SMTA Auto Insight – Issue 16

Why use SMTA QMS?

Currently we carry out over 800 QMS surveys per annum! Participation in the QMS programme and adhering to its standards should also substantially reduce the likelihood for DVSA to consider taking disciplinary action against a Vehicle Testing Station. However, if an incident necessitating this was to occur, then evidence of measures taken by Authorised Examiners to apply standards that exceed DVSA’s minimum standards would be taken into consideration and could lead to a reduction in the severity of any sanction imposed. SMTA members also benefit from free representation and appeals assistance, others will charge you additional costs for this service.

SMTA is proud to support:

COX AUTOMOTIVE

Unlocking profit and growth in 2024

JUST EMPLOYMENT LAW

Sexual harassment in the workplace

AUTO COMMERCIAL

Selling automotive businesses

MEMBER PROFILE

J&R Auto Services, Crieff

THOMSON COOOPER

How to extract profits out of a company

GES COMPETITION

Win an Autop-Stenhoj Jacket

MEMBER PROFILE

AW Autotech, Aberdeen

AUTOTECH CONNECT

If you would like to take advantage of advertising in Auto Insight which reaches all SMTA members and beyond to approximately 5,000 sites across Scotland, or have an article you would like to discuss for publication contact:

Wendy Hennessy Email: wendy.hennessy@smta.co.uk

For details of all up and coming SMTA events please contact:

Email: events@smta.co.uk

www.smta.co.uk

WELCOME TO ISSUE 16

Welcome to this edition of AutoINSIGHT, we are delighted to be announcing that this will be our last edition of AutoINSIGHT! Seems a strange comment I accept however this is because as you may know we bought the rights to ScotsAUTOSCENE a number of years ago and it has been marketed as being incorporated within our AutoINSIGHT title since the purchase. We now feel that and our magazine has matured it has now reached the point where we recognise that there is further development potential within the publication and in doing so we have decided to rebrand and bring back an old favourite of the industry.

There are lots of new features being worked on with new branding and new content in an expanded publication from the May 2024 edition forward. For now we would just like to thank everyone who has been part of our journey to date and hope we can achieve similar successes with the rebirth of ScotsAUTOSCENE.

The Financial Conduct Authority investigation into the use of discretionary commission arrangements pre 28th of January 2021 has set the usual activities of companies wanting to get customers thousands of pounds in compensation already. No doubt some of these businesses will take funds from ill-informed or naive consumers looking for that “golden payout” however the reality of it is the FCA will not conclude their investigation until September 2024 after which they will report and take action accordingly. Many of the finance houses have already been put under enormous pressure from consumers seeking to register their complaint using pre-designed forms and advice gained by watching a well know consumer champion steer them to do so, after all it is their right to do so!

Regrettably there will be some consumers who will decide to take a more direct approach and knock on the door of their supplying dealer hoping to get some traction in advance of the outcome, clearly there is no consideration to support such an approach and we would advise you to always direct any complaint relevant to this to the FCA website which states that the correct course of action for the consumer is to “complain to your provider (if they believe that they have been over charged) , but they will not have to respond to your complaint until after 25 September 2024, at the earliest.”

We have also had the suspension of the selling process for GAP which will create significant challenges for many businesses and finance partners alike. Hopefully there will be some movement in this particular product very shortly as there are many cases of consumers having been supported by a decent product sold correctly an fairly over the years.

As always if there is anything that you feel you would like to see in this magazine going forward (regardless of the title) please get in touch.

And finally, those of you that operate MOT stations please make sure you get your annual assessments completed on time!

Sandy Burgess FIMI Chief Executive, SMTA sandy.burgess@smta.co.uk

by Philip Nothard Insight Director, Cox Automotive

UNLOCKING PROFIT AND GROWTH

IN THE 2024 USED CAR MARKET WITH DATA AND PRECISION

Success in the 2024 used car market hinges on vigilance, according to Cox Automotive.

Several continuing trends, including the realignment of vehicle values, supply shortages, economic uncertainty, and continuing EV market volatility, are likely to underpin those complexities.

To weatherproof their businesses for the year ahead and beyond, dealers and manufacturers need to evolve.

That’s according to numerous industry commentators writing in Cox Automotive’s latest Insight Report. They touch on a used market that’s becoming ever-more competitive and insist that success is more likely for those who offer a premium customer experience.

The leading automotive services provider’s Insight Director Philip Nothard said:

“The used market remains in a delicate transition, as we have seen over the past few years. Inconsistency persists in many

areas, including where vehicle values and production shortages are concerned. The latter continues to have a marked mpact on the number of vehicles entering the used arena.

“In 2024, navigating the changing landscape requires all concerned to have a steadfast connection to data and insights. Used vehicle operators must react to change and should not wait in vain for a return to old market dynamics.”

As the repercussions of production shortages persist, Philip thinks that the industry must prepare for ongoing transformations in

vehicle stock profiles, new fuel types, varied ages, and distinct mileage profiles in the used vehicle parc. He believes the EV market is poised for continued volatility as volumes rise, retailers gain confidence, stocking dynamics evolve, and price entry points decrease.

“Volumes of used EVs are growing fast, but consumer demand remains damagingly low,” Philip said. “The used market for them is yet to find its feet - all of which is fuelling the instability of values. These negatives will surely be diluted as the sector continues to evolve, as prices lower, range and technology improves, and pricing becomes more attractive thanks to competition from new entrants.”

ICDP Managing Director Steve Young gives a stark warning in the Insight Report about the used market road ahead, predicting that things are set to become ‘bloody’ when it comes to vehicles from zero-to-four years old.

He insists: “The fact is, what’s going to happen in the used market from 0 miles through to three years or four years old is going to be quite bloody. If there’s one thing that will drive manufacturers more into being involved in the used vehicle sector, it will be EVs. The used market is becoming increasingly competitive; dealers must differentiate by offering a superior customer experience.”

The CEO and Founder of Regit, an online platform that helps users manage their vehicles, believes manufacturers may feel like they’ve missed out on the used market regarding sales and utilisation of customer data.

He said: “Manufacturers and dealers will undoubtedly have to find some middle ground regarding the used space. It’s a huge part of any dealership, and manufacturers feel like they’ve missed out – not just on sales but also on retaining their pools of customer data. Suppose manufacturers are going to maximise what they can get from used cars long-term. In that case, they must adopt localised customer retention strategies, as what works in one region may not work in another.”

“The used car market has seen a major reshaping over the past few years, which has required significant method change, particularly in the deepening use of data, as well as a greater focus on retail values rather than trade. The market has also had to contend with changing stock dynamics, with fewer sub-five-year-old cars available. Retailers have had to extend into older vehicles, with the average age of stock held by franchised and independents increasing by more than a year.

“This has brought unique challenges, not least the necessary reconditioning impacting both overheads and stock turn.

“Retailers have also faced fewer part-exchanges, as well as consumer-to-business channels eating up a lot of the potential stock.”

Cox Automotive believes an anticipated surge in demand will prompt retailers to swiftly replenish their stock levels for a strong start to 2024.

Philip Nothard concludes: “Ongoing value realignment is creating a market division between retailers and vendors. Dealers will strategically manage a mix of old and newly priced stock. At the same time, the fleet and leasing sector continues its vehicle de-fleeting process with residual values set before the pandemic bounce.”

Cox Automotive’s Insight Report is an annual publication that examines the key trends and issues shaping the automotive industry, particularly the used car market. It’s a valuable resource for industry professionals who want to gain a competitive edge and make informed business decisions.

Ian Plummer, Commercial Director of Auto Trader, says the reshaping of the used market in recent years has underscored the value of data and requires a greater emphasis “on retail values rather than trade” and meeting the challenge posed by a drop in the supply of younger vehicles.

by Samer Cheaitou, Trainee Solicitor, Just Employment Law

SEXUAL HARASSMENT IN THE WORKPLACE

A common query that we respond to from clients is how to deal with complaints of sexual harassment in the workplace. Sexual harassment is a very topical area of law and there have been significant developments in recent years, reflecting changing societal attitudes towards acceptable behaviour in the workplace.

LEGAL DEFINITION OF SEXUAL HARASSMENT

The Equality Act 2010 defines sexual harassment as unwanted conduct of a sexual nature which violates another person’s dignity or creates an intimidating, hostile, degrading, humiliating or offensive environment for a member of staff. Sexual harassment can either be a one-off incident or an ongoing pattern of behaviour.

EXAMPLES OF SEXUAL HARASSMENT MAY INCLUDE:

• Unwanted flirting, gesturing or comments about someone’s appearance.

• Unwanted questions about someone’s personal life.

Telling offensive or sexist jokes.

• Making comments or jokes about someone’s sexual orientation or gender reassignment.

Displaying or sharing pornographic or explicit images.

Inappropriate touching.

• More serious instances of sexual assault.

Sexual harassment is often directed at an individual employee, however it can also relate to the wider culture in the workplace.

LIABILITY FOR SEXUAL HARASSMENT CLAIMS

Generally speaking, an employee who has experienced sexual harassment will seek to bring a claim against their employer, who will generally be liable for the conduct of its employees. This is because the employer is more likely to be able to pay any compensation that is awarded by an Employment Tribunal. However, it is possible for a claim to be brought against the individual who committed the act of harassment too. An employer can potentially leave that individual with all of the liability for the harassment if it can prove that it took all reasonable steps to prevent the harassment from taking place and that it acted promptly to deal effectively with the complaint as soon as it was drawn to the employer’s attention.

DUTY TO PREVENT SEXUAL HARASSMENT

The Worker Protection (Amendment of Equality Act 2010) Act 2023, which will come into force in October 2024, will introduce a duty on employers to take reasonable steps to prevent sexual harassment in the workplace. Where employers fail to discharge this duty, Employment Tribunals will have the power to uplift compensation in successful sexual harassment claims by up to 25%.

SUMMARY

In light of the above, it is more important than ever that employers have a well-drafted anti-harassment policy in place and train employees on what is and isn’t acceptable in the workplace. By doing so, employers can avoid a 25% uplift in compensation in successful sexual harassment claims, and may even be able to avoid liability altogether.

Just Employment Law are employment law specialists with expertise in drafting anti-harassment policies, advising on how to deal with complaints of harassment and providing training on how to deal with harassment in the workplace. If you are interested in learning more about our services, contact us on 0141 331 5150 or at enquiries@justemploymentlaw.co.uk

You can also visit our website at www.justemploymentlaw.co.uk

Automotive Retention Solutions

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We work with ambitious automotive partners to strengthen their relationships with their customers. Through exible retention solutions, we create positive motoring experiences that lead to increased loyalty and greater pro tability.

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SELLING AUTOMOTIVE BUSINESSES

The automotive industry in the United Kingdom is a thriving and dynamic sector, encompassing a wide range of businesses from car dealerships and auto repair businesses to specialty services. While many entrepreneurs have successfully built and managed automotive enterprises, there comes a time when selling a business becomes a strategic decision. Whether prompted by retirement, a change in personal circumstances, or a desire to explore new opportunities, selling an automotive business requires careful planning and a comprehensive understanding of the market. This summary explores the specific considerations and steps involved in successfully navigating the process of selling an automotive business.

PREPARATION:

Preparing for the sale is critical in ensuring a smooth sale and ensuring the best possible price is achieved.

• Prospective buyers will scrutinise the financial health of your business, so it’s essential to ensure that your financial records are in order. Have up-to-date and accurate accounts, tax computations, and other relevant documents ready for inspection.

• Enhance the operational efficiency of your business to make it more attractive to potential buyers. Streamline processes, optimise stock management, and ensure that your team is well-trained and motivated. A well-run business is not only more appealing but also likely to command a higher price.

• Ensure that your business is compliant with UK regulations and has all the necessary permits and licenses. Documenting processes and procedures is crucial for transparency and will instil confidence in potential buyers. Make sure your compliance is up to date to avoid any legal hurdles during the sale.

• Strong customer relationships can be a significant selling point for your business. Develop a plan to communicate the sale transparently to your customers, reassuring

them of continued quality service under new ownership. Loyal customers can add substantial value to your business in the eyes of buyers.

• The landscape of the UK automotive market is influenced by various factors, including consumer trends, regulatory changes, and economic conditions. Before initiating the sale of your automotive business, it is crucial to gain a good understanding of the current state of the market to help you position your business effectively and appeal to potential buyers.

SALE PROCESS:

• Engage with your professional advisors familiar with the automotive market to determine the fair market value and comparing your business to recent sales can provide valuable insights into a realistic valuation.

• Create a professional and comprehensive business listing tailored to the automotive market. Highlight key information such as business history, financial performance, customer testimonials, and growth potential. Professional photographs and a well-designed listing can significantly enhance its appeal to buyers.

• Identify and target potential buyers who are likely to be interested in your automotive business. This could include individuals

looking to enter the automotive industry, established industry players seeking expansion, or investors interested in a profitable UK-based acquisition.

• While marketing your business is essential, maintaining confidentiality throughout the process is equally important. Implement strategies with your advisors to protect sensitive information until a deal is finalised. Confidentiality is crucial to prevent any negative impacts on employee morale and customer relationships.

• Negotiating the terms of the sale is a critical phase that demands a strategic approach and effective communication. Be prepared for collaborative discussions that address the needs and concerns of both parties.

• Expect negotiations on the sale price, taking into account the UK market dynamics. Be realistic about the value of your business, but also be prepared to justify that value based on its unique strengths and potential in the market. Consider whether the deal will involve an all-cash transaction, instalment payments, or a combination of both.

• Buyers will conduct due diligence to validate the information provided and ensure there are no hidden issues. Be transparent and proactive in addressing any concerns that may arise during this phase. Thorough due diligence can build trust

Martin WilsonDirector.

between the parties and contribute to a smoother transaction.

• Work closely with your advisors to structure the deal in a way that aligns with your financial goals and minimises risks. Consider all regulations, tax implications, and any unique considerations that may impact the structure of the deal.

• Once negotiations are finalised, completing the sale involves legal documentation, financial transactions, and the transfer of ownership. Your legal advisors will draft and finalise the necessary legal documents, including the sale agreement, transfer of ownership documents, and any other contracts required.

• Develop a comprehensive transition plan to ensure a smooth handover of the business to the new owner. This may include a period of transition where you provide training and support to the new owner, facilitating introductions to key customers and suppliers within the UK.

• The completion of the sale does not mark the end of the journey. Post-sale considerations are essential to ensuring a successful transition and protecting your interests.

• Communicate the sale transparently to your employees and provide support during the transition. Address any concerns they may have about the sale.

PROFESSIONAL ADVISORS:

• The sale of an automotive business involves intricate negotiations, legal considerations, and financial transactions. Engaging professional advisors with knowledge of the market is essential for a successful and smooth sale.

• Engage financial advisors who understand the nuances of the UK tax system and financial regulations. Their insights can help optimise the financial aspects of the deal and minimise tax liabilities. Specific financial advice is crucial for a well-structured and financially advantageous sale.

• Seek the expertise of legal professionals experienced in automotive business transactions. They can assist in structuring the sale, drafting contracts, and navigating any legal complexities to ensure your interests are protected and the transaction complies with UK legislation.

PROFESSIONAL FEES:

The professional fees incurred in the sale of an automotive business can be very substantial and particularly in the sale of large businesses. However, the underlying principles of a small business sale are no different from a large business sale and making costs proportionate can be challenging.

At the same time certain professional advisors are geared up to deal with the sale of larger businesses and are unable to provide cost effective advice to small businesses. Choosing the right advisors is essential and it is also important to fully understand the costs that will be incurred.

Business Brokers and other Corporate Finance Advisors will typically charge an upfront fee together with commission on the sale as well as possibly stage payments. Although a significant part of the fees will be based on the successful sale of the business there is no guarantee this will happen. The fees may also be reduced if there is already a purchaser in place.

In contrast tax advisors and solicitors will generally charge on a time basis with additional fees if the sale is successful.

AUTOCOMMERCIAL:

To address the issue of costs a new website has just been launched www.autocommercial.co.uk which assists entrepreneurs looking to sell their automotive businesses confidentially.

Sellers of Automotive businesses simply set up an account at no cost and for a small, fixed fee they can add anonymous details of the business on the website. All enquiries from potential buyers are sent to the sellers accompanied by a profile of the buyer together with contact details and confirmation that any information will be treated in accordance with a non-disclosure agreement. The seller can then decide how and when to respond, putting them in full control of the sale process.

Potential buyers can set up an account at no cost adding their company profile and acquisition criteria as well as agreeing that any information provided will be covered by a non-disclosure agreement. This enables them to request information on any of the

confidential listings and ensures they are notified when a new business or property is added which meets their acquisition criteria. For a small, fixed fee buyers can also advertise their specific requirements enabling them to reach a wider audience whilst also highlighting their credentials as a buyer.

The website includes automotive properties for sale which can be listed on an open market basis as is customary, but it is equally possible to advertise on a confidential basis adding a new dimension to automotive property sales.

Business and Property Agents can make full use of the website including a link to their own details or using the confidential procedure through the website.

To assist buyers and sellers identifying professional advisors, the website includes details of business brokers, accountants, property agents and solicitors with experience in the automotive sector.

The website has been created by MTBN (www.mtbn.co.uk) who have been advising clients on the sale of automotive businesses throughout the UK for over 30 years with a particular focus on the sale of car dealerships and, as the AutoCommercial website actually evolved from discussions with the SMTA many years ago, members of the SMTA will be offered free listings until the end of March 2024.

HILTON SMYTHE:

In recognising the wide range of businesses within the automotive sector MTBN have also established a relationship with Hilton Smythe (www.hiltonsmythe.com), a national firm of Business Brokers, enabling Clients to benefit from MTBN’s specific expertise in the automotive sector at no additional cost.

Hilton Smythe have an office in Glasgow which covers businesses in Scotland and for further information, please contact Emma Flood 01204 929937, e.flood@hiltonsmythe.com.

MORE INFORMATION:

For more information in relation to the AutoCommercial website or MTBN please contact Martin Wilson (MTBN AutoCommercial) 07802 296363

MOTORISTS TO VIEW THE MOT CERTIFICATE ONLINE

Between April 2022 and March 2023, you collectively carried out about 34.5 million light MOTs. And that uses up a lot of paper.

If every test had an A4 certificate printed out, those pieces of paper would:

y cover an area the size of 295 Wembley Stadium pitches

y stretch 4,500 miles if they were placed end-to-end

In fact, it would take 13,800 boxes of A4 paper to print that many certificates. And it takes more than 4,000 trees to create that much new paper.

SETTING OUR VISION FOR 2025

Our strategic plan to 2025 sets out our ambition within the MOT to:

y improve how we use technology and automation in the test

y make the MOT slicker

y provide better information for customers

y minimise opportunities for fraud

I blogged about our proposed move to paperless certificates in August, sharing the work we’d been doing with our user research team, alongside our review of the paper we ask you to store and print within the MOT.

THE BENEFITS OF REDUCING PRINTING

We’re still reviewing the findings of this paper review and considering where we can best make use of our current digital services. But we want to start to move forwards with our plans to reduce the amount of MOT certificates being printed.

It will:

y save MOT testing businesses money by using less paper and printer ink or toner

y be better for the environment

y reflect the way some customers are already using our online service

EMISSIONS TEST RECORD

For now, you’ll still need to issue a printed emissions test record if the vehicle fails the emissions test.

ASK, ENCOURAGE AND EXPLAIN

The easiest thing to do is to ask your customers whether they want a paper copy of their MOT certificate or if they’re happy viewing it online when they drop their vehicle off. They’ll then know what to expect when they collect it.

In some cases, if the vehicle does not have any advisories or if there are minor advisories, it makes more sense to suggest the customer views this information online.

We know many MOT centres are sending more and more paperwork to customers by email to help lower printing costs, so this could be something you’d like to consider if customers want a copy of their certificate.

We understand that there will always be customers who want a paper copy of their certificate to drive away with, so we’re not going to stop you from being able to print certificates. But it’s important we make small changes where we can.

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Dedicated Business Development Manager an extra member of your team with unrivalled knowledge

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For more information visit, dealer.santanderconsumer.co.uk or scan here:

SMTA: How did you come to start up?

After working 15 enjoyable years at Crieff Garage as a Ford technician, I was talked into opening up an independent garage with a business partner. Our ambitions didn’t match up and I bought him out after year one!

SMTA: How has the business grown since then?

We moved to bigger premises 17 years ago and added another two bays 9 years ago.

SMTA: Can you run us through a typical day?

A

SMTA: What’s been the highlight of your business so far?

We won Best Tradesman two years running in 2017 and 2018 in Scotland’s Business Awards and the Car Star Award in 2023 which was an awesome night!

SMTA: What’s the one thing your business couldn’t function without?

An MOT bay!! Also the fact that we always work as a team.

SMTA: What’s the best thing about working for yourself?

I get time to put effort into helping within the community with things like the local food bank and helping kids get into sports.

SMTA: And the hardest part?

I never get to switch off.

SMTA: How does your SMTA / Scotsure membership help?

It is like having a life vest around my business.

SMTA: Where will your business be in five years’ time?

I would imagine we will be busier and pushing more towards EV technology.

SMTA: How do you maintain customer levels?

We continue to offer an honest, reliable product/service.

SMTA: What is the biggest challenge for your business right now?

Like every good garage, it is getting very good mechanics! I don’t take average, I pay for the best!

SMTA: What’s the most important thing you’ve learned in your career, and how have you made use of it?

Be honest and you get out what you put in!

SMTA: You won one of our C.A.R Star awards this year at our Annual Dinner, can you tell our readers what community work you are involved in?

Getting kids in sport, more specifically golf. I have now set up a golf swap shop at Crieff Golf Club where we can give children under 12 free memberships and every piece of equipment (clubs, shoes, balls etc) free of charge Donations to local food banks and sponsorship of local clubs.

I am very passionate about bringing apprentices through. I always have one or two on the go, and I have done since the day that I opened 18 years ago. Two of our apprentices (who have since fully qualified) were parts of an IMI Skills Competition scheme through the local college and were invited to Manchester for the national finals in which Ollie won gold and Jack came highly commended. They were two of very few independent garage mechanics there as the others were all from main dealers so that was a proud moment.

by Debbie McKay Commercial Director, MotoNovo Finance

NEW RESEARCH REVEALS GOVERNMENT INCENTIVES CRUCIAL TO STIMULATING USED BEV SALES

y The high price of EVs is now the primary barrier to consumers switching to buy one

y Half of potential buyers would be influenced positively by a government grant or incentive

These are two of the takeaways from a significant piece of research into consumer sentiment regarding electric cars that we have established from a significant research programme that we had commissioned involving over two thousand people.

While it remains an issue for some potential buyers, range anxiety has fallen significantly as a concern for would-be car buyers. The price of a BEV, whether for a new or used car, now dominates as the critical barrier to switching to a fully electric vehicle.

The new battery electric vehicle (BEV) grew by almost 50,000 sales in 2023, achieving 314,687 new registrations, which was more than 2020 and 2021 combined. Fleet/ business sales, including salary sacrifice schemes, dominated this growth. These benefit from generous Benefit in Kind tax benefits for the end user. There is no support for consumers who do not have access to such support, and according to our research, a scheme such as the VAT cut for private

buyers proposed by the SMMT would make a difference.

However, there is also no government support available for used BEV buyers, and this also matters for the car buyer and the future values of used BEVs, which are crucial in setting PCP and PCH monthly payments for new BEV buyers. The symbiotic relationship cannot be understated. According to Cap HPI, those second-hand values fell by over 40% in 2023, which was not helpful for the new car market.

Used BEV sales may have increased significantly last year, but so has the supply of used cars, and the sustainable growth of new BEV sales needs a strong used car market. It must grow as fast as the new BEV market has been increasing. While the broader landscape for used car values last year was downwards, the fall in BEV values exceeded falls seen in ICE stock, which is an issue. It suggests that demand is not keeping up with supply, and price is a crucial challenge.

When asked, “To what extent would a government financial grant/incentive, such as a scrappage scheme, encourage you to switch to a used battery electric vehicle rather than a petrol or diesel car?” over half of people said it would make a difference

and a third of these people said it would make a ‘big’ difference.

In 1995, diesel cars made up less than 10% of the car parc in Europe; transformed by the introduction of turbochargers, it still took sixteen years for diesel cars to achieve their market share peak of 55.76% in 2011. The switch to BEVs is far more ambitious in terms of timescale and the need to win hearts and minds, but then again, so is the environmental importance. The speed of change to BEVs that has been achieved is remarkable, but it has been driven by positive action. The limited purchasing activity in the new BEV market underlines this reality.

Encouraging everyone to make the switch, whether it is a new or used vehicle, matters, and it cannot be right that government support is only available to a section of the population and only for new vehicles.

ARE YOU LOOKING TO BECOME A DVSA APPROVED MOT TEST STATION?

Are you looking to upgrade your existing MOT Test Station and install connected equipment?

Call Niall Farmer now for an informal chat 07483 827734

SMTA MEMBERS PREFERRED OFFERS from GES Scotland

Call Niall Farmer on 07483 827734 or email nfarmer@mpdonline.co.uk

“We are delighted with our new MOT bay, supplied and installed by Gemco. Niall Farmer from Garage Equipment Services quoted, organised the installation and assisted with all the DVSA paperwork. Every step of the process was made easy and the installation guys were amazing.”

Nicola, Lochside Motors, Dyce, Aberdeen

FEMALES IN FOCUS

FRIDAY 20TH SEPTEMBER 2024

GRAND CENTRAL HOTEL, GLASGOW

We are delighted to hold our Females in Focus lunch this year at Grand Central Hotel in Glasgow on Friday 20 September 2024.

This lunch is always such a highlight of our event calendar and we are proud to be able to run an event that highlights the many career paths available in the motor trade to females. The event will again have an inspiring panel of business women sharing their career stories and insights!

Full details will be available soon, in the meantime any queries can be emailed to events@smta.co.uk

Sponsorship items are available please email wendy.hennessy@smta.co.uk for information.

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by Scott Hallesy, Tax Manager, Thomson Cooper

HOW TO EXTRACT PROFITS OUT OF A COMPANY

Running a business requires knowledge, planning and commitment. Directors don’t want any of their hard work to be wasted, but do want to make the most of any profits that are generated. Quite right! Here, we examine ways to extract profits out of a company, and how they can be combined to minimise any tax liability.

FOUR MAIN WAYS TO EXTRACT PROFITS

Once you’ve set up a company and become a director, you have to be smart about how you extract profit to avoid paying more tax than you need to.

There are four main routes for a director to extract profits from their own limited company – salary, benefits in kind, dividends and pension contributions. Usually, combining these four methods is the most tax-efficient approach to minimise your tax bill.

With corporation tax applying on any of your company’s taxable profits from its accounting period, the money you take out of the profits to pay yourself can potentially reduce your company’s corporation tax liability.

PAY YOURSELF A SALARY

When running a limited company, it might be easy to overlook that your business’s money doesn’t go straight into your personal bank account.

So, to get it into your pockets, firstly consider paying yourself a basic salary. This is usually set just below certain thresholds for National Insurance contributions (NICs) with the aim of enjoying the benefits of paying NIC without actually suffering any.

If, for example, you pay yourself above the lower-earning limit (£6,396 in 23/24 and 24/25), you will accrue qualifying years towards your state pension.

While that’s good news, paying yourself more than the Class 1 NICs secondary threshold (£9,100 for 23/24 and 24/25) may be less attractive.

Your company will become liable for employers’ NICs at a rate of 13.8% (for 23/24 and 24/25) on any earnings above that. If you pay yourself a penny less than £9,100, your company avoids paying this tax altogether.

The next payroll consideration is the personal allowance (£12,570 in 23/24 and 24/25).

The basic rate of income tax doesn’t apply until you exceed this threshold.

One other point to remember is that any salary you pay yourself will be treated as a business expense, which means it will reduce your taxable profit and lower the amount of corporation tax your company has to pay.

BENEFITS IN KIND

Benefits in kind (BIK) are benefits that employees or directors receive from their company which aren’t included in their salary or wages. BIKs are subject to taxation and contribute to your overall income for tax purposes.

A company car or van and private health insurance are two common benefits which can be tax efficient and provide valuable ‘perks’ from the company. Historically, having a petrol or diesel car as a company car was commonplace but these days it is the electric company vehicle which is most tax efficient due to the low BIK values. The low BIK rate of 2% for 23/24 and 24/25 compares favourably

with the highest BIK rate of 37% for much higher emission cars.

TAKING DIVIDENDS

Dividends are paid to the company’s shareholders out of post-corporation tax profits. Usually, a director will be one of those shareholders and could even be the sole shareholder.

Many directors pay themselves in a combination of salary and dividends. As dividends are drawn from profit, you need to show you have profit reserves available before paying dividends.

If you cannot demonstrate that, HMRC could reclassify your dividends as salary and you would almost certainly need to pay income tax and NICs on that.

Dividends are a different form of taxable income, and they are treated slightly differently in comparison to salary. The same income tax bands apply, but different dividend tax rates are associated with them.

The best way to illustrate how dividends are taxed is through an example. Let’s say you’re the sole shareholder, your company has made post-tax profits of £39,570, and your accounting period runs parallel to the tax year.

You take £8,000 as salary in 23/24 and £29,570 in dividends, £37,570 in total. The £1,000 tax free dividend allowance (reducing to £500 in 24/25) leaves £28,570 of your dividend potentially taxable, while what’s left (£36,570) will exceed the personal allowance (£12,570).

Once the personal allowance is deducted, £24,000 of your dividends will be taxable at 8.75%. You will fall into the basic-rate income tax band. This would leave you with a tax bill of £2,100, with the dividend being taxed as the top slice of income.

Dividends can often be an attractive way of remunerating spouses who own shares in the company but this is dependent on the company’s circumstances. It is important that all dividends are properly documented.

Assuming you stay under these thresholds, when the time comes to take your pension benefits – currently after the age of 55 but rising to 57 from April 2028 – 25% is normally tax-free.

The rest of your retirement income that exceeds the personal allowance will be taxed at your marginal rate of income tax under the existing rules.

However you go about extracting profits from your company, getting tax planning advice on your own particular circumstances from a taxation specialist will help you pay the least amount of tax legally required.

PENSION CONTRIBUTIONS

The single most tax-efficient way to extract profits from your company, but often not the most practical, is to make employer contributions towards your pension.

These will reduce the company’s liability to corporation tax and they are not subject to NICs, although this does involve taking money out of the company for future use.

You can potentially put up to £60,000 gross into your pension pot over the course of the tax year with no tax due. If you haven’t used any of your annual pension allowance over the last three tax years, you might be able to carry over any unused annual allowance from those years.

The total amount you can save without incurring charges into your pension was previously capped at £1,073,100, due to what’s known as the ‘lifetime limit’ allowance, although this is set to be removed from April 2024.

Scott Hallesy is a Tax Manager with Thomson Cooper. He has over 30 years’ experience providing advice on all areas of direct taxation including corporate and personal tax planning, corporate restructuring and tax relief claims. www.thomsoncooper.com

Mirka® Modular Trolley

Build your optimal workflow.

With the Mirka Modular Trolley, you can keep the working area organised and clean for a professional and efficient workflow. Thanks to its customisable modular design, it is easy to accessorise the sturdy trolley to suit your workshop and line of work.

For further information or to arrange a consultation, please contact Customer Services on 01908 866100.

COMPETITION WINNERS

Both members won a GES Induction Lamp Kit for entering the competition

1: Andrew Hepburn – Castleton Motors Auchterarder. (Wants a mention if possible that he has been in business 42 years and an S.M.T.A. Member for most of that time).

2: Calum Munro – Munros of Oban. Another longstanding member

by Steve Winter Head of Sales – North

WHOLESALE STOCK FUNDING – IT’S NOT WHAT YOU THINK

Successfully navigating the used car market means being agile and adaptable – sniffing out a great opportunity when it arises. But in today’s ever-changing world, where car buying behaviour is evolving, margins are getting tighter and where there’s always fierce competition for quality vehicles, keeping your forecourt stocked and your cash flow healthy can feel like a slog.

This is where stock funding comes in. Though often misunderstood as complicated, restrictive and a last resort for failing businesses, the truth is that it is a crucial tool that helps ambitious dealers to transform their business.

IS STOCK FUNDING TOO RESTRICTIVE?

We’ve already pointed out that agility in the market is vital to any dealer’s success. Among other things that means doing the basics right, including having access to funds when the right vehicle comes along. Wholesale stock funding, such as a NextGear Capital Stocking Plan, is one common form of funding. With it you can fund wholesale vehicles from anywhere you want. If tried and tested sources are more appealing, at NextGear Capital we have more than 70 auction and wholesale partners. This is great news for you if you are keen to make sure your stock turn is efficient and reliable. Our partners are also what sets us apart from traditional lenders and ‘captive’ funders.

IS IT FOR FAILING BUSINESSES?

We’re not going to hide behind the fact that, quite often, whether it’s on social media or general chatter, stock funding is considered to be the last resort for dealers who might be struggling. But that’s far from the truth. We prefer to say we work with ambitious dealerships, and we have numerous customers who have been with us since they were start-ups and who now have multi-million-pound funding lines. The

success stories are almost too many to be counted. Having the ability to stock more vehicles and sell where the market dictates, frees up cash for investment elsewhere in your business – a surefire way of drastically improving overall profitability. This unmatched flexibility empowers you to make strategic decisions based on your unique business needs, not on limitations imposed by other funding sources. These measures could hardly be called the preserve of someone who’s going through a difficult time with their business.

IS STOCK FUNDING TOO EXPENSIVE?

The NextGear Capital team often speak to dealers who are rightly concerned whether they are using their capital in the right way and running, as it were, a tight ship. Some even think that stock funding is too costly. While it’s true that stock funding is more costly using your own capital, in truth it can’t be rightly compared to ordinary cash or traditional credit. You’re not comparing “apples with apples”.

Instead think about stock funding as a way to grow your business and pursue additional investments. A prime example we see is dealers using our funding as an enabler to evolve their stock profile i.e., to stock better quality (and potentially higher margin) vehicles. Another use case is where dealers use the additional funding to stock more vehicles on their forecourt. With both of these examples it’s easy to see how stock funding can be a driver of additional

revenues and profit margins that may have otherwise been unattainable.

SURELY IT’S TOO COMPLICATED?

It may come as something of a surprise to learn that stock funding is not that complicated. We provide funding that allows dealers to purchase vehicles and grow their business – it’s as simple as that. Another myth that typically piggybacks the sinistersounding principal of the ‘captives,’ i.e., that if you take funding from NextGear Capital, there’s going to be some other requirement attached to that funding. In truth, there’s no caveat other than dealers must use it on a pay-as-you-go basis to fund used cars, motorbikes or commercial vehicles.

MORE THAN 1,700 DEALERS TRUST US

Our Stocking Plans are tailored to suit the needs of used vehicle dealers. We take that responsibility very seriously and have and experienced team who’ll work with you to understand your business and determine an appropriate facility. Not only that, we stay close to you and adjust your plan as your needs evolve.

We provide funding that enables dealers to purchase vehicles and grow their business – it’s as simple as that. Ignore the fake news. Why not book an appointment here with our Scotland-based Account Manager, David Robertson, to find out how you can boost your bottom line?

https://cox.auto/ugBPk

by Howard Titney, Legal Advisor at Lawgistics

COMPANY AND BUSINESS NAMES – A NOT SO BRIEF GUIDE!

The use, display, and disclosure of company, business, and trading names are regulated by legislation that sets out requirements such as the names businesses may trade under, how particular details about businesses must be disclosed and applied to individuals who trade under a name that is not their own, and partnerships that do not operate under the names of the individual partners, companies, and limited liability partnerships.

Sole traders and partnerships are required to display and disclose detailed information about their businesses when they use a business name that is not their surname (with or without forenames or initials), or one that does not use the names of all the partners. The disclosure requirements do not apply when a business is continuing the trade of a former owner, and the new name includes both the former and current owner.

Where a sole trader or partnership carries on business under a name that is not the proprietor’s or partners’, their details must be disclosed to customers and suppliers. These details must include the full name of the proprietor or all partners plus an address for contact and service of legal documents.

Such information must be displayed in a prominent position on all business premises where customers and suppliers have access and be included on all forms of business correspondence, documents, and websites. This information must be provided immediately in writing to any customer or supplier upon request.

Partnerships of more than 20 persons are not required to disclose details of all the partners in business documents if a list of all the partners’ names is maintained at the principal place of business. The partners’ names do not appear in documents except in the text or as a signatory and documents that state the address of the partnership’s principal place of business. The list of the partners’ names must be open to and available for inspection at the principal place of business during office hours.

Companies registered with Companies House must follow specific rules concerning incorporation and names that are used and registered. Full guidance on this can be found at GOV.UK, and includes, amongst other things, company names being a maximum of 160 characters, using only the permitted characters, punctuation, abbreviations, signs, and symbols, not using the name of a currently registered company, not infringing registered trademarks, and not using words or expressions that are banned or need approval from the Secretary of State.

Active companies must display their full registered company name at their registered office, at all other locations from where they carry on business (except those premises used primarily for living accommodation), and at the place where company records are kept available for inspection.

This requirement does not apply to companies where the residential address of every individual director cannot be disclosed by the Registrar of Companies to a credit reference agency. In this situation, the company does not have to display its registered name at any location apart from the company’s registered office or an inspection place.

Where business premises are shared by up to five companies, the registered names must be easily seen by visitors and continuously displayed.

Where business premises are shared by six or more companies, each company must ensure their registered name is either displayed for a minimum of fifteen continuous seconds at least once every three minutes or available for inspection by visitors.

Companies must disclose their registered name on all forms of business correspondence, documentation, and websites.

In addition, companies must disclose the part of the United Kingdom where the company is registered, the company’s registered number, the address of the company’s registered office, that they are a limited company (for companies exempt from the obligation to use the word “limited” and for community interest companies that are not public companies), and that they are an investment company (where appropriate).

Where a company’s business letters include the names of any individual or corporate director of the company, other than in the text or as a signatory, the letter must disclose the names of every director of the company.

Companies must send a written reply disclosing their registered office address, the location of any inspection place, and the type of company records kept at that place within five working days of receiving a written request for company information from anyone it deals with in the course of business.

All information that is required to be displayed or disclosed must be clearly legible.

Limited liability partnerships (LLPs) requirements are similar to those for partnerships and companies, but there are specific rules concerning incorporation and the names that can be used and registered with Companies House, full guidance on this can be found via GOV.UK.

For further information, consult GOV.UK or speak with Lawgistics Ltd.

As for trading names and trademarks, one cannot use another company’s trademark as one’s own business name. A trademark register search via GOV.UK will show if a mark is already registered.

For distance sales, the Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013 require a supplier to provide a prospective buyer with details about themselves and include the postal address of their business.

The Electronic Commerce (EC Directive) Regulations 2002 require businesses selling or advertising online to provide certain information on their website. Some of this overlaps with the above requirements, such as the company or business name, a UK geographic address, and detailed information on pricing, delivery charges, etc.

Supporting Scottish Motor Dealers For 36 Years.

Celebrating one year since the introduction of our Sustainable Packaging initiative, Supagard is thrilled to share that we are ahead of our target of re-purposing 10 million plastic bottles within the initial five-year time-frame. By crafting our customer handover bags from recycled plastic and introducing trigger spray bottles composed of 40% recycled material, we are well ahead of schedule to meet our target within the next three years.

Supagard will maintain its position as a pioneer in innovation in the Car Care Sector for 2024 - we thank existing customers & welcome new clients to join us on the journey.

s u p ag a r d . c o m T e l : + 44 (0) 141 633 5 9 3 3

Rated Excellent

SMTA ANNUAL DINNER 2024 – DATE FOR YOUR DIARY & GUEST SPEAKER ANNOUNCEMENT

SMTA is delighted to advise that our Annual Dinner & Awards will be held on Thursday 24th October 2024 at the Hilton Glasgow! Tables will be available to book soon!

We are so excited that we’re announcing our guest speaker in this bulletin, and it is none other than……… THE STIG! Yes, it is the man in the white suit from Top Gear also known in real life as Ben Collins will be our guest speaker.

As a respected figure in the world of motorsports, Ben has additionally been the stunt driver to some of the biggest blockbuster films in modern cinematic history, including The Dark Knight Rises, Quantum of Solace and most recently Skyfall.

Sponsorship items are available please email wendy.hennessy@smta. co.uk for information.

AW AUTOTECH

SMTA talked to owner Alan Wallace of AW Autotech

SMTA: How did you come to start up?

AW: I was working for an auto electrical company and specialised in petrol injection. Most of our work was problem solving for other garages, it was a natural progression to then do it for myself.

SMTA: How has the business grown since then?

AW: Initially, I specialised solely on problem solving, I saw very quickly that I could offer far more as I was a qualified mechanic. We offer most garage services apart from bodywork.

SMTA: What’s been the highlight of your business so far?

AW: To still be going after 26 years is a great achievement, but I would say that going from being a one man band to providing employment for a further seven members of staff is equally satisfying.

SMTA: What’s the one thing your business couldn’t function without?

AW: Loyal and hard working staff!

SMTA: What’s the best thing about working for yourself?

AW: Coming up with ideas and being able to implement them without having anyone standing in your way.

SMTA: And the hardest part?

AW: Constantly worrying about the obvious things like workload, keeping staff in employment and trying to deliver a quality service to our customers.

SMTA: How does your SMTA / Scotsure membership help?

AW: Being able to pick up the phone and ask a question at any time is fantastic!

SMTA: Where will your business be in five years’ time?

AW: We recently purchased the property adjacent to us and are looking at expanding our workshop. Part of that will be a dedicated EV area.

SMTA: What is the biggest challenge for your business right now?

AW: I have been very lucky that we have long-serving members of staff, unfortunately two key members are due to retire. At the moment I am training new staff to fill their roles.

SMTA: What’s the most important thing you’ve learned in your career, and how have you made use of it?

AW: That’s a difficult one as you learn so much running your own business. One thing is listening to your staff and working out what makes that individual motivated. The same applies to your customer it is very important to listen so that you can make the correct decisions.

“ Through our show we have been able to donate to various charities including the British Heart Foundation, Clan Cancer Research, Charlie House, Sandpiper Trust and various other local charities.”

Alan Wallace of AW Autotech

by Laurence Abbot Managing Director, Autotech

CYBERCRIME WITHIN THE AUTOMOTIVE AFTERMARKET –UNDERSTANDING THE RISKS

The evolution of vehicles has redefined the aftermarket. While representing opportunities for the sector, as EVs and an increasing number of software-defined vehicles roll into workshops, they are also introducing new, previously unseen, challenges.

EVs are electrifying the second hand car market with an increase of 99.9 per cent reported in quarter three of 2023, and these vehicles will soon infiltrate the independent repair sector. Consequently, against the backdrop of a skills shortage, a severe need for training, and the installation of EV infrastructure is needed.

For some, the investment to prepare for this is still perceived to be a step too far. But regardless of how deeply a garage future-proofs itself and equips its business for EVs, they are all susceptible to a new danger – cybercrime.

REGARDLESS OF SIZE –IT’S TIME TO ACT

Contrary to belief, cybercriminals don’t just focus on large corporations. According to reports, automotive hacks have increased by 225 per cent in the last five years and remote attacks accounted for 85 per cent of all breaches.

Cybercrime is no longer a perceived future threat - the automotive industry has passed

the inflection point, and there is today a very clear and present risk. The average vehicle now typically contains over 100 control units, creating an increasing attack surface for vulnerabilities, compromises, and cyberattacks; the proliferation of connected vehicles using internal combustion engine vehicles remains susceptible to cybercrime intrusions.

For electric vehicles, the risk is heightened and even an EV charging point introduces a new set of vulnerabilities, turning what might seem like a simple power source into a potential gateway for cyberattacks. Beyond their primary function, EV charging points facilitate a crucial digital interaction, known as the ‘digital handshake’, between the vehicle and the charging point each time a car is plugged in, providing two-way communication with the vehicle. However, this interaction poses an often overlooked risk, creating an attack surface that malicious hackers could exploit to infiltrate a garage’s systems, exposing customer data.

In the event of a successful cyber intrusion,

the consequences can be severe. Beyond compromising the vehicle’s performance, a breach could lead to unauthorised access to personal and financial data stored within the vehicle’s systems. Instances like the Arnold Clark hacks, where hackers managed to obtain and leak the addresses, passports, and national insurance numbers of customers, serve as stark reminders of the vulnerability of modern vehicles. Regardless of business size, cyberattacks can be expensive, disruptive to business, and damaging to brand reputation. While the risk cannot be entirely eliminated, there are proactive, simple measures which can be taken to alleviate the threat, starting with a cybercrime audit which will test for any vulnerabilities.

An auditor can recommend any preventative steps which need to be taken to create a stronger digital defence and a robust firewall. From gaining the latest security accreditations, such as ISO 27001 and the Government backed Cyber Essentials certifications, to training staff to ensure they also take simple preventative steps which will protect the business. All of this will demonstrate to customers and insurance companies that every measure has been taken to protect a business against cybercrime.

THE RISK CAN’T BE IGNORED

As vehicle manufacturers continue to develop new infotainment, ADAS, and tech features, cybercrime risk will become a defining challenge within the industry and the risks must be realised, with a vigilant stance taken to protect against potential threats.

For further information visit www.autotechconnect.co.uk

Image: EV charging points facilitate a crucial digital interaction, but open up new vulnerabilities

MARKET INSIGHT

In the motor trade industry, the importance of insurance cannot be overstated. It’s a crucial safety net, protecting businesses from risks and liabilities. However, underinsurance is a potential threat with significant implications for the motor trade. This article explores underinsurance and its impact on businesses within this sector.

UNDERSTANDING UNDERINSURANCE

Underinsurance occurs when a business or individual fails to secure insurance coverage that adequately protects their assets or liabilities.

In the context of the motor trade, this typically relates to insufficient coverage for vehicles, premises, employees, or thirdparty liabilities. Underinsurance can result from various factors, including cost-cutting measures, inadequate risk assessments, or simply a misunderstanding of the coverage needed.

A recent survey identified that 82% of commercial properties are underinsured.1 At the same time, The UK Business Risk Report reviewed risks over the next 12 months; 34% of businesses expressed concerns over financial uncertainty – including underinsurance.2

THE IMPACT OF UNDERINSURANCE IN THE MOTOR TRADE

1. Financial risk:

One of the most immediate and critical consequences of underinsurance is financial risk. In the motor trade, businesses deal with valuable assets, including vehicles, equipment, and infrastructure. In accidents, theft, or damage, the cost of repairs or replacements can be substantial. If a business is underinsured, it may not have sufficient coverage to cover these expenses fully, leaving it to shoulder the financial burden. This can strain finances, jeopardise liquidity, and even lead to insolvency in severe cases.

2. Legal consequences:

Operating in the motor trade involves legal responsibilities and liabilities. Underinsured businesses may be ill-prepared to meet legal obligations during disputes. This can result in legal consequences, fines, and battles that can further drain resources and damage the business’s reputation.

3. Reputation damage:

In the motor trade, reputation is paramount. Customers trust businesses to provide quality service and fulfil their obligations, including compensation for damages or losses. When underinsurance leads to difficulties in meeting these obligations, it can tarnish the business’s reputation. This loss of trust can be challenging to recover from and may result in losing valuable customers and partnerships.

4. Limited growth and opportunity:

Underinsurance can hinder a motor trade business’s growth potential. Inadequate coverage may dissuade potential investors, partners, or lenders from engaging with the business, fearing the heightened risks associated with underinsured operations. This limitation can impede expansion plans, diversification efforts, and the pursuit of new opportunities within the industry.

5. Employee and customer wellbeing:

Adequate insurance coverage in the motor trade also extends to protecting employees and customers. The UK Business Risk Report highlighted that people-related risks dominate the key risks across the board, topped by employee mental health and wellbeing, 30.8%.2 Insufficient coverage can compromise the safety and wellbeing of staff and clients. For example, suppose an accident occurs on the premises. In that case, underinsurance may not provide adequate compensation for injuries, medical expenses, or rehabilitation, potentially leading to legal actions and emotional distress for all parties involved.

PREVENTING UNDERINSURANCE IN THE MOTOR TRADE

To mitigate the risks associated with underinsurance in the motor trade, businesses should consider the following:

Comprehensive risk assessment: Conduct thorough risk assessments to identify potential vulnerabilities and insurance needs. This includes evaluating the value of assets, potential liabilities, and regulatory requirements.

Regular policy reviews: Periodically review insurance policies to ensure they align with the evolving needs of the business. As the motor trade landscape changes, coverage should adapt accordingly.

Consultation with insurance experts: Seek advice from insurance experts or brokers specialising in the motor trade industry. They can provide valuable insights into the specific risks and insurance solutions available.

Appropriate coverage: Invest in insurance coverage that meets legal requirements and adequately protects the business against potential losses and liabilities.

In conclusion, underinsurance is a significant concern in the motor trade industry, with far-reaching implications for businesses. The financial risks, legal consequences, reputation damage, and limitations on growth highlight the importance of addressing underinsurance proactively.

By conducting comprehensive risk assessments, regularly reviewing policies, seeking expert advice, and investing in appropriate coverage, you can safeguard your assets, protect your stakeholders, and ensure your long-term business success.

For questions about motor trade insurance, contact a Marsh Commercial adviser.

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3 We accept various sizes from motorcycles to truck tyres.

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E: Info@caledoniarecycling.co.uk