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SMMT PUSHES FOR POST-LOCKDOWN SCRAPPAGE SCHEME

SMMT PUSHES FOR POST-LOCKDOWN SCRAPPAGE SCHEME

A leaked letter from the SMMT to Chancellor Rishi Sunak and Business Secretary Alok Sharma has revealed that the SMMT is campaigning for a 1.5bn scrappage scheme to revitalise the British automotive industry in the wake of the pandemic.

First reported by The Guardian, the letter allegedly argued the case for a “market stimulus package”  that can “support the entire market, not just disproportionately favouring specific segments or technologies, recognising the diverse nature of UK automotive manufacturing”.

To this end, any such scheme should encourage the purchase of combustion-engined cars as well as EVs, said the SMMT, with discounts of £2500 hoped to put 600,000 new vehicles on the road.

READ: LKQ PLOTS GROWTH AFTER CORONAVIRUS PANDEMIC

The last scrappage scheme, in 2009, offered new car buyers £2000 in exchange for their old vehicle as part of the industry’s recovery from the recession, with more than 400,000 vehicles sold as a result.

The Guardian quotes the SMMT as arguing that a new scheme “could also support wider government ambitions in terms of climate change and improved air quality”, but that the primary benefit “would be in jump-starting the market, the sector and the economy without further drain on the public purse”.

Further proposed benefits include taking automotive workers off the Government’s job retention scheme and reducing the risk of mass redundancies by driving demand for new vehicles.

The new car industry has suffered a significant and rapid downturn during the pandemic. In April – when most British manufacturers had paused production – just 4321 cars were sold, and recent figures show that just over 20,000 were sold in May.

READ: WHO BENEFITS FROM SCRAPPAGE?

But such a move would be unpopular with the aftermarket. The IAAF argues that most vehicles taken off the road would be ‘very much roadworthy’, meaning a scrappage scheme would “have a significantly negative effect on public mobility and the automotive aftermarket”.

Chief Executive Wendy Williamson said last month: “Motorists are currently under great pressure, and they should not be penalised for keeping hold of vehicles that are in good working condition and can continue to be serviced, repaired and maintained long into the future.

“Not only is this unfair to consumers, but it is putting the aftermarket at great risk, as it will result in a direct decrease in the number of vehicles entering independent garages.”

The IAAF suggests that, rather than implementing a universal, nationwide scheme, the Government should instead target drivers who live or work in low-emission zones, as they will be more likely to swap into a cleaner, newer vehicle.

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NATIONAL ‘FURLOUGH REGISTER’ FOR APPRENTICES GOES LIVE

NATIONAL ‘FURLOUGH REGISTER’ FOR APPRENTICES GOES LIVE

Training and technical body, the IMI has warned of a ‘dire shortage of skills’ if the industry loses track of the thousands of apprentices currently on furlough.

For this reason, the IMI has launched a ‘Furlough Register’ for apprentices to ensure they don’t fall out of the loop.

READ: FURLOUGH SCHEME EXTENDED UNTIL OCTOBER

Warning that 83 percent of apprentices were unable to study as they did before lockdown, Steve Nash, CEO of the IMI

IMI Chief Exec Steve Nash

commented: “A big concern for us in terms of whether the apprentices will actually return to the workplace at the end of the furlough period. And that is not only a risk for the sector as it needs to be well prepared and well-skilled for the next generation of automotive technology. It is also a huge waste of the investment already made by the apprentices, their training centres and employers.”

READ: UK AFTERMARKET COMBINES TO PRODUCE RESTART GUIDE

Feedback to the IMI suggests that communication with furloughed employees. Apprentices have also reported looking for their own ways to continue their studies, using their initiative to access sources of learning materials and teaching themselves, which the new register will provide.

“The goal with the IMI Furlough Register is to be able to easily identify the apprentices who need support – and provide them with a range of learning tools they can access for free as and when they need them”, concluded Steve Nash.

Apprentices can complete the IMI survey here to join the Furlough Register.

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UK AFTERMARKET COMBINES TO PRODUCE ‘RESTART’ GUIDE

UK AFTERMARKET COMBINES TO PRODUCE ‘RESTART’ GUIDE

UK aftermarket trade bodies have combined to produce a guide for businesses on how to operate safely during the current crisis. 

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

The best-practice guidance covers the entire aftermarket sector, including workshops, warehouses, mobile operations and parts distributors. It covers every aspect of their operations, from safely communicating with customers and colleagues to social distancing, sanitisation and hygiene, and collection/delivery of vehicles from vulnerable owners. It is designed to complement government advice and help the aftermarket sector demonstrate safe practices for employees and customers across all points of interaction. It comes as vehicle mileages start to climb and the sector calls for an end to the six-month MOT extension.

READ: CORONAVIRUS: FACTORS TO REMAIN OPEN

Although workshops have been allowed to stay open throughout the lockdown the new guidance will help companies of all types and sizes in the aftermarket operate safely while minimising the risk of virus transmission.

The guidance has been written by representatives of the IAAF, IMI and SMMT as well as the Garage Equipment Association (GEA). You can read it here

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BREAKING: AUTOMECHANIKA 2020 CANCELLED

BREAKING: AUTOMECHANIKA 2020 CANCELLED

Automechanika Frankfurt will not happen in 2020 it has been announced.  The event will instead be held in 2021 and in odd years thereafter.

 

In a statement, the organisers said: “As you might have already expected: This is to inform you that Automechanika Frankfurt, the international industry gathering for the automotive aftermarket, is being postponed until 14 to 18 September 2021 in response to local and global measures implemented to stop the spread of COVID 19. From then on it will take place in the odd years”.

Detlef Braun, Member of the Executive Board of Messe Frankfurt, explained:

 “Our top priority is ensuring the health and safety of everyone – exhibitors and visitors alike – taking part in the event. With waves of the pandemic moving around the globe and many countries not expecting it to peak until the summer, I am certain that the decision to postpone Automechanika until September 2021 is the right one. Over the past two weeks in particular, we have been engaged in intensive discussions with our customers, partners and supporting associations, and they sent us a clear signal. By holding the event in 2021, we are responding to our customers’ wishes.”.

Automechanika Birmingham will happen in the same year as planned, due to ‘pent up demand’ in the UK aftermarket.

 

We’ll bring you more on this breaking story as we get it.

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LKQ BOSS: INVESTMENTS UNDER REVIEW ‘TO SECURE LIQUIDITY’

LKQ BOSS: INVESTMENTS UNDER REVIEW ‘TO SECURE LIQUIDITY’

Arnd Franz, CEO of LKQ Europe has spoken in an interview about the direction of the group as the region emerges from lockdown. 

Speaking to German weekly, Automobilwoche, Franz explained that investments planned by the company needed to be under close review ‘not only to adjust capacity, but also to secure liquidity’.

READ:  WALKOUT AT EURO CAR PARTS

However, Franz was keen to point out that any review did not affect the large distribution centre, currently under construction in the Netherlands.

“We are providing a medium double-digit million-euro amount for this. Our plan is to complete this project by the end of the year. This will not change at all” he said.

READ: LKQ CONFERENCE FOCUSSES ON CHANGE MANAGEMENT

Also in the interview, Franz explained that independent garages might see some business return soon, though 2020 will understandably be down on 2019. ‘Perhaps we will have a chance of recovery towards the end of the second quarter, but perhaps not until the third quarter’ he said.

Last month he explained in another interview that an ‘integration’ of the systems and processes used by the firm’s many brands over Europe was required.

 

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TM FACTORS SUPPORTS LOCAL COMMUNITY WORKERS

TM FACTORS SUPPORTS LOCAL COMMUNITY WORKERS

Independent parts distributor TM Factors Hereford is helping its local community by carrying out a number of goodwill gestures for individuals and local charities supporting vulnerable people.

READ: SUPERCHIPS IN ADMINISTRATION FOLLOWING COVID-19 CLOSURE

The business also organised a collaborative effort to help a front line nurse at Hereford City hospital, whose car had broken down and needed a new clutch, tyres, pads and discs.  Enlisting the support of Eurocars Autocare Garage to provide the repairs, TMD Friction to supply the pads and discs, Chrispins Paint and Bodyshop the gearbox, Valeo the clutch and John Wood Tyres to provide the new tyres, this incredible effort successfully got the nurse’s car back on the road, ready for her night shift.

READ: CORONAVIRUS: FACTORS TO REMAIN OPEN

Director Melissa Portman-Lewis said: “I have been overwhelmed by the kindness shown by local people and the motor trade and I want to continue this combined effort to go further and offer more support to those that need it most. The motor trade is making a real positive impact to people’s lives, using its expertise, logistics and generosity to provide a solution for people during this extremely difficult time.”

The local NHS is also benefiting from the use of the firm’s vans, with voluntary drivers delivering prescriptions where needed.

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EXTENDED MOT WILL HAVE ‘CATASTROPHIC’ EFFECT SAY TRADE BODIES

EXTENDED MOT WILL HAVE ‘CATASTROPHIC’ EFFECT SAY TRADE BODIES

Two trade bodies have issued warnings about the likely impact that the MOT extension will have on independent garages and parts distributors. 

Both The IGA and the IAAF have written to the government to explain how they believe the extension will impact our trade. 

In its letter, the IGA included a suggestion that proposing to government that they start with an initial six-week MOT extension period, which could then then be reviewed on a weekly basis, rather than a blanket six-month extension. 

READ: IAAF BOSS: GOVT. MUST HELP THE AFTERMARKET

In a statement, the trade body said: ‘The government needs to consider that many MOT operations, being small businesses, will have their cashflow seriously impacted once this situation is over. Next year will bring about a significant reduction of tests in March, April and May and with some businesses in this sector only conducting MOT tests, in these instances, the crisis will extend for many years ahead’.

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

Stuart James, IGA Chief Executive states: “We really need the government to take this on board. We understand that measures need to be put in place to fight the virus, and support these measures, however we do not agree with the six months extension of MOTs. We urge the government to show a degree of flexibility, as the repercussions for the independent sector will be severe.”

“Better guidance also needs to be given to the public regarding the extension to ensure that vehicles remain roadworthy.”

Meanwhile, The IAAF has said the decision to extend MOTs causes “huge challenges” for the sector, arguing that the industry needs to ensure ‘vehicles continue to be kept safe in these challenging times’. 

 

After receiving feedback from its membership of suppliers and distributors, the IAAF found that many motor factors fear that without MOT business, some garages will no longer be viable.

 

Another concern expressed by members is that the majority of consumers do not realise that they are expected to ensure their vehicle is roadworthy and if not, they could face large fines and penalty points. Failure to meet the Government’s “roadworthy” condition specification means that some vehicles will be driven in a dangerous condition, and in turn would allow the insurance companies to refuse to honour the insurance as they’d be able to demonstrate that the car or van was in an un-roadworthy condition. 

 

Wendy Williamson, IAAF chief executive, said: “The extension is having a ‘catastrophic’ knock on effect on the parts supply chain who are struggling to keep open. Business is down at least 50 percent and some outlets have already closed. We absolutely need to keep essential logistics, blue light services and key workers on the move but these groups could struggle to find anyone open for either parts or repair.”

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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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UPDATE: SPARTAN MOTOR FACTORS ENTERS ADMINISTRATION

UPDATE: SPARTAN MOTOR FACTORS ENTERS ADMINISTRATION

***UPDATE: March 19, 14:30. Branches are trading again and CAT understands talks are underway with a potential buyer*** 

 

***UPDATE: Spartan acquired by Motormania holding company ****

 

Cardiff-based Spartan Motor Factors, which operates a number of branches and employs 145 people across South Wales and the west of England, has entered administration.

The administration process will be carried out by Deloitte’s Cardiff office. CAT spoke to a Deloitte representative, who confirmed that the firm was appointed on 13 March.

Deloitte also said there have been no redundancies so far, but was unable to confirm whether Spartan’s Newport head office and 10 additional branches were operating as usual.

READ: GROWTH IN SPARTAN TIMES

Founded in January 2012, Spartan claims to have “one of the largest distribution centres and stockholdings in the South West”, with over 500,000 individual references available to order. A USP of the firm was a two-year guarantee on each parts sold. In its early years, Spartan won CAT’s Independent Factor of the Year award three times, and more recently picked up an award for enterprise from the Welsh government. 

READ: SPARTAN LEAVES PARTS DISTRIBUTION PARTNERSHIP FOR IFA

In 2018, Spartan rapidly expanded, opening two new branches in Blackwood and Swansea, shortly after cutting the ribbon at a new site in Pontypridd and a specialist cooling centre in Abercarn. Director Lee Gratton at the time said: “We are actively looking to expand the Spartan network further into England through either acquisitions or branch openings if the right individuals approach us.”

An official statement from Deloitte is expected to be released imminently. We’ll post it as soon as we have it.  

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FORD TO CLOSE HALF OF UK DEALERSHIPS

FORD TO CLOSE HALF OF UK DEALERSHIPS

Ford is set to close around 50 percent of its UK dealerships as it embarks on a bold strategy to streamline its commercial operations.

The move, which was announced at an investor conference today (26 January), is part of the ‘Ford 2025 dealer plan’ which the brand says hopes will build “a stronger and more sustainably profitable Ford sales and servicing network”. Between 210 and 230 stores are expected to be affected.

It is hoped that the majority of the affected dealers will remain in operation as dedicated aftersales hubs, and the firm anticipates that 90 percent of new car buyers will still be able to reach a dealership within 30 minutes.

Some of Ford’s smaller UK dealerships will be converted into standalone service centres, with Ford claiming that “customers will not be unduly inconvenienced” by the shake-up.

An official Ford statement read: “We are working together in a spirit of partnership with our dealers and their investors to build a stronger and more sustainably profitable Ford sales and servicing network for the future in the UK, which works for the mutual benefit of our businesses and for our commercial and passenger vehicle customers.”

It is the largest consolidation of a VM dealer network in UK to date, and follows similar downsizing initiatives at Honda and Vauxhall. Despite heavy restructuring over the last 20 years, Ford has concluded that “dealer network profitability is still not sustainable”.

READ: SCOTTISH DEALERSHIP SALE SAVES 101 JOBS

Vehicle manufacturers are gradually exploring new ways of selling new cars. Last year saw Volvo launch the ‘UK’s most comprehensive’ online car sales service, while Mercedes activated a new digital showroom this week, which provides real-time stock availability data and a finance quote function.

At the beginning of 2019, Ford revealed the first details of its overhauled European business strategy as part of a $14bn drive to cut costs globally.

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