temporary, Coronavirus Business Interruption Loan Scheme with £1bn in funding which can offer loans of up to  £1.2m to SMEs facing difficulties.

SMEs in the retail, leisure or hospitality sectors that have premises with rateable values below £51,000 will welcome the suspension of business rates for one year. And any business currently eligible for small business rates relief will be provided with a £3,000 cash grant.

The state of the economy

With the headline material announced, the Chancellor turned to the state of the UK economy and other measures.

It’s entirely clear that even before the outbreak of coronavirus that the world has been slowing down. The Chancellor’s figures don’t include the effects of coronavirus, but GDP growth is predicted to stand at 1.1% in 2020 and 1.8% in 2021, then 1.5%, 1.3%, and 1.4% in 2024. Sunak announced an extra £175bn of capital investment over the next five years, which the Office for Budget Responsibility expects to mean that another 500,000 will be in work. Inflation is predicted to rise to 1.4% in 2020 and 1.8% next year.

Of course, it’s natural to ask with all of the announced spending where the money is coming from to pay for it? The answer is that part will come from tax changes, but a sizeable amount will follow from increased borrowing – which had been previously highlighted. In summary, borrowing is likely (OBR figures) to rise to 2.1% of GDP in 2019-20, 2.4% in 2020-21, 2.8% in 2021-22 and 2.5% by 2022-23.

In terms of the now annual rise in the National Living Wage (NLW), that will increase by 6.2% from 6 April. However, the Chancellor went further and announced that the Low Pay Commission has been given a revised remit to ensure that NLW reaches 66% of median earnings – more than £10.50 an hour by 2024. It’s worth pointing out that, according to Incomes Data Research, when the NLW was launched in 2016 it was designed to pay a rate that matched 60% of median earnings. While this increase will help the low paid it will increase employer costs; the Low Incomes Tax Reform Group is worried that this could lead to ‘false self-employment’ or fewer workers being hired.

Another allied change relates to the National Insurance threshold which will rise from 6 April to £9500 from £8632. The Chancellor expects this rise to give workers an extra £100 a year. However, the Low Incomes Tax Reform Group, is concerned that this doesn’t help those below the new threshold and that further, Universal Credit recipients will lose £63 of the £100.

For the self-employed who work as contractors there was little cheer because, despite numerous calls from campaigners, Sunak refused to delay the tightening up of IR35 legislation. And so, the self-employed who work for a company as if they are an employee could potentially end up paying the same level of tax that permanent staff members pay, but without the benefits.

Numerous changes

Sunak offered a number of ‘populist’ tax changes, chief of which was the removal of the so-called “tampon tax” – from January 2021 the UK will no longer charge 5% VAT on women’s sanitary products.

The planned rises in spirits, beer, wine and cider have all been postponed as has the much-vaunted increase in fuel duty. Tobacco taxes, however, will continue to rise by 2% above the rate of retail price inflation. And to help pubs stay afloat, the proposed business rates discount of £1000 per year has – for one year only – been increased to £5000. At the same time, the government is to give £1m to support the Scottish food and drink sector to promote itself worldwide.

For business, the Chancellor commented that the country needs “a thriving private sector” and to this end he announced £130m of funding to provide start-up business loans, £200m for the “British business bank to invest in scale-ups”, £200m for life sciences and £5bn in new export loans. And with a nod to the government’s newly found favour in the regions, dedicated trade envoys to represent the North, the Midlands, Wales and the West of England will be placed in UK embassies.

Following on from the government’s manifesto pledge to review the efficacy of Entrepreneurs’ relief, Sunak announced that it’s to be restricted so that it offers a lifetime allowance of just £1m compared to £10m previously. As he explained, the relief apparently does little to incentivise the creation of businesses, mostly ends up going to a comparatively small number of individuals and costs the government some £2bn a year. The predicted savings will be redirected to business via an increase in the Research and Development Expenditure credit (RDEC) from 12 to 13%, a rise in the Structures and Buildings Allowance (which relieves the construction costs for new structures and buildings) from 2 to 3%, and an increase in the Employers Allowance (which reduces an employers’ secondary Class 1 National Insurance costs) to £4000.

On top of that is an increase in investment in R&D from the planned £18bn to £22bn as more of the funding – £400m – is spread around the regions.

It should be noted that RDEC change only helps larger firms; SMEs use a different scheme which only saw a delay of one year to April 2021 on a cap on tax credits payable; there was no rise in its allowance.

Other areas

On environmental issues, the Chancellor announced changes to how the issue of pollution is tackled, notably, from April 2022 the levy on electricity will be frozen while that placed on gas will rise; a new Plastic Packaging Tax of £200 per tonne will be applied to plastic packaging where less than 30% recycled plastic content is used; and the use of red diesel will be restricted to agriculture, rail and domestic heating and fishing. Those in construction, civil engineering and related trades, plant and equipment hire, transport, quarrying and mining and leisure will lose out.

There’s to be money for greener and cleaner transport options to make it less expensive to buy lower emission vans and cars as well as pay for more rapid charging hubs. And there’s to be £120m for defences damaged in recent floods, £200m to local communities to help areas flooded repeatedly and £5.2bn for new flood defences.

These green changes will be partly paid for by the increase in Air Passenger Duty that will, from 1 April, see long-haul economy tickets rise by £2 to £80, and premium cabin fares rise by £4 to £176.

The regional governments are to be offered more funding – £640m extra for Scotland, £360m for Wales, and Northern Ireland will see £310m.

Other changes to infrastructure will involve gigabit broadband being rolled out nationwide at a cost of £5bn, and £510m being spent on creating a shared 4G network so that 95% of UK will be covered. Roads and rail will see spending too; Sunak noted that there would be “over £27bn of tarmac” through a strategic fund for roads and motorways providing “over 20 connections to ports and airports, over 100 junctions, 4,000 miles of road” alongside £2.5bn over five years to fix potholes. Some might question how this fits in with the government’s green credentials.

Housing saw a 1% cut in interest rates that apply to lending for social housing and there’s to be £1.1bn from the Housing Infrastructure Fund to build 70,000 new homes, £650m to help rough sleepers with 6000 new places, and a new stamp duty surcharge of 2% on non UK residents from 2021. And for those in buildings covered in unsafe combustible cladding, there’s £1bn for its removal from structures over 18m in height, whether publicly or privately owned.

To ease the pressure on NHS funding the planned cut to Corporation Tax has been shelved – it remains at 19% which, Sunak reiterated is the “lowest rate in the G20.” There’s also extra funding for HMRC to reel in an expected £4.4bn in additional revenue. And to get consultants and GPs working more, the pensions taper threshold has been increased by £90,000 to £200,000 to take the majority out of a tax trap; workers in other sectors will benefit if they earn under £200,000.

Businesses caught by the Making Tax Digital (MTD) regime for VAT will welcome the Chancellor’s plans to evaluate MTD’s introduction before (if) it’s rolled out further. According to the Chartered Institute of Taxation, MTD hasn’t reduced errors, reduced costs or greatly improved productivity.

For importers, the introduction of ‘postponed accounting’ means that those who are registered for VAT will account for import VAT as an entry in the VAT return, rather than paying it at the time of import or by using a monthly deferral account; this will aid their cashflow significantly.

And finally, publishers will be pleased that the government is to remove VAT on digital books, magazines and manuals from 1 December. However, it should be pointed out that the EU changed the rules regarding this back in October 2018.

Summary

So, the Chancellor has combined election pledges with pragmatism in helping the country fight coronavirus. The question is – is the government be storing up economic problems for the future or is it hedging on the basis of interest rates will be low for some time? One thing is certain, the plan to place treasury offices around the country is noble, but will 22,000 civil servants all want to move out of London?

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A HOT BED OF MODERN SLAVERY

A HOT BED OF MODERN SLAVERY

The very fact that, in June 2019, there were more than 1400 active investigations into alleged instances of forced labour across the UK, compared with just 188 in November 2016, is indicative of just how rampant the problem has become recently.

The government’s Annual Modern Slavery Report, published in October, highlights the advanced nature of people trafficking gangs, and the heavy response it’s planning as a means of tackling the ‘hidden crime’. The four Ps – pursue, prevent, protect and prepare – lay at the foundation of Home Secretary Priti Patel’s anti-exploitation masterplan, which is designed to bring an end to the ruthless mistreatment of the up-to-13,000 estimated victims across the UK.

It’s not all taking place backstage, either. Hand car wash users across the country are urged to keep an eye out for timid workers, signs of on-site habitation and improper safety equipment in the search for human trafficking gangs. A lack of regulation in the sector makes it all too easy for victims to go under the radar, and the nature of the work means they’re often subjected to freezing temperatures and rain on a day-to-day basis.

WAKE-UP CALL

The phenomenon was brought to public attention by the tragic death, in 2015, of East London car wash worker Sandy Laurentiu-Sava. The Romanian national was living in squalid conditions above the cheerily named Bubbles car wash in Bethnal Green, and was fatally electrocuted when the flat’s crudely mounted power shower short-circuited. His employer and landlord, Shaip Nimani, was jailed for four years. In the wake of the incident, Sava’s brother said: “It appears to me that the employment laws and rules and regulations in the UK are not strong enough, and that more needs to be done to protect the welfare and wellbeing of foreign nationals, to stop incidents like this happening again.” Some will argue, however, that the recent tragic deaths of 39 Vietnamese migrants in the back of a lorry in Essex, suggests that not enough is being done.

Charity group Unseen UK aims to put a stop to such incidents, with Head of Communications Tabitha Ross calling it ‘literally a matter of life and death’, in light of the organisation’s Q2 2019 report recording a nine percent increase in labour exploitation compared to the previous three-month period. Its publicly accessible Modern Slavery Helpine has helped to identify 15,000 victims of modern slavery since it was launched in 2016, becoming one of the country’s most vital weapons in the war against labour exploitation, but now faces imminent closure.

Ross says the charity is working to save the threatened resource, and is halfway to its £800,000 fundraising target, with resources in place to ensure continued operation into 2020. She notes, however, that now is ‘a difficult time for helplines’ in general, and that many ‘up and down the country are at risk of closure’. The helpline’s closure would significantly hinder the consumer’s ability to report suspicious activity at car washes, and could open the door for traffickers to set up new car washes, and import more labourers to work at them.

KNOCK-ON EFFECT

Unfortunately, says Brian Madderson, Chairman of the Petrol Retailers Association (PRA), ‘none of our enforcers seem interested in stopping it,’ and that illicit activity of this nature has found its way into ‘almost every corner of the British Isles’. The PRA represents 70 percent of UK forecourts, and notes a significant downturn in automated car wash trade over the past ten years – a result, so it claims, of the activities of illicit traders. Other countries, Madderson says, ‘are astonished to find that we have up to 20,000 hand car washes across the UK’, where they have none. Aggravating the issue, he says, is the fact that all the equipment and chemicals necessary to running a hand car wash are available from most builders merchants with no need to show any licence or certification.

In 2018, compelled by the government’s inactivity, the Church of England’s anti-slavery arm, the Clewer Initiative, launched a free-to-use ‘Safe Car Wash’ smartphone app, which supplies data from user reports to the National Crime Agency and Gangmasters and Labour Abuse Authority. Any car wash user concerned about employees’ working conditions can answer a series of questions before contacting the Modern Slavery Helpline. The organisation sees employment at a hand car wash as a ‘gateway’ to exploitation for the vulnerable, noting that it’s often an early port of call for people brought from overseas to the UK for work.

Madderson agrees, remarking that, though the hours are long and the conditions far from ideal, car washing ‘requires zero skill’ and brings in at least ‘some money’. For the desperate – and quite often undocumented – worker, it’s the most efficient way of securing a bed and clothing. But, warns The Clewer Initiative, ‘car washes pop up and down without much warning, and may also be cutting corners in other areas’.

ACTION PLAN

The organisation has received more than 2000 reports of suspicious activity since its app launched, helping to identify sites where workers were at risk of abuse. The app’s website, however, notes: “The findings show 126 calls to the Modern Slavery Helpline were made through the app. This is disappointing, as it is only 18% of those who were asked to call.” Madderson, having worked with the app development team, hopes that ‘significant upgrades’ being made to the app will encourage more users to take action. One function being rolled out will offer the location of a nearby, vetted hand car wash, which has been designed to drive business away from trafficking gangs.

Lack of official regulation has put the problem into the hands of consumers and struggling charities, and is taking money away from the regulated car wash sector. It remains to be seen if Anti-Slavery Commissioner Sara Thornton’s bold two-year strategy will have an effect, so for now it’s a case of being on the lookout for wrongdoing, and reporting it where possible.

WHAT TO LOOK OUT FOR

– Cash: If a car wash won’t accept a card or issue a receipt, it could indicate financial misconduct, and suggest staff are not being paid properly.

– Lodging: Look out for signs that workers are living on site, or arriving at the same time every morning, as insufficient accommodation is often provided by trafficking gangs.

– Equipment: As the nights draw in and temperatures drop, look for workers with bare hands, soggy trainers and short-sleeved tops.

– Aggression: Car wash bosses could intimidate customers to prevent closer inspection into their practices. Watch for vicious dogs and potential weapons.

– Nervousness: A victim of labour abuse will probably be unwilling to look customers in the eye or handle money, and might have very poor English.

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THE ALLIANCE IS SET TO GROW

THE ALLIANCE IS SET TO GROW

You wouldn’t guess that Neil Croxson, the new(ish) CEO of the Parts Alliance had spent his earlier career in finance, because whenever we asked about money, he steered the conversation onto the subject of people.

“The job isn’t just about selling parts, I sit on the IAAF committee and I love working with suppliers and customers. There are just so many great characters,” he said, referring to GSF founder Stan West and Andrew Page, son of the founder of the once-mighty factor chain, itself a founder member of the original Parts Alliance buying group, before it left to follow its own path.

“When I agreed to follow on from Peter [Sephton, the previous CEO of the Parts Alliance] probably 90 percent of the decision was about people and the kind of people that I want to work with,” he added. “I have so much respect for these men and women. So it’s an industry about people and very fine detail.”

The ‘fine detail’ he refers to is the delicate balance of running a motor factor chain that is capable of making a profit, but can also deliver the range and service levels demanded by garages. Keeping stock levels right and then being able to get the parts to garages as fast as possible is essential to make sure the opposition don’t get the order, but the biggest cost that factors face is actually getting the part to the technician.

READ: CROXSON REPLACES SEPHTON AT THE PARTS ALLIANCE

It’s for this reason that we met Croxon in ‘Midpoint’, a newly acquired central warehouse that acts as a hub across the Parts Alliance’s various sub-brands. The place is large, though not off-the-scale huge. Rather, the building has been set up to make the most of its internal dimensions in order to house 120,000 different stock references. During our visit, the place was a hive of activity, with staff picking stock by barcode at great speed. The racks were full of all the brands stocked by the business, of course, but we were struck by the number of braking products under the Drivetec house brand there were in stock, and most of them sporting the re-imaged packaging.

“It’s a major investment we’ve made in our logistics,” said Croxson, noting that it would be hard to serve the customers without having warehouses filled with products. “GSF has always had a distribution centre of course, so we are just down the road from where it is set up. Central distribution isn’t entirely new to us”.

Perhaps it’s surprising that the Parts Alliance didn’t already have a central distribution hub, as such. After all, it was over six years ago that private equity firm Hg Capital bought the group out and began acquiring the independent chains that were once its members.

The hub is only a part of getting the maximum efficiency into every parts order. “We’re looking constantly at ways in which we can improve our processes, because if we can be more efficient, in the end it is of benefit to the garage,” said Croxson. “Keeping the garage at the forefront of our thinking is absolutely critical.”

READ: PARTS ALLIANCE OPENS NEW BRANCHES

This efficiency involves a mixture of local conditions and telemetry: “Are we routing the vans as cleverly as we can given the local traffic conditions?” wonders Croxson. “It isn’t just a case of sitting down with a map and looking at driving from one place to another. For example, many towns have a river running through them, which means there will be a bridge in the town centre where the traffic doesn’t move. It’s understanding nuances like that which will make the difference.”

“We will use telemetry to map what’s happening with the vehicles and where they are,” he added. “Technology is a huge part of our future as an industry and we’re using that technology to improve what we do. People have got used to things like the Uber app, where they can see where their taxi is, so there is no reason why we can’t do the same to see where our vans are. That technology exists to help us work more efficiently. I think the technology will become a bigger player as we go forward.”

However, it isn’t technology that will be the biggest capital spend in 2020. At a time when other chains are consolidating, the Parts Alliance is plotting expansion. “The major investment in the business will be the continued expansion of our network,” explains Croxson, adding that the firm opened a ‘jaw-dropping’ 13 branches in 2018, and another five this year. “We’re a national player, we cover most of the corners of the UK now,” he said.

At the heart of this expansion drive is the scale needed to compete at a national level. “The objective is to be able to offer our services to every garage across the country. Croxson said: “Everywhere you look on the map, there are still opportunities where we can’t provide that service to customers.” Creating a network that is truly national will, he believes, gain customer loyalty through reduced lead times. This is particularly important in a consolidating marketplace.

“The fact that there’s continued consolidation in the market recognises that what we’ve been doing is the right approach,” he said. “The market is going to change. Tech is a bigger player, driving habits are changing and cars have extended service intervals. There are changing dynamics in the marketplace and there is a need for scale. There is also a need for our customers to have scale in order to manage that.”

To plug this gap, the company needs to look beyond the mixed spread of the original buying group to fill shelf space in areas where local garages may not even be aware of the Parts Alliance or its members. Asked whether this would be achieved through acquisition or new build, Croxson replied: “We’re open to whatever opportunities are available,” adding that mapping the country had allowed them to ‘pinpoint’ where branches are required, suggesting that opening on fresh sites will be the way ahead.

One significant acquisition in 2014 was a number of branches in the South West of England picked up from the receiver following the collapse of Unipart Automotive. These branches filled a wide gap in coverage and were a significant step in the firm’s ambitions to operate right across the nation. Reusing the Unipart name wasn’t an option, meaning they were simply branded ‘Parts Alliance Southwest’. Bringing these branches into the network also meant the group was able to rehire some of the highly experienced staff from Unipart, including Paul Dineen who became Regional Business Director following the takeover.

The Unipart acquisitions were possible as at that time the Parts Alliance was owned by private equity firm Hg Capital, a decision with which Croxson, then Finance Director, was heavily involved. Given what happened to Andrew Page and others, it would be reasonable to say that the aftermarket has had mixed experiences with PE firms, but Croxson remains positive about the group’s time under Hg’s ownership. “I think private equity can have a bad name from its propensity to dip in and out” he said. “Hg Capital came in and stuck to their plan and they put their money behind it. I mean, 2014 was a difficult year for the industry.”

Croxson explained that ‘private equity’ is a catch-all term for any private money, and the strings attached will be controlled by different people with differing agendas depending on who you work with. “Any PE house is representing a set of investors. You really want to know what a PE is up to when they buy into a company. You really want to look into their funds and what they’re investing for,” he explained. “If a PE house is investing pension fund monies, then they might be more interested in turning an income stream than in turning a company and making a fast buck. Hg came in with an idea that there were a lot of independent motor factors out there. They saw that there were all these members of the Parts Alliance that were all independent, and they thought that there could be strength in bringing them together and there could be value in doing so, and they made their money out of doing so. It was good private equity”.

Hg sold the business to Canada-based parts distributor Uni Select in 2018, which displays a similar appetite for expansion, and according to Croxson has been very supportive of projects such as modernising central distribution.

However, it’s worth pointing out that the Parts Alliance, though a buying group in itself, is itself a member of larger buying group (or ‘global trading platform’ as they prefer to be called), Nexus International. Uni Select isn’t a member of any buying group so has a different sourcing strategy. This hasn’t been a problem though. “There’s a difference between the UK and the North American market. There are different vehicles on the road and different suppliers in those markets,” said Croxson.

Whoever the ultimate owner is, it seems the Parts Alliance and its people have a clear vision of the company’s future.

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INSURANCE FOR YOUNG DRIVERS

INSURANCE FOR YOUNG DRIVERS

Looking to get your young workers out on the road? Here’s how to make it affordable.

The aftermarket supports youth employment. It’s great for the industry and even better for the people being given their opportunity in a thriving work environment. If you run a business that employs young people, and require them to drive for business, you will need to consider what ramifications that has for your insurance programme.

In times of financial uncertainty, sourcing competitive rates from your suppliers is paramount. Unfortunately, adding young drivers to your motor trade or fleet insurance policy makes you less attractive to insurers. After all, it’s no secret the insurance industry doesn’t have a favourable view of covering young drivers, which can lead to eye-watering premiums for you, and even a refusal to cover those drivers at all.

However, this doesn’t have to be the case. In fact, with a bit of planning and tweaking to the way you manage your vehicles and drivers, it’s possible to manage your premiums and still give your young employees the opportunity to build their careers in a driving role.

Restrict vehicle usage

Allowing your drivers to take vehicles home can help mitigate the risks involved with having all your vehicles stored in one place and act as a significant employee benefit. But it also increases the risk of incident in the eyes of insurance companies, especially if social use is permitted. Consider restricting this access to older and more experienced drivers only and exclude social use if you can.

With night driving considered another risk factor you could restrict your younger drivers from using your vehicles during the hours of darkness.

Consider your excess

Most insurers will insist on a higher excess if a driver has held their license for less than 12 months, though some specialist policies will negate this. Increased excesses can also apply to drivers under 25.

However, you can also voluntarily increase your policy’s standard excess, which may lower your premiums. This works particularly well if you generally don’t claim for minor damage. Some companies also make employees liable for any excess charges that might occur, to offset the potentially increased costs of repairs.

Monitor with telemetry

Driver training courses can give younger, less experienced drivers a better understanding of safe and responsible motoring, and can count in your favour when it comes to calculating premiums.

Fitting cameras and telematics can also help reduce insurance costs. In fact, the simple presence of a camera has been proven to improve people’s driving style. Telematic data can even be used to form a league table for your drivers, and create a bonus structure that rewards good driving.

Disciplinary process

Do you have a robust disciplinary process for your drivers? One where they can be taken off the road whilst a situation or concern is resolved? If not, we’d recommend one is implemented. Being able to demonstrate you have policies like this in place demonstrates to insurers you are taking the necessary steps to mitigate risk, a key factor when looking to reduce premiums.

Article by Joe Howard, Associate Director at Norwich-based insurance firm Hugh J Boswell

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BUYING IN TO A FRANCHISE

Business can be tough for small and local, independent firms. Despite the freedoms associated with running a business that is at liberty to do whatever it likes in terms of appearance, business model, etc., there isn’t the financial assistance or technical information that a bigger brand, franchiser or buying group can provide.

One business owner who has had a thorough experience with an automotive garage franchise is Kamran Saleem, now owner of the independent MotorServ UK service centre business. Prior to running his current venture, Saleem operated a branch of the iAuto garage network. Describing the initial set-up of the branch, Saleem said: “The actual delivery and installs and everything of equipment and fixtures for the garage, that actually ran very smoothly and we were very happy with what was going on at the start of the franchise, it was brilliant. They provided a lot of support.”

Saleem and a technician in the workshop

Through the iAuto network, Saleem, whose background was in automotive sales and ‘knew as much about car servicing as the man in the street’, was able to learn the ins and outs of the industry. “It gave me the insight, all the trade secrets, background etc. So that’s probably a year’s worth of experience in a week,” he said. At the time, Saleem was paying five percent of turnover as a franchise fee, as well as some fees for software licences.

Marketing

Initially, Saleem recalled that things like supplies, kit, trade contacts, branding and more were ‘spot on’, but issues started to arise after the set-up. “When we actually opened, day one, it was like: ‘okay, how do we get the cars in now?’,” he said. Sales did not pick up substantially, and Saleem noted that a lack of marketing by the franchise did not help. “What they needed to do is focus on marketing, focus on sales, focus on this or that, but they were too busy selling franchises that they were over run.” Plus, Saleem claims that his own efforts to market the business were not heeded quickly as all the initiatives needed approval which too long to obtain.

Eventually, Saleem decided to leave the franchise, which was a negative experience in itself, requiring the need for a BFA lawyer. “The franchise agreement, they’re heavily weighted towards the franchisor,” said Saleem. “There aren’t a lot of lawyers around that will actually take on a franchise agreement that’s written properly.” iAuto agreed to terminate the contract, but Saleem claims it took ‘about nine months in total to get out’, and ‘ended up costing me probably £70k in costs and loss in income and sales growth during the period all this was going on’.

Programmes

However, Wendy Williamson, Chief Executive of the IAAF, makes a distinction between franchises and garage programmes and believes that the latter are beneficial for the industry. “To me, the definition of a ‘franchise’ is a business that is absolutely run to a very tight set of rules and regulations,” she said. “And I think it’s not what we see in the aftermarket. We see garage programmes where the independent garage still has their independence, they are still Joe Bloggs independent garage…”

Williamson was once involved in the Unipart Car Care Centre scheme, which provided a ‘much more professional image for the garage,’ she explained. “These days, many of our key distributors offer similar programmes with UAN, Groupauto, UK Parts Alliance, ECP, all having very similar programmes which I’m a big fan of and still think they are absolutely key to giving garages as much support as they possibly can,” she said.

Ultimately, when it comes to pros versus cons, Williamson notes that: “I wouldn’t necessarily really see that many cons with these programmes”, and thinks challenges facing the independent aftermarket such as connected vehicles and data access mean that: “the more that the independent sector can support each other right the way through the supply chain, the better it is for the whole sector.”

There are benefits to being being in a group or franchise, but talking to fellow businesses within the industry might help.

“Don’t necessarily rely upon the data that you’re given by the franchisor. Look at the other franchisees, if they exist; you’re going to be in their shoes after all,” said Saleem.

“So make sure you’ve got access to them. And if you are blocked access to the other franchisees or you’re not given the opportunity to discuss things … then there might be something up”  he concluded.Buis

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