CMI Pack June 2024

Customer Market Intelligence Pack

Let’s prepare for the future together​ June 2024

Contents

2 Market overview from Kevan​ 3 State of the UK economy 5 Hints and tips from your peers Alex Lindley, Managing Director of Lindleys Autocentres and Garage Hive 8 Market dynamics and what to expect by 2027 - Aftermarket performance and forecast - MOT curve - New registration - Car parc - Used cars - Light Commercial Vehicles (LCV) - Mobility 30 Hear it from our customers (MINI tell their story)

Introduction from Kevan Wooden​ Chief Executive Officer (CEO) ​

I’m pleased we’re able to share with you the latest edition of the Customer Market Intelligence Pack. We really hope this is a useful tool to bring you the trends and insights you need to plan ahead for your business.​ ​In terms of what you’ll see in this edition, plenty of data to show the changing market dynamics such as the pressure on volumes and how inflation is driving changes within the industry.​ ​The car parc continues to change at a pace, as you all know the 2035 government target of only zero emissions vehicles being sold is changing the landscape. As well as the obvious player, Tesla, there has been and will continue to be an influx of Chinese electric vehicles. These new disruptors are certainly worth keeping an eye on.​

​Despite the volume growth of battery and electric vehicles, ICE vehicles are still dominant. ​ ​You’ll not be surprised to see MOT season remains unchanged – don’t forget to prepare for this busy period.​ ​And finally, I’m delighted to welcome Alex Lindley to this edition. Managing Director of Lindleys Autocentres and a huge driver of Garage Hive, Alex will share his perspective on how garages can remain competitive and what he sees as the challenges ahead.​ ​Thanks for your continued

33 For your consideration 34 Our customer promise

partnership. Best wishes​ Kevan

State of the UK economy​

UK economic outlook, show improved prospects from 2025 onwards

2022

2023

Latest

2024F

2025F

2026F

GDP

4.3% 0.1% 0.2% (Jan)

0.4% 1.2% 1.7%

4.8% 0.3% -0.1% (Q4)

0.5% 1.6% 1.7%

Private Consumption

Unemployment rate (Q4)

3.7% 4.3%

3.9% (Jan)

4.3% 4.3% 4.3%

CPI (Q4)

9.1% 4.2%

3.4% (Fab)

2.1% 2.1% 2.0%

House prices (Q4)

10.2% -1.4%

-0.6% (Jan)

-1.0% 1.8% 1.0%

Average earnings (Q4)

5.9% 6.6%

5.6% (Jan)

4.0% 3.0% 3.2%

5.25% (Mar)

Base rate

1.5% 5.3%

4.4% 3.5% 3.3%

• Lowering inflation and interest rate will support stronger GDP growth. Household consumption also set to grow leading to more disposable income • UK general election to be held on 4th July 2024 and likely to result in a change of Government.

• However, wider geopolitical and supply chain issues continues- including the Red Sea disrupting shipping routes between Asia and Europe. As a result, price of shipping has increased due to rising commodity prices and conflict.

4

Hints and tips from your industry peers​

Meet Alex Lindley​ Managing Director of Lindleys Autocentres and Garage Hive​

Brief overviewof you​ ‘I’ve been in the automotive industry for 20 years this year, starting as an Apprentice Technician working my way through various roles including Service Advisor, Branch Manager, finance and eventually Managing Director of Lindleys Autocentres. I am also a director of Garage Hive, one of the industry’s leading GMS’. ​ Howdid you start and what are the future plans for these businesses? Lindleys Autocentres is 3rd generation family business which started as an engine reconditioning specialist in 1959. I joined the business in 2004. In 2012 we started to move away from engine work and move towards a more traditional service, MOT, and repair business. Lindleys has grown significantly over the last 10 years, growing from a single site it is now a multi-location business currently operating 8 autocentres, 2 tyres centres, 5 mobile tyre vans and a vehicle sales operation with over 100 staff across the business. The plan is for continued growth, there are plenty

‘ The plan is for continued growth, there are plenty of opportunities out there and the industry still feels really positive’

of opportunities out there and the industry still feels really positive.

In 2017 after looking for a new garage management system we ended up finding and investing in Garage Hive. It’s been a bit of a wild ride since then and we now operate the UK sales, implementation, and support for the company. The Garage Hive team has since rapidly grown and is used in garages across the UK and Ireland. Our future plans include expansion into other countries, including launching in South Africa later this year. My time is evenly split between both companies.

Garage Management System of the Year 2023

Powered by Microsoft

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Recruitment and staff retention has been a problem for years and will continue to be a problem for years to come.

What do you think are the keyopportunities for workshops in the next 3 years?​

There are several opportunities often spoken about, such as EV, ADAS, commercial vehicles and tyres. My advice is to position your company to not commit to any single path but be ready to change direction quickly when the time is right. The industry is at a bit of a crossroads between fuel types and technologies and you’re going to get different advice, sometimes extremely different, depending on who you speak to. At Lindleys we’ve decided to focus on our servicing, MOT, tyre and fast-fit offerings as these products and services apply to all fuel and vehicle types. We do have EV trained technicians and we are also marketing that we are EV ready, for when the time is right. What do you think are the key challenges workshops will face in the next 3 years?​ Recruitment and staff retention has been a problem for years and will continue to be a problem for years to come. I do find that some garages are having much more success than others though when it comes to recruitment. A mistake I see often made with some job adverts is the lack of a clear salary instead of a wide-ranging salary or the very common “competitive salary”. From our experience anything other than a clearly

defined well paid salary doesn’t work. The problem is, in order to be able to advertise a clearly defined salary you need to be paying the existing staff in line with what you’re willing to pay a new recruit – this can be an expensive exercise!​ In the coming years there will also be a significant reduction in diesel vehicles coming through to the independents – this is backed up by vehicle registration data. The challenge with this is that over 60% of the revenue in independent workshops comes from diesel vehicles, with the average invoice value of a diesel being more than £100 over any other fuel type. Independent garages must be thinking about ways to fill this revenue gap.

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The absolute priority must be understanding your numbers and making sure that the business is setup for success in the first place.

Howwould you advise other workshop owners to sustain a profitable outlook in a tough economic environment?​ The absolute priority must be understanding your numbers and making sure that the business is setup for success in the first place. This includes knowing what your daily running costs are (gross profit target), making sure that you have enough hours/ technicians available, and charging a labour rate that is suitable for those business costs. I can’t stress this enough – it has to be every garage owner’s number one priority.

And finally, have you got any other top hints and tips for garage owners? Stay positive, you’re probably doing a great job! Running a garage is a complicated business, it isn’t meant to feel easy . That being said, we are in a great industry in a sector that is doing really well and even though the future isn’t exactly clear, it’s exciting and full of opportunity.

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Market dynamics and what to expect by 2027

8

Pressure on aftermarket volume, value driving market growth​

2024 Forecast​ IAM​ ​+1.2% volume growth yoy ​ Value +4.4%​

2024 Forecast​ OEM​ ​-2.1% volume growth yoy ​ ​Value +1.0%​

2023​ workshop turnover ​ +1.2% volume growth yoy ​ ​Value +6.2%​

2024 Forecast​ workshop turnover ​+0.5% volume growth yoy ​ ​Value +3.7%​

Source: GiPA Note: Workshop turnover (based on car parc size, car age, mileage, inflation and other economic variables)

9

MOT remains a key opportunity and with the cycle not back to pre Covid levels, workshops will still face the seasonality challenges​

MOT volume (include retest)

2019 Actual

2023 Actual

2024 ECP Forecast*

5,000,000 4,500,000 4,000,000 3,500,000 3,000,000 2,500,000 2,000,000 1,500,000 1,000,000 5,00,000

JAN FEB MAR APR MAY JUN JUL

AUG SEP

OCT NOV DEC

Source: SMMT. Figures include retest.​ Actual in 2024.

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New car market​

In 2019, 90% of all new cars sold were either petrol or diesel. In 2023, this was less than half (44.5%)​

NewCar Registrations (000s) 2019 2,311​

NewCar Registrations (000s) 2023​ 1,903

Petrol Diesel

MHEV diesel MHEV petrol BEV PHEV HEV

+18% vs 2022 -18% vs 2019

• New registrations seeing a positive turn as supply constraints ease, fuelling growth to the car parc. 2.1 million new cars are estimated to be sold in 2024​

• Increasing penetration of Chinese car brands – In 2019, 0.6% car brands registered where from China, in 2023 this grew to 4.3%​.

Source: SMMT, GiPA MHEV - Mild Hybrid Electric Vehicle, BEV - Battery Electric Vehicle, PHEV - Plug-in Hybrid Electric Vehicle, HEV - Hybrid Electric Vehicle

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A changing car ownership shows fleet is driving demand in new car sales. Over half of new sales are fleet, as private buyers continue to feel the cost of living crisis

NewCar Registrations (000s) 2022 1,614

NewCar Registrations (000s) 2023​ 1,903

2%

3%

Private Fleet Business

51%

43%

47%

55%

• Fleet is driving growth in new car sales (55%) vs private (43%)

• In 2023, fleet saw a 39% year on year growth, while business registrations fell by -1.5%. Private consumer demand saw a -0.1% decline over the same period.

Source: SMMT, GiPA

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​The most popular make and models sold are still ICE, however Tesla sits firmly within the top 5​

Top 10 Model 2022​

Top 10 Model 2023​

1

1

42.704

49.591

Nissan Qashqai

Ford Puma

2

2

35.910

43.321

Vauxhall Corsa

Nissan Qashqai

3

3

35.551

40.816

Tesla Model Y

Vauxhall Corsa

4

4

35.088

36.135

Ford Puma

Kia Sportage

5

5

32.387

35.899

MINI

Tesla Model Y

6

6

29.655

34.469

Kia Sportage

Hyundai Tucson

7

7

27.839

33.385

Hyundai Tucson

MINI

8

8

26.558

31.745

Volkswagen Golf

Nissan Juke

9

9

26.549

30.159

Ford Kuga

Audi A3

10

10

25.070

29.984

Ford Fiesta

Vauxhall Mokka

Total 2022 car sales (1.6)

Total 2023 car sales (1.9)

Source: SMMT​

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​Based on current purchasing behaviour, Tesla is the most popular BEV​

Top 10 BEV Model 2022

Top 10 BEV Model 2023

1

1

35.551

35.899

Tesla Model Y

Tesla Model Y

2

2

19.071

MG 4

21.715

Tesla Model 3

3

16.757

3

11.197

Audi Q4-e-tron

Kia-E-Niro

4

13.536

4

9.832

Tesla Model 3

Volkswagen ID.3

5

12.542

5

9.178

Polestar 2

Nissan Leaf

6

10.295

6

Volkswagen ID.3

MINI

7.452

7

10.084

7

Kia-E-Niro

Polestar 2

7.345

8

8.940

8

BMW i4

MG 5

7.030

9

8.495

9

6.399

Volkswagen ID.4

BMW i4

10

8.136

10

6.594

Skoda Enyaq iV

Audi Q4-e-tron

Total 2022 car sales (1.6m)

Total 2023 car sales (1.9m)

Source: SMMT​

15

15

​However, this is likely to change as the number of Chinese brands continue to penetrate the UK market​

In 2019, 0.6% car brands registered were fromChina, in 2023 this was 4.3%​

Germany

Japan

UK

USA

South Korea

France

Czech Rep.

Sweden

Spain

China

0.6% 3% 2% 3% 8% 8%

1.1% 3% 3% 4% 8% 7%

1.9% 3% 3% 3% 7% 10%

3.3% 2% 3% 3% 7%

4.3% 3% 3% 4% 7%

11%

11%

11%

11%

9%

11%

10%

15%

14%

13%

12%

11%

16%

16%

17%

17%

17%

30%

30%

30%

28%

27%

2019

2020

2021

2022

2023

Source: SMMT, GiPA​

16

​And whilst BEV (Battery Electric Vehicles) only make up 17% of new car sales, in 2023, according to the government’s ZEV (Zero Emission Vehicle) mandate, by 2035 100% of new cars sold will be zero emission

2035 Confirmed target for all new cars to be zero emission

96% 100%

66% 80% 84% 88% 92%

22% 28% 33% 38% 52%

2024

2025

2026

2027

2028

2029

2030

2031

2032

2033

2034

2035

Source: SMMT and Department for Transport​

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The car parc​

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The car parc dynamics reveal an aging parc, ICE still dominates and BEV volume is growing ​

Age category ​

Average age ​

Car parc size​

• 33.43 million in 2023 (+0.7% yoy growth)​ • Estimated to be 34.53 million by 2027 • (+3.3%. growth on 2024).

• Average car parc is currently 9.2 years • (+0.2 years yoy and increase compared to 2022)​ • Estimated average car age to be between 9.5 and 9.7 years by 2027​.

• Currently, 39%of the car parc is 10 years or older. By 2027, this is expected to be between 44% and 46%​ • Whilst, 26%of the car parc is 4 years or younger. By 2027, this is expected to be between 26% and 29%​.

Petrol

Diesel

BEV

• Average age of the petrol car parc is currently 9.5 years ​ • Estimated to reach 10.7 years by 2027.

• Average age of the diesel car parc is currently 10.4 years • Estimated to reach 12.4 years by 2027.

• Currently, 1 million electric cars​ • Forecast to triple reaching 3.3 million BEV car by 2027​ • Current average age of 2.6 years and anticipated to remain broadly stable into 2027.

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7.2 million used car sold in 2023, petrol and diesel are still the most popular fuel types, however BEV is slowing gaining share, now 1.6% from 0.9% in 2022​

Top 5 fuel types in 2023

2022​ 6.89 million​

Fuel No. transactions

1. Petrol 4,079,555 2. Diesel 2,747,911 3. Hybrid 221,859 4. Electric 118,973 5. Plug-in Hybrid 65,837

2023​ 7.24 million​ +5.1% yoy​

Source: SMMT​

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The most popular used car is the Ford Fiesta, unchanged from 2022. The Top 10 has seen very little change

Top 10 Model 2022​

Top 10 Model 2023​

1

1

308.017

Ford Fiesta

288.639

Ford Fiesta

2

299.454

2

237.705

Vauxhall Corsa

Vauxhall Corsa

3

216.227

3

227.427

Volkswagen Golf

Volkswagen Golf

4

213.821

4

223.417

Ford Focus

Ford Focus

5

165.011

5

160.736

Vauxhall Astra

Vauxhall Astra

6

158.710

6

158.298

MINI

MINI

7

155.264

7

155.100

BMW 3 Series

BMW 3 Series

8

137.517

8

141.135

Volkswagen Polo

Volkswagen Polo

9

114.801

9

120.286

Audi A3

Nissan Qashqai

10

112.312

10

118.805

BMW 1 Series

Audi A3

Total 2023 used car sales (7.2m)

Total 2022 used car sales (6.8m)

Source: SMMT​

21

Light Commercial Vehicles (LCV)​

22

Although the vast majority of vans being sold are diesel, the share of BEVs have grown from 2% in 2020 to 6% in 2023, a 4 percentage point increase in 3 years

New LCV Registrations (000s) 2020​ 292​

LCV Registrations (000s) 2023​ 341

2%

1%

3%

6%

17%

92%

97%

Diesel BEV Others

Source: SMMT​

23

And whilst BEV (Battery Electric Vehicles) only make up 6% of new van sales in 2023, according to the government’s ZEV (Zero Emission Vehicle) mandate, 100% of new vans sold will be zero emission

2035 Confirmed target for all new cars to be zero emission

94% 100%

58% 70% 76% 82% 88%

10% 16% 24% 34% 46%

2024

2025

2026

2027

2028

2029

2030

2031

2032

2023

2034

2035

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The most popular van is the Ford Transit Custom, unchanged from 2022​

Top 10 Model 2022​

Top 10 Model 2023​

Ford Transit Custom Ford Transit

Ford Transit Custom

1

1

42,215

40,865

2

2

Ford Transit

33,203

28,280

Mercedes-Benz Sprinter Vauxhall Vivaro

Vauxhall Vivaro

3

3

17,034

20,477

Ford Ranger Volkswagen Transporter

4

4

16,830

18,679

Ford Ranger

5

5

16,827

17,487

Volkswagen Transporter Ford Transit Connect

6

6

15,164

16,041

Renault Trafic Mercedes-Benz Sprinter

7

7

8,218

15,799

Citroen Berlingo

8

8

8,085

14,065

Peugeot Expert

Toyata Hilux

Renault Trafic Volkswagen Crafter

9

9

8,085

10,888

Ford Transit Connect

10

10

7,455

10,856

Total 2022 LCV sales (282k)

Total 2023 LCV sales (341k)

Sources: SMMT​

25

The LCV dynamics illustrate a similar trend with an aging van market, diesel being the most dominant fuel type and anticipated half a million BEV vans by 2027 ​

LCVs in operation (m)

Average age​

Age category ​

• 5.60 million in 2023 (+2.7% yoy growth)​ • Estimated to be 6.05 million by 2027 (+5.1% growth on. 2024).​

• Average van currently 10.6 years (+0.2 years yoy increase)​ • Estimated to be 11.1 years old by 2027​.

• 42% of vans in operation is 10 years or older. By 2027, this is expected to be around 45%​ • 29% are 4 years or younger. This is expected to remain broadly unchanged by 2027. ​

Petrol

Diesel

BEV

• Petrol currently make up 4% share of the van market​ • This is estimated to remain broadly the same by 2027.

• Diesel is the dominant player with 94% share of the van market​ • However this is estimated to reduce to 76% share by 2027.

• Currently, 77k electric vans on the road​ • By 2027, this is expected to reach over 500k​.

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Mobility​

Car mobility levels remain just below the pre-pandemic levels, however there was increased usage of cars in 2023 (96%) compared to 2022 (93%)

Car mobility levels (weekly rolling average)

Source: DfT​

28

LCV mobility levels is trending above pre-pandemic levels, primarily aided by online deliveries and increasing mobility levels in 2023 (115%) compared to 2022 (110%)​

LCV mobility trends (weekly rolling average)

Source: DfT​

29

Meet Steve Chambers and Kyle Berry Co-owner and Manager of The Mini Repair Shop The Mini repair shop tell their story

Customer case study – in their own words...

Brief overview of The Mini Repair Shop

We have been in business for the last two years. We have been a LKQ Euro Car Parts customer since day one. Our team comprises of three technicians and two front of house. In our workshop, we have three lifts at this site, but we are currently looking for another at time of writing this.

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There is another motor factor with a branch just around the corner from us, but they can’t match LKQ Euro Car Parts on availability.

What do you tend to buy from LKQ Euro Car Parts and why?​

Our brand is very important to us, and we’ve set ourselves high standards to uphold. We’ve got more than 25 years’ experience as senior technicians within the dealer network, and when we decided to set up on our own, we wanted to deliver a similar quality of work and customer experience…but without the dealer prices. ​ LKQ Euro Car Parts stocks the quality brands we want to fit on our customers’ vehicles, like Mann, Pagid and Mahle. And critically, they have a massive amount of stock that’s ready to be delivered quickly. We’re buying the exact same parts now as we were when we worked in the dealer network – but with two key differences. They’re not co-branded with the OEM logos – and they don’t come with the OEM price tag.​

Between the two LKQ Euro Car Parts branches near us, we have total confidence that everything we might need is in stock and can be here within the hour.​ ​It’s great to have a single point of contact – we have a direct number for our dedicated rep, who understands our business and is always on hand to help and advise. Why do you choose to spend with LKQ Euro Car Parts instead of our competitors?​ Between the two LKQ Euro Car Parts branches near us, we have total confidence that everything we might need is in stock and can be here within the hour.​ ​What’s your relationship like with your local LKQ Euro Car Parts branch?​

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Hear it from another customer: Customer case study

​How do you tend to place most of your orders i.e. online or by phone?​ We place a lot of orders online through TechMan, which builds estimates for us and links into Omnipart so we can buy in what we need for every job. It’s seamless, it’s accurate and it saves us lots of time.​ We tend to go through the diary and order seven days ahead. It’s easy to cross reference from the dealer parts catalogue to the LKQ Euro Car Parts range on Omnipart and there’s no need to pick up the phone. The phone is there for customer service instead.​ How did you hear about 1TEC Auto Hub and why did you join?​ Our LKQ Euro Car Parts rep suggested that becoming part of 1TEC Auto Hub could add real value to our business. If you’re buying a lot of parts, it makes good sense from a rebate and rewards point of view – and means that you can then invest back into your business.​ It’s easy to see that 1TEC Auto Hub is a unique garage concept because of the backing it has from LKQ Euro Car Parts, as well as brands like Varta and Shell.​

The HaynesPro package is another big benefit we make use of daily, and the training that’s included encourages us to keep topping up our knowledge. We’re experienced and we know our stuff, but it’s vital we don’t become complacent, and that we stay on top of the latest trends, tech and tools.​ Can you tell me about your plans to invest in training next year?​ ​Our existing knowledge has got us this far, but we’re keen develop our softer skills to help grow the business. And the same is true in reverse for our front of house team – they’re fantastic with customers, but they’ve never worked in the motor trade before. I’m sure they’d benefit from a basic level of technical knowledge to increase their confidence when discussing customers’ requirements and getting them booked in. ​What are your plans for the future more broadly?​ We’ve got enough work for another three or four lifts and another two technicians. The key for us is finding modern, clean premises that work for our brand so that we can maintain the high standards we’ve become known for locally.

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Key considerations for your business

Interest in new diesel cars is waning, however the opportunity for older diesel is huge, currently around 12 million cars and estimated to reach 12.4 years old by 2027. ​

A changing car ownership shows fleet is driving demand in new car sales. Over half (55%) of new car sales in 2023 were fleet. A growth segment that your workshop should view as an opportunity to drive additional revenue.

A changing car market shows, in 2019, 90% of all new cars sold were either petrol or diesel. In 2023, this was less than half (44.5%)​.

The aging car parc is a huge opportunity for the aftermarket with nearly half of the parc estimated to be 10 years or older by 2027​.

Electrification is growing and will continue to do so, don’t get caught out, be prepared​.

MOT remains a key opportunity and knowing the seasonality challenges helps your workshop maximise opportunities.​

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This is our promise to you

There whenever you need us​ We’re here to solve your problems. You’ll have a dedicated local sales advisor with the expert technical knowledge, tools and catalogues needed to give you advice – in branch or on the phone with other experts available online too. And we’ll always treat you with courtesy and respect.​ Your business isn’t 9-5 and neither are we. You can also order from us 24/7 through our industry leading online platform, Omnipart and you’ll receive the same delivery service as you do when you call one of our branches.

The right part, first time, on time We believe we offer the best value for money and the best product availability in the market, with more than 130,000 lines in stock. And thanks to our world-class logistics, we can get them to every part of the UK on the same day and in most cases within the hour. If something goes wrong on the way to you, we’ll keep you up to date all the way, so you know when to expect your delivery. And if we don’t have a product ready for immediate dispatch, we’ll tell you when we can get one out to you, or we’ll endeavour to offer you an alternative.

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No hassle warranty and returns​ We pride ourselves on the quality of our extensive product range. But on the rare occasions when something might go wrong, our warranty process is hassle free. If you buy a product with a warranty issue, we’ll aim to sort it as quickly as possible – within 30 days at the most – or you’ll get your money back. No arguments, no fuss. And if you return a product that’s not been used with its original packaging, we’ll endeavour to refund you within 24 hours – or on the same day if it’s before 4pm. No ifs, no buts.

A supportive partner in a changing world​ The aftermarket is changing quickly but we will help you see what’s coming over the horizon – and to make sure your business is ready for it. From training, work referral and garage management solutions, to the technology required to work with hybrid and electric vehicles, we will give you what you need to thrive today and tomorrow. And in an increasingly digitally driven world, we’ll help you become more visible and better connected with your customers.

We’ll do our utmost to make sure we deliver on these promises.​ But if we don’t, we want to know. Email us: promise@eurocarparts.com