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3 October 2016Automotive: Impact of emerging technologies on garages and workshops from a risk exposure perspective

Impact of emerging technologies for the automotive industry

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The development of fully autonomous vehicles is gathering momentum at a rapid pace, as evidenced in the Queen’s Speech in May last, where measures were announced to promote the development of driverless cars.

This is good news for consumers, with the convenience factor and anticipated reduction in road traffic accidents (RTAs) as well as a potential lowering in personal motor insurance costs to look forward to. However, what do these innovations mean for the wider automotive industry?

The truth of the matter is that the industry is scrambling to keep up. Laws will have to be changed to accommodate this shift in technology and insurers are yet to determine who will be liable in the event of a RTA (manufacturer or “driver”).

There will almost certainly be an impact on independent garages. That’s because it is likely to become a manufacturer/dealer-led market, given the ownership of the driverless technology. However, if competition boards stipulate that the technology has to be made available to independent garages, it would still cost them to purchase the technology, obtain the correct tools and equipment and retrain staff. Could smaller, family run businesses (which make up a fair majority of the motor trade aftermarket) afford the additional expense and investment, or will they continue as they are now and risk being left behind? To help answer these difficult questions, we can look back at the experience and challenges which followed the introduction of other technologies, such as electric and hybrid vehicles.

The Institute of Motor Industry (IMI) has revealed that only 1% of the sector’s technicians are qualified to maintain these vehicle types. Furthermore, specialist tools and equipment are required to maintain these vehicles and keep technicians safe - a huge investment for garage owners to bear and one that the figures demonstrate they have been unwilling or unable to do to date. But, with autonomous vehicles containing enough electrical current to kill somebody, can a garage owner afford to get this wrong?

Failing to invest in the training and equipment for these vehicle types could leave garage owners severely exposed, especially from an employer and public liability perspective. And whilst industry trade bodies lobby for government to put their money where their mouth is by investing in the automotive sector, garages and workshops will meanwhile need to pay for training and new tools themselves. For those garages with access to or availability of funding, it would certainly be an opportune time and shrewd move to invest early to stay ahead of the competition, but only if done properly. Otherwise, garages could run the risk of invalidating insurance if claims are made and it’s proved that the garage made a mistake due to insufficient training or inappropriate tools. History demonstrates that the Health & Safety Executive can and will come down hard and impose fines on those garages found to be non-compliant (from a Health & Safety at Work Act perspective). Whilst there are undoubted benefits to using these emerging technologies, the true level of disruption to the automotive market needs to be considered. Will we see a shrinking motor aftermarket, as garages struggle to afford to keep up? Given the timeframes involved, decisions are going to have to be made promptly factoring in all the pros and cons this advanced technology brings with it.

For advice on how this technology could affect your business; help to identify the skills gap in your business or risk evaluation and planning to ensure your business is prepared contact Arthur J. Gallagher.

For further information on the Automotive practice, and how it could help you and your business, contact the Automotive Team on automotive_enquiries@ajg.com or 0800 61 222 84.

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