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Photograph of some cars
This sector encompasses all activities (except manufacturing and renting) related to motor vehicles and motorcycles including lorries and trucks, viz:
This sector encompasses all activities (except manufacturing and renting) related to motor vehicles and motorcycles including lorries and trucks, viz:
The Motor Trades industry is a significant provider of local jobs. With a 2006 employee workforce of approximately 13,200 people the sector accounts for 2.2% of Lancashire's total jobs, a share fractionally above the 2.1% in Great Britain at large. This total is about three-times the number engaged in motor vehicles and parts manufacture itself. Unlike the characteristics of most service industries it continues to be a male dominated sector with men comprising 77% of the workforce and part-time working (at about 15% of the workforce and divided equally between the genders) is also relatively low for a service sector activity (Table 1).
Providing largely a local or at best sub-regional market service, motor trades jobs are distributed widely across the County though 36% of them are based in Central Lancashire districts, reflecting local features such as the sales and distribution networks associated with Leyland Trucks, the presence of major vehicle dealer networks and the location of motorway service sites (Figure 1). Within local districts the importance of the sector as a source of jobs ranges from a share of over 3.3% in Chorley to only 1.3% in Fylde and Rossendale.
Figure 1 Motor Trades Employment by District, 2006Graph showing the number of motor trades employee jobs in Lancashire's districts and unitary authorities - see text for details Source ONS - Annual Business Inquiry
A more detailed distribution of employee jobs by ward is illustrated in Figure 2 suggesting that the highest concentrations tend to be in out of centre suburban or out of town locations.
Figure 2 Motor Trades Jobs as a Percentage All Employee Jobs, Lancashire Wards, 2006Map showing motor trades jobs as a percentage of all jobs for Lancashire's wards - see text for details Source ONS - Annual Business Inquiry
Structurally, motor trades is a highly fragmented sector, dominated by small and very small businesses: nearly 99% of the estimated 2,250 business units in Lancashire employ fewer than 50 people and these provide 79% of all jobs (Table 2). Statistically, the average size of business unit is just six employees though many of these belong to larger organisations. Motor vehicle dealerships comprise most of the larger establishments within the local sector. Examples of these include the Manchester-based (External) Lookers Motors Group Ltd , part of a multi-franchise main dealer group (which also includes (External) Dutton Forshaw ); (External) Inchcape , another large UK multi-franchised dealer group; (External) Cicely Commercials Ltd , Mercedes-Benz vans dealer with local branches in Blackburn and Preston; (External) Barron Group Ltd , Chorley, dealer in caravans and motor homes; (External) Pye Motors Ltd , Morecambe-based main dealers; and (External) Bowker Preston Ltd , BMW and Mini dealership. The majority of the larger establishments are to be found within the urban areas (Figure 3)
Map showing the approximate location of Lancashire's motor trades establishments - see text for details
Source
ONS - Annual Business Inquiry
From employing about 5,500 people in 1950 the motor trades industry expanded steadily (albeit cyclically) in line with rising incomes and growing car ownership levels, doubling to nearly 11,000 jobs at the start of the 1980s. Following a pause over the recession years of the early 1980s, the industry again began to expand steadily adding a further 4,000 jobs (+40%) by 1999 which represented a peak year for the local sector (Figure 4). In spite of continuing strength in much of the vehicle sales market, local employment in the sector has been somewhat erratic and has fallen over recent years. This may have reflected local factors as well as wider structural changes occurring in response to cost pressures and changes to European regulations affecting new car sales.
Figure 4 Motor Trades Employee Jobs, Lancashire, 2006Graph showing how the number of motor trades employee jobs in Lancashire has changed from 1950 to 2006 - see text for details Source Ministry of Labour/ONS - ERII Employment Records
Over the past decade most component sectors of Motor Trades in Lancashire enjoyed some net gains in employee jobs (the main exception being sales of automotive fuels), though the recent jobs downturn has negated some of this growth, notably in motor vehicle sales (Table 3). Evidence would suggest that the biggest losers have been single site businesses whilst the numbers of multi-site businesses have fared rather better.
As one of the most transforming events of the 20th century, the mass production and ownership of motor vehicles has itself spawned several major supporting industries. Amongst these is the motor trades industry which nationally is now made up of over 71,000 enterprises with a workforce of some 613,000 people and which has a combined annual turnover in the region of £156bn, two-thirds of which derives from the retail and wholesale of motor vehicles. Total annual gross value added is estimated at £24bn. Gross value added per head in the sector stood at about £39,000, encompassing a range from £28,000 per head in the maintenance and repair of motor vehicles to £52,000 per head in motor vehicle sales.
The market for motor vehicles is generally mature and the fortunes of the sector are linked closely with those of the economy generally and with the cyclical swings in both business and consumers sentiment. Purchases of replacement cars may well be delayed when the economy is weaker. Consumers can also be highly sensitive to the cost of borrowing. The purchase and maintenance of cars account for a large proportion of household expenditure and partly in consequence the motor trade is a highly competitive and tight margin industry across most of its individual sectors. Though still a relatively small company industry, concentration is increasing through mergers and acquisitions and through the closure of smaller single site outlets as branch networks of larger organisations expand at the expense of the smaller independent operators. Changes in the road and vehicle sales tax system are increasingly being directed towards encouraging drivers to choose smaller, less polluting and more fuel efficient cars. The motor vehicle market is also characterised by a large proportion of second hand sales. The used car market accounts for around half of the total car market in value terms. Furthermore, motor dealers account for just over half of used car sales in volume terms, the remainder being traded in the private-to-private market.
Broughton Petrol Filling StationPhotograph of Broughton petrol filling station
The traditional garage and franchised dealers networks have faced a growing challenge over recent years. In the repair and servicing sector this has derived from generally improved car reliability, longer service intervals and longer warranties for new vehicles and from increased competition from a rapid growth of drive-in or fast fit operators handling a narrow range of fixed price service and maintenance activities. As vehicles have become more complex, vehicle maintenance and repair activities have also become more skilled and more demanding of technical equipment, challenging public perceptions of the retail motor industry and placing pressures on independent operators. Independent garages now have the right to service and repair vehicles without flouting warranty rules, but meeting manufacturers' technical and quality standards can often entail considerable new investment in equipment and training.
On the retail side, marketing and distribution costs are reckoned to have accounted for up to 30% of a new car's price and are where manufacturers, have sought to target much cost cutting. This, together with some over-capacity in the car market and increasing pressure on margins have forced manufacturers to make radical reductions in the size of their franchised dealer networks and a corresponding increase in the size of sales territories in order to simplify the supply chain and to reap economies of scale. The process has been further accelerated by EU revisions to the motor industry's long-standing Block Exemption from normal EU competition rules. The exemption was originally granted because of the perceived need for specialised after-sales care of such complex and potentially dangerous machinery as a car. The new regulations loosen carmakers' grip over who sells and services their vehicles, marking a shift in power to dealers and independent garages. The net effect of such changes has been increased merger and acquisition activity, a growth in multi-franchising and a further reduction in single site independent sales outlets with many ending up as manufacturer service centres only. In total the number of national enterprises engaged in the sale of motor vehicles has fallen by more than 40% since 1995. The sector is also under pressure to adopt new forms of dealerships and marketing and to be more responsive to customer needs such as through a growth in built-to-order and customised sales. Changes include larger new car franchises backed with co-operative buying groups, parallel importers and the growth of independent car "supermarkets" and stores with the promise of hassle-free sales experience offering a large range of vehicles often at no haggle prices and increasingly, direct and indirect sales and marketing using internet technology.
The petrol retailing sector, nationally a £20bn per annum turnover industry, has faced similar levels of competition, particularly from retail supermarket sales that have won a significant 40% market share. There has been considerable rationalisation of station sites and a steep fall in independent and/or unbranded retailers, particularly in rural areas but increasingly also in urban areas. Nationally the number of enterprises wholly classified to the retail sale of automotive fuel fell by 40% over the decade to 2006 and the actual number of petrol station outlets is now reckoned to be no more than 9,500 compared with a peak of 74,000 in 1974.
This page was compiled by Peter Kivell .
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