Aftermarket May 2022

MAY 2022 AFTERMARKET 15 www.aftermarketonline.net Sue concluded: “It is crucial that the government does all in its powers to support businesses and consumers to counterbalance the cost-of-living strain facing the country. As an industry, this is coupled with the challenging deadlines we are striving to meet to successfully transition to zero emission transportation.” Disadvantage On the 5 pence fuel duty cut. Gordon Balmer, Executive Director of the PRA said: “The fuel duty announcement is a step in the right direction, but it does not go far enough to ease the burden on motorists. “Other European countries have gone further: for example, Ireland has cut duty by 17 pence, leaving our members in Northern Ireland at a competitive disadvantage as they are unable to compete with prices across the border. “While the Chancellor was speaking, the price of Brent Crude went up by $6 a barrel, meaning that rising prices will see the 5 pence cut cancelled out almost immediately. Retailers are holding duty-paid stock which will be sold before the fuel duty cuts come in. To give the motorist an immediate discount at the pumps, the Chancellor would have to backdate the fuel duty cut to 1 March.” Pressure On the overall impact the measures might have on the prevailing economic situation, Philip Nothard, Chair of the Vehicle Remarketing Association (VRA), said: “In the same week as this Spring Statement, inflation reached a high not seen in 30 years while fuel prices hit record levels. We are seeing pressure on costs across the economy on a scale that has not been present in decades. “In the face of such major forces, the Chancellor has taken some action, and promised more in the future in the shape of his tax plan, but really nothing that is going to have a significant effect. It’s fairly clear that vehicle buyers and the remarketing businesses that serve them are only going to received limited help from government when it comes to coping with these pressures. After the high levels of government intervention seen during lockdowns, we’re back to something resembling business as usual.” Philip added: “While there appears to be general agreement within remarketing that the used vehicle sector is sufficiently resilient to resist these issues at this point in time, it remains unknown what will happen if economic conditions continue to worsen over time, especially given downgraded forecasts covering growth and inflation, and in the face of issues that are difficult to call, such as we are seeing in Ukraine.” Paul Burgess, CEO at Startline Motor Finance, said that the measures did not go far enough, particularly considering the economic outlook: “The Chancellor has made some effort in his statement to stave off the effects of the rapidly rising cost of living but these are largely marginal. Reducing fuel duty by 5 pence when petrol and diesel has risen 30-40 pence per litre over the last year is only going to bring slight relief while the National Insurance alignment means just a few hundred pounds and the cut in income tax won’t arrive for another two years. “Whilst recognising the human tragedy unfolding in Ukraine, the underlying question for the used car sector in general is whether low growth, high inflation, now forecast to beat 7%, and other factors likely to impact on consumer confidence such as the situation in Ukraine are going to have a negative effect on sales and values. Our view is that the market is sufficiently buoyant and stock in such short supply that it will remain relatively strong.” Significant According to Nick Zapolski from used car buying service ChooseMyCar.com, the 5 pence fuel duty reduction is not enough: “While we all expected a decrease in fuel duty, the 5 pence trim is a mere drop in the ocean and will not be a significant help for most of us. The 5 pence reduction in fuel duty will see about a £2 saving for most people when they fill the tank. It’s lucky so many of us are still remote working as people can’t afford to work. Our research released this week showed that 45% of people admitted they are struggling to afford to run their cars to get to work.” For garages that provide servicing and repairs to businesses with small fleets, the measures may be welcomed by these customers, as Nick McClellan, Managing Director at vehicle tracking, dash cam and fleet management company RAM Tracking, said: “The cut in fuel duty is welcome news and could amount to savings of around £87 per vehicle per year or over £600 per year for an SME fleet of seven vehicles. “Fuel duty adds almost 58 pence per litre to the price of fuel and with prices in the UK having recently hit a new record high, with the average cost of petrol at £1.65 a litre and diesel at £1.76 a litre, this 5 pence reduction is badly needed for drivers and for many small and medium sized busineses.” Nick also suggested that simple vehicle maintenance application and behaviour changes could make a real difference at the moment: “At a time of high costs of living and rising energy prices, it’s worth changing driver behaviour to minimise burning precious fuel, such as avoid idling for too long, keeping tyres pumped up, not going too fast or too slow, avoiding braking aggressively and better route optimisation.” Transformation Summing up, according to Mike Hawes, SMMT Chief Executive, while the Chancellor’s measures may offer a degree of pressure alleviation for individuals and families, more could have been done to offer support to business at a difficult moment: “Measures to help address the accelerating cost of living are welcome but business also needs support, especially on energy, investment and skills. Time is of the essence as the industry is not yet in recovery but costs are increasing rapidly, undermining U.K. competitiveness. government could have acted to help automotive manufacturers alleviate soaring business energy costs and encourage investment.” The move to EVs will require ongoing support too: “We look forward to working with government on its proposals for business investment and, especially, super deductions which are highly valued. Manufacturers have committed £10.8 billion to UK EV and battery R&D and production in our first ‘electric decade’.” Mike added: “Driving even more investment will be essential if we are to supercharge automotive manufacturing, and the jobs and economic growth it creates, during its biggest transformation in 100 years.” The Chancellor has taken a number of positive steps, but the measures announced fall short of supporting businesses... ”