Despite the country entering Lockdown 2:0 and lingering uncertainty beyond the proposed lifting of restrictions on 2 December, the incident repair aftermarket appears to be in a positive frame of mind.
A highly encouraging 88% of respondents to an online poll said they were either confident (53%) or very confident (35%) of managing this current lockdown and any subsequent regional restrictions that may be imposed this year or next.
The live poll was carried out during the ARC360, in association with I Love Claims, webinar on Wednesday 11 November, which focused on the fourth quarter of 2020 and asked: where are we now?
Marc Holding, managing director of the Vella Group, summed it up succinctly: ‘I think like a lot of people we’ve got a ‘been there, done that’ attitude.’
Lockdown
While this national lockdown is not as severe as its spring predecessor, its impact, coming on the back of a two-week firebreak in Wales; intensified restrictions in Northern Ireland; the five tier system in Scotland; and the previous three tier system in England, has still been significant. That was underlined by another live poll, which split respondents almost down the middle between those reporting a decrease in recent weeks (54%) and those saying volumes had either been static or risen (46%).
Marc continued, ‘The majority of our sites sit in the Lancashire area so we feel like we’ve never really been out of lockdown. Like the wider industry we had the dip, got volumes back up and then expected an upward gradient with schools going back. We got back to 75-80%, but then we started to see a deterioration in volumes pre-lockdown 2.0 and last week we probably averaged out at about 60%.
‘But it’s hard to tell how much lag there is on claims coming through and, at the moment, we’re operating day-to-day because it’s just so volatile.’
Volatile
Volatile was also the word used by Michael Golding, network manager at LV=, who, along with Joe March, head of commercial and network management, Hills Salvage & Recycling Ltd, joined Marc on the ARC360 panel. Michael explained that a few regions, such as London and Leicester, had remained constant despite restrictions but the fluctuations throughout most of the country made forecasting next to impossible.
Michael said, ‘We were all set to go and then Lockdown 2:0 came along and everything stalled. We’ve definitely seen a slump this week but speaking to repairers, many are a lot more prepared this time and have just carried on.’
Optimism
One reason for this sense of optimism is the announcement that the Jobs Retention Scheme (furlough) has been extended to March 2021. That has instilled confidence within many businesses and allowed them to manage costs into next year.
Marc said, ‘The change to flexi-furlough has been a real blessing. One of our biggest costs is staffing so being able to turn staff cost into a variable cost has allowed us to turn it up and down according to volumes.’
Moreover, many operations have now turned their eyes to next year and are well advanced with preparations to help them succeed in whatever the ‘new normal’ turns out to be. A third poll found that 60% were already looking to the second quarter of 2021 while a further 28% expect trading will only settle down again in the third quarter.
Longer term
Michael said, ‘December will be what it will be. I wouldn’t say we’ve written off the rest of the year, but our efforts are going into longer term planning.’
For LV=, that means preparing for a new way of working with greater automation and live chat services with repairers, while also shaping the business to handle unpredictable volume levels, more remote working, a diluted rush hour and a potential shift away from public transport.
Meanwhile, Hills Salvage and Recycling is also looking ahead, and benefiting from its diverse business model. It has been able to absorb a fall in salvage volumes by concentrating on green parts supply; demand has escalated in this area and Joe thinks it’s partly because repairers are seeing older vehicles and, without the usual churn, able to look a bit harder for repair solutions.
He said, ‘We’re putting all our resources into our green parts business. That’s where we see our upside coming from next year.’
Staff
However, one note of caution in the short-term surrounds the wellbeing of staff, many of whom are suffering ‘Covid fatigue’. While there was a sense of unity within the country during the first lockdown, that has splintered this time around with more people sceptical of the benefits, confused by the rules and fed up with the restrictions.
Marc said, ‘Everyone is hitting the mental wall and we have to be really careful how we manage the human element of the business. We have a strong HR team focusing on wellbeing and a lot of it is just about being aware of co-workers. But we all know people who have really struggled and from a human capital point of view, we don’t want to get into 2021 with everyone bruised and battered and run down. As an employer, we have to tread a fine line between caring for our staff and intruding into their lives.’
Reassurance
Joe said the key thing was reassurance, particularly with dire unemployment forecasts. And while reassuring staff verbally is always a positive, actions speak louder than words and to instil a sense of worth and confidence in his workforce Joe has been training many to carry out dual roles. He explained that those who wanted to come back to work but were not able to because their particular departments were quiet, had now come back to assist in other areas of the business.
He said, ‘The honeymoon period of being at home has long gone for most people and they want to be at work and they want to feel valued. We’re expanding our site to 26 acres and undertaking a massive restructure, so training people to come in and keep contributing to the business has been a key thing for us and them.’
Data
Meanwhile, the webinar also revealed some telling data from the past weeks. It showed how, according to CAPS, unique claims spiked from 90% to 106% from the week ending 31 October to the week ending 7 November, as motorists rushed to beat lockdown.
Further, the TomTom Traffic Index highlighted how congestion during last Wednesday’s rush hour tracked above both 2019 and the previous week’s levels but had dipped below both by the start of following week as lockdown took hold. Similarly, the number of people driving, walking and using public transport had all tailed off from the mid-September peaks according to Apple data.
ARC360, in association with I Love Claims, is supported by corporate partners BASF, BMS, Copart, EMACS, Entegral, Enterprise Rent-a-Car, Mirka, Nationwide Vehicle Recovery Assistance, S&G Response, Sherwin Williams and CAPS; partners asTech, The Green Parts Specialists, Indasa, Innovation Group and Prasco; and strategic partners AutoRaise; NBRA; RepairTalks; and TrendTracker.
