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Sector Information

The IMI (Institute of the Motor Industry) is the professional association for individuals working in the motor industry. The Institute is the Sector Skills Council for the automotive retail industry, part of the Skills for Business network and also the governing body for the Automotive Technician Accreditation (ATA) scheme. It includes twelve sub-sectors:

  • Light vehicle maintenance and repair
  • Heavy vehicle maintenance and repair
  • Motorcycle sales, maintenance and repair
  • Accident and repair
  • Body building
  • Vehicle sales
  • Vehicle rental and leasing
  • Roadside assistance and recovery
  • Fast fit operations (tyres, exhausts, batteries, etc)
  • Parts distribution and supply
  • Lift truck maintenance and repair
  • Motorsport maintenance and repair

Many businesses operate across more than one of these sub-sectors, so aggregating data is more reliable for the purposes of analysis. Retail activities involving cars, motorcycles and commercial vehicles are covered by the sector definition, but not those involving public transport vehicles.

A brief report was produced in July 2009 on the impact of the recession on the automotive retail sector by IMI.

Employment in automotive retail

Key statistics:

  • There are around 549,176 people employed in the sector, accounting for 1.8% of employment in the UK.
  • 86% of the workforce is full-time.
  • There has been a fall of 8.4% in employment between the first quarters of 2009 and 2008, compared to 0.7 in the whole economy.
  • 82% of sector employees are male.
  • Full-time jobs account for 86% of all employment in the sector in 2008, compared with the UK industry average of 74%.
  • Total employment in the automotive retail sector is set to remain at around 640,000 for the next six years.

At the regional level the London area has seen a steady decline in the number of employment units since 1999, down 16% in 2007 compared with 1998 while the number of employment units in the East Midlands has risen by 8% over the same period. The highest volume of sector employees is in the South East of England (82,000).

Source: IMI Workforce Profile 2009, Working Futures 2006 and Automotive Retail Sector – Quarterly Report July 2009

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Automotive retail organisations

  • There are between 68,000 and 82,000 organisations in the sector.
  • Micro-business units account for the vast majority of all automotive retail businesses comprising 85% of the total.
  • 83% of organisations are single site.
  • 11% are independent companies with multiple sites.
  • Small to medium and large businesses make up the remaining minority at 15% and less than 1% respectively.
  • 85% have less than 10 employees, 10% have 10 and 249 employees, and 0.06% have more than 250 employees.
  • Sales of motor vehicles and maintenance and repair of motor vehicles businesses comprises 77% of all automotive retail business units.
  • New car registrations were down by 24.8% in may 2009, compared with the same month in 2008.
  • New van and truck registrations were down by 49.2% in May 2009, compared with the same month in 2008.

The sector has seen a considerable consolidation over recent years with the larger businesses acquiring medium-sized and family firms as investment requirements increase.

At the regional level, the highest proportions of head offices and branches are located in the South East, North West and the East of England. London area has declined 16% in the number of employment units between 1998 and 2007. By comparison, the number of employment units in the East Midlands has risen by 8% over the same period.

Source: IMI Workforce Profile 2009, Automotive Retail Sector – Quarterly Report July 2009 and Automotive Skills SSA Stage 1 – UK 2006a

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Vacancies and skills issues

The number of organisations reporting skill gaps varies across the UK:

  • 17% in England
  • 27% in Scotland
  • 23% in Wales
  • 10% in Northern Ireland

From an employer perspective it is significant that there is a lack of proficiency in technical skill occupations.

About 1 in 5 companies report having vacancies:

  • In England, employers are most likely to report hard-to-fill vacancies because there are: a low number of applicants with the required skills (38%); not enough people interested in doing a job (34%); and a low number of applicants (28%).
  • In Wales, vacancies are most likely to be hard-to-fill because there are: a low number of applicants with the required skills (45%); a low number of applicants with the required attitude, motivation or personality (30%); and a low number of applicants generally (27%).

Source: National Employer Skills Survey 2007 and Automotive Skills SSA Stage 1 – UK 2006a

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Recruitment and retention

Recruitment difficulties were reported in 2005 by 46% of employers in the sector, including: 64% of franchised dealers; and 46% of independent dealers.

Difficulties in recruiting technicians and mechanics were reported in just over 20% of franchised dealers and 20% of independent dealers. A significant number of independent dealers also reported a shortage of MOT testers. However, employers reported very few problems in recruiting managers.

Recruitment problems are believed to be because applicants are not right for the job, the sector has a poor image, a higher number of young people are going into higher education, and finally there are concerns over salary levels.

Sector-specific experience is usually more highly valued than transferable skills sets and competences. As a consequence there is little evidence of recruitment from outside the sector.

Staff turnover is a key problem for the sector as a whole. Data suggest that high turnover rates for franchised dealers are likely to be in both sales and service. In comparison, independent dealers have the highest turnover rate in servicing. Annual staff turnover rates for franchised dealers, independents and bodyshops ranged between 15% and 20% in 2005.

During 2008, the redundancy rate almost quadrupled, but reduced in early 2009. Skilled trades, which make up a third of occupations within the sector (34.2%), accounted for a high number of redundancies (45.5%). Technician and mechanic occupational groups are also experiencing high numbers of redundancies.

Source: Automotive Retail Sector – Quarterly Report July 2009 and Automotive Skills SSA Stage 1 – UK 2006a

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Employment forecasts

Over the next decade, 224,000 people will be required to fill jobs in the automotive retail industry. This accounts for 36% of the industry. The total UK requirement for jobs is forecast to be 43% for the same period. Of the 224,000 staff required, 11,000 (5%) is due to a forecast growth in the sector over the next decade.

Replacement demand for the industry is forecast to be 213,000 over the next decade to replace those leaving their jobs due to retirement or other reasons.

Between 2007-2017, the occupations forecast to require the greatest number of people are:

  • sales and customer service (66,000)
  • managers and senior officials (48,000)

Total skilled trade posts are predicted to contract by 11,000 to 2017, but replacement demands will mean that some 15,000 opportunities in the sector will be available.

Source: Working Futures 2007-2017

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Future drivers in the sector

Across the UK future drivers of skills and productivity in the sector have been identified including:

  • Patterns of consumer demand – there is a growing consumer demand for particular types of used cars. Demand is strong for diesel, small and family cars.
  • Government policy – ‘green schemes’ which legislate on vehicle emissions will impact on the product technology and skills needed in the sector. Also more manufacturers are working towards producing ‘greener’ cars, partly in response to legislation, which will drive future skills needs.
  • Government incentives – with the economy beating the sector hardly, the UK chancellor’s budget in April 2009 announced a scrappage incentive scheme to increase new car sales.
  • Employee-related legislation – such as the introduction of paternity leave, which may impact on the sector, particularly small companies with few employees.
  • Technological change – continuing changes in IT and the increasing use of the Internet means that staff have to: learn new skills; adapt to new requirements for maintenance and repair; plus attain high-level problem solving skills and technical diagnostic skills to cope with very complex vehicle systems. 57% of traders believe that the Internet is becoming a major part of business activity, whilst 39% believe that it will not grow enough to make a significant impact.
  • Globalisation – the automotive industry as a whole is highly globalised, and this is likely to continue. However, the ‘retail’ sector downstream of the factory gate is very largely unaffected by international competition.
  • Innovation – for it to have a healthy future with healthy profits the UK automotive industry needs to become far more innovative.
  • Competition – with increasing competition there are increasing demands for well-trained, responsive staff to ensure customer satisfaction and retention. The importance of customer facing skills and the impact they have on business competitiveness cannot be underestimated.
  • Enterprise – it is crucial to the improvement of productivity in the sector that entrepreneurship is encouraged and supported by government.

Source: Automotive Skills SSA Stage 1 – UK 2006a and Automotive Retail Sector – Quarterly Report July 2009

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