The traditional workshop will remain”

The traditional workshop will remain”

AUTOMOTIVE.AT:Mr. Ringseis, what are the biggest challenges currently facing independent workshops?

GEORG RINGSEIS: The automobile is a technology carrier - more than ever in the age of digitalization and networking. For example, today flashing - i.e. programming or updating control devices - is one of the basic skills that must be mastered, even in an independent workshop. The biggest challenge is the increasingly necessary digitization of the workshop in order to keep up with the rapid development of technical requirements. Currently, this particularly includes the modernization of diagnostic devices and appropriate training for employees. The workshop must have the financial resources available for this. What I think is very important: Before decisions are made about modernization and training, it should be clear what customer needs you want to cover in the future. It is advisable to have a – at least rough – strategy for your business. All vehicle workshops have to face this challenge, but independent companies even more so due to the multi-brand concept.

What future requirements should workshops prepare for?

Modern vehicles are rolling data centers. That's why there will generally be more and more demand for IT know-how. Electric vehicles also require the use of high-voltage drives. Workshop operators have to ask themselves the question: Am I and my employees sufficiently trained and do we have the necessary equipment? Another aspect is that in the age of digitalization and networking, OEMs are increasingly using their privileged access to vehicle interfaces. This means they are able to interact directly with vehicle users and steer them specifically into their own service and repair networks. What we are also seeing is that attempts are increasingly being made to use cybersecurity as an argument to legitimize anti-competition measures. One of the already known challenges is that some vehicle manufacturers see the warranty as a customer loyalty program. Especially if they suggest to their customers that they will lose their warranty claims if they go to an independent specialist workshop during the warranty period. But that is wrong. Because the regulations in the Aftermarket GVO are unambiguous and clear. Nobody loses their warranty claim if they go to an independent workshop and have a service or repair carried out according to the manufacturer's specifications.

In your opinion, can a workshop survive the next ten years if it completely rejects the topic of electromobility?

Yes, we at the VFT are firmly convinced of that. One thing is clear: the electric car is here to stay. But: Just as Rome wasn't built in a day, our mobility won't be electrified overnight either. Because the electric car alone is far from done - given the necessary infrastructure. From today's perspective, it can be assumed that by 2035 only one in four vehicles in the existing fleet will be battery-electric. This means that the “traditional” workshop will also have its place. In addition, there are already numerous workshops today that specialize in certain, drive-independent services - think of car glass, tires, etc. – have specialized. The young and vintage car scene is also gaining in importance. This means that the classic repair continues. Accordingly, there are more and more companies that specialize in repairing older components.

To what extent will the investments be made by those independent workshops that want to service and repair hybrid and electric vehicles?

This question cannot be answered in general terms. Independent specialist workshops are known and popular for their multi-brand concept. We have to see whether this concept can be transferred in its current form to the area of ​​electric vehicles. Depending on the number of employees or jobs for OEM repair companies in the E segment, estimates assume an average investment volume of up to 200,000 euros for tools, training and workshop equipment. For smaller companies it will be correspondingly less. However, such investments are certainly not an option for all independent workshops. We therefore expect that in the future there will be greater collaboration within smaller units and across the entire value chain - perhaps somewhat comparable to what we know in the health sector of medical centers, where several specialists come together and thus together cover a very broad range of services for their patients. From the perspective of an independent workshop, such an investment currently only makes sense if it specializes - at least now that the electric fleet is still very small. Appropriate skills are required here, such as replacing battery modules or calibrating specific e-vehicle components. At the same time, as already mentioned, the need for specialist workshops for conventionally powered vehicles remains high.

Is a decline in repair business to be expected because electric cars require less service?

Repair means: Something has broken and therefore needs to be repaired or replaced. On the one hand, one can roughly assume that battery-electric vehicles require, on average, 30 percent fewer “traditional” spare parts than combustion-powered vehicles. On the other hand, there are also specific spare parts that only electric cars need. Overall, a decline in the need for spare parts of between 13 and 17 percent is expected in just under 20 years. But that doesn't automatically mean that there is less going on in the workshop. Because what we are seeing, at least at the moment, is that certain vehicle parts in electric cars are exposed to greater wear and tear - often due to the high vehicle weight - and therefore have to be replaced more frequently. At the same time, air conditioning systems in electric cars, for example, will also need service and pollen filters will need to be replaced. And the bonus is also due regularly for electric cars. What we haven't even considered up to this point is the area of ​​software or software updates etc. OEMs currently have an advantage here due to their already mentioned, privileged position and direct access to vehicle users. Appropriate EU data legislation could change that.

Do you see the future of independent workshops at risk due to the limited access to repair data by automobile manufacturers?

Access to repair and maintenance information for the independent repair sector was already regulated in the Aftermarket GVO. This set of rules has not only just been extended by the EU Commission for another five years, but has even been expanded. While in the past there was only talk of technical repair and maintenance information, independent market participants must now have explicit access to technical information, tools, training and also vehicle-generated data that are necessary for the repair and maintenance of vehicles. Based on this, there shouldn't really be any open questions. But practice has already taught us otherwise. This is also shown by a current case that our German sister association GVA is conducting against Scania before the European Court of Justice. This is about the appropriate provision of vehicle identification numbers by the OEM. Nevertheless, there is still a need for discussion with the OEMs at national and European levels in order not only to maintain the status quo, but also to adapt it to the current technical status.

Can a solution be expected at the political level in the foreseeable future that will ensure the survival of independent workshops?

In a competitive market where customers have real freedom of choice, they have the final say. They assess whether the service and quality offered by the automotive or bodywork technician matches the price and whether they will come back. In the end, it is the customers who decide who will survive economically in the long term. From the perspective of the workshops, the following applies under such conditions: everyone is the creator of their own happiness. This doesn't work in an asymmetrical market, where this level of competition does not exist and customers have no real freedom of choice because, for example, certain vehicle parts, data and services can only be obtained from a specific provider. Independent workshops are confronted with everyday hurdles in numerous service areas. Some of these hurdles may be overcome with additional time or financial investment, but others cannot. Every single hurdle means inequality in the competition for repair services. And that's why every single measure that helps bring more symmetry to the repair market is important and sensible. At the VFT, we work every day to ensure that such measures come about - and we are always happy about successes. The mills in Europe may grind slowly, but we continue to see positive signals from the EU Commission and recognize their desire to strengthen competition. The current expansion of aftermarket GMOs already mentioned is one such example. The new regulations for European design protection are currently in the works. The first introduction of a Europe-wide repair clause is currently being negotiated. This is important for the free supply of visible vehicle spare parts. The biggest challenge we are currently tackling from the perspective of the independent aftermarket is European data legislation. There is a lot of future - and therefore many opportunities, but also many risks - for the independent mobility and repair sector. The proposal for a general EU data law has already taken shape and is currently being discussed among the EU institutions. However, this general approach does not do justice to the realities of the automotive sector. For example, currently only vehicle manufacturers have privileged access to data due to the technical design of the systems installed in the vehicles. You decide at your own discretion who receives which data, when and in what form. This gives vehicle manufacturers a dominant position and leads to asymmetrical market conditions. And that's why the vehicle sector needs sector-specific rules. We hope that the EU Commission will draw up a proposal by autumn. Otherwise, time will be tight in this legislative period, as there are European elections in June 2024.

Can apprenticeship training still keep pace with rapid technological developments?

At the beginning we already talked about the technical challenges that independent workshops in particular are confronted with. Apprenticeship training also plays a role here, as it cannot keep up with the rapid development of technical requirements. On the one hand, this is because changing curricula is a lengthy process. It is important that basic training is not neglected. At the same time, the need to learn new things does not end with vocational school or an apprenticeship qualification. What we need is further training after the final apprenticeship examination. For this reason, repair companies are required to train their employees as required.

What measures should be taken to combat the shortage of skilled workers?

There is a reason why the job “automotive technician” is no longer called “automotive mechanic”; In Germany, too, the name was changed to “automotive mechatronics engineer” because nowadays a lot of additional know-how is necessary in addition to traditional mechanical knowledge. This also makes it clear who we need to get excited about working in the workshop: diversely interested, smart and motivated boys and girls. For this reason, in my opinion, a whole package of measures is needed: It starts with compulsory schools. There, the training and thus the level of training of compulsory school graduates must be improved. When it comes to subsequent vocational training, greater support and better funding is needed for the companies providing training. It is conceivable, for example, that training companies would waive the additional wage costs for their apprentices. As long as there is a shortage of skilled workers, there should also be a constructive discussion about accompanying measures, such as the duration of unemployment benefits or easier admission to the labor market for skilled workers from third countries.

Are you expecting a wave of insolvencies among independent workshops due to the increasingly difficult conditions in the repair business?

No, I do not expect bankruptcies in this context. What I am assuming, however, is that the number of company closures will increase. On the one hand, due to demographic developments, which, in combination with the shortage of skilled workers, lead to age-related company closures due to a lack of successors. On the other hand, because the investment amounts - as mentioned - are high and external financing is difficult to obtain under the current lending guidelines.