As the country comes to terms with the fall-out from the Brexit vote, Neil Pattemore gives some early insight into how our aftermarket might be affected.
I think I’m fairly safe in stating that theresult of the referendum was unexpected by many. Whether itcame as a complete shock or a pleasant surprise (depending on how you voted) the decision is made, and we now need to move forward to optimise the future the country has voted for.
Apart from the significant change to many of the politicians involved, one thing is for sure – for the UK aftermarket not much will change overnight. It will take some time to start the negotiations with the
EU once the Article 50 has been enacted, but even then, the priority will be on the high level agreements that will govern trade, immigration, finance and other ‘strategic’ issues. The most immediate affect may be the ‘nervousness’ of the markets and the consequential impact on exchange rates. This is unlikely to become any more stable until long after Article 50 of the Lisbon Treaty has been enacted.
So from the independent workshop perspective, which reportedly was heavily supportive of leaving the EU, what are the likely effects?
1. Interest rates may initially fall, but could then rise – but I suspect that most aftermarket businesses will be acting more cautiously and delaying any capital investment until the future direction of the
UK becomes clearer, rather than taking advantage of the lower rates. Uncertainty, lower confidence levels and unfavourable exchange rates will also impact new car sales, but this will also mean that people
are likely to keep their vehicles longer and perhaps even take more ‘staycations’, benefiting the aftermarket overall.
2. Worsening exchange rates are also likely to drive up the cost of replacement parts.
The UK aftermarket is vibrant, highly competitive and diverse, but its facing a background of increasing vehicle technology. So is the potential loss of European legislation going to adversely impact independent workshops?
From a regulatory viewpoint, little should change for the automotive industry. European vehicle Type Approval regulations are jointly developed through the ‘UN World Forum for the Harmonisation of
Vehicle Regulations’ in Geneva and Brussels. As a member of the World Forum, Britain has always been a key player in defining these requirements.
There will be no interest on the part of UK Regulators in leaving this international automotive regulatory system, so the main challenge will largely be in transposing UN/EU regulations into UK legislation to
directly replace the current system. As Euro 5 legislation is a vehicle Type Approval Regulation, this is unlikely to change, ensuring continued obligations on VMs to provide full repair and maintenance
information to independent operators for post-2011 vehicles.
However, pre-2011 vehicles are covered by the Block Exemption Regulation (BER), which is based on Competition Law, so although considered to be under threat, it would be a brave Government who did not continue to ensure manufacturer’s obligations to provide the required technical information that supports affordable vehicle repairs for millions of British motorists (who are also voters).
Fully engaged
Replacement parts Type Approvals granted by any EU member state will remain valid in the UK, just as EU members will continue to accept British approvals because these fall under the UN, not the EU, system. The UK has been and is likely to remain fully engaged with the international automotive regulatory requirements.
Future restrictions on immigration may also impact recruitment of lower paid staff or make it more difficult to find trained vehicle techniciansLooking slightly further ahead, the UK Government will
need to consider advances in vehicle technology, especially the remote connection to the vehicle (telematics) that will be implemented on all new Type Approved vehicles from May 2018 as part of ‘eCall’. This is linked to higher customer expectations with the connected car, leading to further
opportunities to develop new services, increasing consumer loyalty and reducing wo rkshop operating costs. Importantly for independent wo rkshops, it is about still being able to continue to connect to the car and access its data.
The real challenge of Brex it will therefore be about future legislation being agreed with the UK Government and this will require a co-ordinated UK aftermarket to lobby the legislators. As such, there has never been a more important time to join and support the aftermarket trade organisations so that we can continue the fight for your future!
