ILC ARTICLE

Window of opportunity for reform closing quickly

23rd July 2020

Time is running out for the incident repair aftermarket industry to make the most of this unheralded period to reform for the better.

Despite good intentions, little hard and fast action has been taken to improve the sector in the ways discussed at the outset of the pandemic, and the fear now is that as businesses start up again the old working practices are starting to creep back in.

Lost opportunity

Speaking at the 19^th ARC360 webinar, held in association with I Love Claims, Richard Steer, CEO, Steer Automotive Group, said, ‘It’s looking like a lost opportunity at the moment. People are naturally very reluctant to give up their competitive advantages, but it would be a shame if we don’t use technology to improve efficiencies within the industry, speed up service, and deliver better customer service. These are the things we’ve been talking about and why can’t we achieve them? The technology is there.’

He was joined on the panel by Rick Kerry, director, Ipswich Accident Repair Centre, and NBRA executive director Chris Weeks, who added, ‘Ever since I’ve been at the NBRA I’ve really wanted to see the market evolve and mature, but no one ever puts the ball in the back of the net; we just talk about it.

‘This will be a huge missed opportunity if we don’t make use of the meteoric impact of Covid-19 to find win-wins. There is always a win-win if you think hard enough and debate hard enough.’

Challenge

However, the concern is that a new wave of challenges will sweep through the sector before any lasting changes can be instilled.

In many ways bodyshops are operating from within a protective bubble at the moment, with certain payments deferred, government support schemes still in effect, and a flexible workforce enabling them to adjust staffing levels to meet peaks and troughs. However, the clock is ticking down on all these measures and the most significant of them, the Coronavirus Job Retention Scheme, comes to a dead end on 31 October.

Decision time

Before then, bodyshops will have to make difficult and lasting decisions – and they will have to do so with little sign of what the winter may bring in terms of volumes and further lockdowns.

Chris said, ‘There are a lot of headwinds coming this way: the continued claims challenge; the erosion of the Jobs Retentions Scheme, which will close around people’s necks like a noose; and the sustained losses from lockdown.

‘People are also worried about a second wave – globally the pandemic is worse now than it has ever been – and they are enormously concerned that parts discounts and other aid packages will start to evaporate because now is not the time to start pulling support away.

‘But making decisions about staffing levels will be critical. If they keep too many people on they won’t be efficient and will lose money, but if they don’t have enough they won’t be able to handle the workload.’

Choice

In some ways bodyshops are caught between a rock and a hard place – retaining all their staff and hoping volumes don’t stagnate and that there is no second wave or facing the huge cost implications of redundancies.

Rick said, ‘If you make three or four people who have been with you a while redundant then you could wipe out profits for a year – even a good year. So, what do you do, give them three days’ work a week and hope they get a job somewhere else? I think the furlough scheme is saving a lot of businesses at the moment, but there is a storm coming in September and October.’

Incredibly, Richard estimated that keeping staff on furlough until the start of November will cost his business upwards of £100,000, but he said without sufficient referrals there has been no option. ‘It’s a constant balancing act,’ he said.

A live online poll held during the webinar underlined the extent of the problem, with 58% of respondents saying they are also treading the furlough/volume line. A further 21% said they were in the process of streamlining headcount – with the same number, encouragingly, looking to increase their workforce numbers.

Impetus

There is a hope that September will add impetus to the recovery, with schools returning and the government’s advice to return to work taking hold, but for now the market appears to have plateaued around the 60-70% mark, a figure recognised by both Richard and Rick. That status quo is expected to remain in place, with 61% of respondents to the ARC360 poll believing there will be no major change during the holiday season (17% actually predicting a further slowdown).

Meanwhile, ARC360 partner Entegral, which measures Enterprise Rent-A-Car customer claims activity, reported a 15% increase in week-on-week claims volume, following a seven per cent decrease the previous week, with new hotspots identified in Cannock, Monmouth, Stansted, Exeter and Boston.

Diverse

Rick said, ‘We’re quite diverse in our work so we’ve got a few jobs that maybe other bodyshops won’t be getting, which has helped to keep volumes up. This period has given us time to look at the business and we want to change things, but at the moment it’s just survival of the fittest and we just want to make sure we’re in the count.’

Richard agreed. ‘There aren’t any winners in this – just survivors. But we all rely on each other, we all have to be here to make this ecosystem work, so we need to pull together to make sure as many of us as possible survive.’

Chris concluded, ‘Covid-19 hasn’t gone away. We’re very much in the eye of the storm still and there are a lot of worried people out there.’

ARC360, in association with I Love Claims, is supported by corporate partners ACIS, BMS, Copart, EMACS, Entegral, Enterprise Rent-a-Car, Nationwide Vehicle Recovery Assistance, S&G Response and CAPS; partners The Green Parts Specialists, Indasa, and Innovation Group; and strategic partners AutoRaise; NBRA; RepairTalks; and TrendTracker.