A “proper industrial policy from government” is essential if the UK automotive sector is to weather the multiple economic challenges it faces, including tariffs, electrification and the rising tide of cyber-crime, warned automotive industry economist Professor David Bailey at the IAAF 2025 Annual Conference.
He was one of a host of speakers addressing the annual sector event, held in Milton Keynes last week (Thursday 4 December), where the overarching theme was Future Shock. According to Professor Bailey, the future is already here. “Hurricane Trump has rolled in,” he said, pointing out the blowback from the imposition of tariffs across the world.
Looking at the domestic situation, he used an apt analogy: “Think of the UK economy as a car with a flat tyre; it’s just not going well.” He continued: “Without a real reset with the EU, there is going to be areal drag on growth.” Meanwhile, China remains both a threat and an opportunity, but nothing is certain with its economic energy cooling too: “Half of all the growth worldwide this century has been in China, so that slowdown will have a big impact.”
Then there is electrification: “We know in 2030, the ICE ban cometh. As we transition to an electric future, we need to support the industry, including the aftermarket. We also need to attract Chinese investment. They were playing catch up with us, now we are going to have to play catch up with them. They have been making EVs for 25 years.”
With the Jaguar Land Rover cyber hack demonstrating ongoing vulnerabilities, he said lessons still had not been learned from the pandemic or other subsequent disruptive events. “There was hardly any support for the supply chain.” Comparing the UK response with how similar situations have been handled elsewhere, Professor Bailey was blunt: “We need a proper industrial policy from the government.”
Decrease
Meanwhile, consumers are cutting their spend on vehicle maintenance as the cost of living continues to bite, according to Max Wenger from management consultancy Roland Berger. “UK, consumers report a decrease in spend on maintenance and repair,” he said, “as result of lower disposable income, and lower annual mileage. There is also a shift in preference from name brands to white label parts, which suppliers need to consider. Many consumers are opting to buy their own parts online, and we are also seeing workshops shifting to the online channel.”
Ongoing car market fragmentation and lower production volumes will also affect the aftermarket: “Prior to COVID, the global automotive industry peaked,” he noted. “We’ve lost 10m vehicles on a global level. The USA and Europe lost most, but Europe was slower to react.”
This is affecting parts suppliers “They structurally lost 2% in EBIT margin,” Max observed,“and this is not sustainable.” However, the EV transition also offers opportunities, and competition is increasing: “The number of BEV suppliers is larger than for ICE powertrains as traditional players compete with many new entrants. Many suppliers have also doubled down on the aftermarket.”
Garage Den
Later on the bill, Ferdotti Motor Services Director Tim Guidotti was on hand in order to explain why the Future is Fleet for the automotive aftermarket. “Fleet companies want to put more into the aftermarket. The pie is big and there is plenty for us to eat from.”
The conference came to a close with The Garage Den. This aftermarket-themed take on TV’s long-running business hit Dragon’s Den saw Milwaukee, TechMan, HELLA, PHINIA, WAI and Cataclean compete to win the backing from industry dragons Tina Drayson, Matt Cleevely, Randeep Rehal, Gary Wood, Tim Guidotti and Mick Shaikley. With investments made, the teams show their progress in June next year at the UK Garage & Bodyshop Event 2026.
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