If anyone knows what's really going on in the automotive aftermarket, it's Andy Hamilton. In this episode, Andy explains block exemption post-Brexit, what it is, how it works, and how it affects independent garages and workshops across the UK and Europe. Andy Hamilton joined LKQ Euro Car Parts back in 2010, and in 2023 he was appointed LKQ Europe’s President and Executive Managing Director.

Key learnings in this episode

1. LKQ operates across 18 European countries.
2. In the UK, we now have a Block Exemption Order that differs from the regulation in Europe, meaning the UK government will need to step in and update policy to avoid divergence.
3. Andy’s primary focus is on the preservation of independent workshops and the future of the aftermarket.

Quote of the episode

“The trickiest thing for the independent workshop now is it’s like that slow death. The issue and the demand aren’t necessarily visible today, but they’ll creep up over time because more and more vehicles will trigger past that three, four, five-year anniversary.”

Guest Information

Thank you to Andy Hamilton for being our guest!

Website: LKQ Europe

Social media: Andy Hamilton Linkedin

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00:00.62

Andy Brooke

So, um welcome to Spanner & Works podcast, Andy Hamilton, who is ah the European President and Executive Managing Director of LKQ Europe. Thank you, Andy.

00:12.57

Andy

No problem, Andy. Good to me. Yeah, apologies for the longest job title on the planet.

00:17.90

Andy Brooke

Yes, it's fairly, fairly long. I'm not sure what it really means. Is it like Chief Executive then?

00:22.49

Andy

It is, yeah. So um obviously being part of a um a global business, it's getting alignment with the relevant segments. So Europe is one segment, there's three other segments. So just so that there's consistency across the overall organization, we tend to have similar role descriptions rather than just simplistic cleaner or CEO or both.

00:39.97

Andy Brooke

ah

00:44.59

Andy Brooke

yes at least you're not bosh you don't have a string of numbers and letters after your name as well which makes it even more confusing

00:52.41

Andy

Not yet, but don't say never.

00:57.05

Andy Brooke

so i really want to speak to andy on the podcast because um there's some really important stuff going on about mbvr and if you don't know what mbvr is it's block exemption regulations, which is currently the bane of all of our lives in some ways, the good side and bad side. So I'm going start really by asking you, and how would you describe your time so far as Cheekham's executive?

01:21.15

Andy

In Europe?

01:22.40

Andy Brooke

Yep. With all this going

01:24.00

Andy

Yeah. some i mean it's I've been in this role capacity for 18 months. um Prior to this, I was a CEO for the UK business for five years.

01:34.65

Andy

And alongside the five years, ah concurrently, I was also supporting our Italian business for about 18 months as well.

01:40.13

Andy Brooke

Oh, right, right. right

01:41.47

Andy

um So I had a little of a taster as far as um some of the other geographical um environments and markets when it comes to not only distribution, but also automotive and aftermarket. um In some respects, as you'd imagine, it's very similar in the different markets.

01:57.22

Andy

um In other respects, it can be quite different. um Culture plays a massive part. The way that each of the markets is set up plays a different part. the way i suppose the position of the aftermarket compared to the OEs in some markets plays a part as well.

02:13.50

Andy

So um we as LKQ, we operate across 18 countries in Europe. um

02:20.04

Andy Brooke

All right.

02:20.81

Andy

And it's safe to say there are probably 18 different interpretations of what automotive aftermarket means and how that operates. So it's it's fascinating. and And you mentioned the motor vehicle block exemption regulation at the start.

02:33.22

Andy

03:04.33

Andy

And we're already starting to see some of that risk starting to trickle through as well.

03:09.95

Andy Brooke

So what we're basically saying here, Andy, correct me if I'm wrong here, is that we've got on the statute books the legislation in Europe before Brexit and pretty much then we've done, what if we done about it? Pretty much nothing.

03:25.80

Andy Brooke

And that's with successive governments. So it's not the current government, it's the previous incumbents as well.

03:31.24

Andy

Yeah, I mean, the blockers entered order for the UK, and they extended it. um And of course, in some respects, left it open. um um There was more, there were more um additional, I suppose, windows of opportunity to be reviewed, but not concrete, um because I think a lot of things also is unknown. And that's, understandably, ah politicians and and governments are not going to cast in stone policies and and regulation legislation unless they're absolutely clear that there's a specific need. So I get that.

04:07.67

Andy

um But of course, it's it's left to suitable level of vagueness also within some of the um yeah annexes and some of the additional items that were put in. um Things like over the air and access um and cybersecurity were all kind of left um not vague, but very open.

04:26.26

Andy

um so it's not exactly clear how to then turn that into legislation that um either oes or anyone else needs to actually follow and then yeah on top of that we've got the type approval challenges as well um so yeah it's interesting

04:42.79

Andy Brooke

So if we go into the basics of MBVR, in case people don't really understand what it is on the podcast, so we're talking about really the access to to repair and maintenance information, put simply, the tools, the information to fix the vehicle, the access to diagnostic software, that sort of thing. So what we're saying really is in the UK, we're lagging behind Europe. So what does europe how does the European picture look differently to us at the moment? Say, for example, obviously you're in Obviously 18 different countries, are they further ahead of the UK at the moment?

05:17.17

Andy

So the regulation is up for renewal before the order. So the UK, I think the democracy and the motor vehicle block exemption order for the UK, so there had to be a differential. So there's regulation versus order. The order has a slightly longer time period, whereas in Europe, they're under a slightly more time pressure to get some resolutions and some changes.

05:38.76

Andy

um And with Brussels, they are um they are firming up and imposing um or confirming more policy and regs around it.

05:53.03

Andy

um The UK, and I know Neil will probably give you a far better and more detailed answer and a much longer answer, but the UK, we, yeah, we haven't, in the UK, they haven't really followed that through yet.

06:00.85

Andy Brooke

Yeah, that's what we're talking about here.

06:08.97

Andy

and we got some pressing points um coming up. um So there is a good chance that a type of approval change will come through Brussels in later parts this year.

06:21.06

Andy

So from a block exemption regulation in Europe, that means that there will be proposed four or five level access to um the software on the vehicle.

06:34.25

Andy

And then depending on certification and depending on approval and depending on competence or however they do it is what the garage, the technician will be able to do on the vehicle from basic reading through to potential recoding, etc.

06:42.43

Andy Brooke

you

06:48.30

Andy

So the European position is that type of approval will go through um and that means everyone has to follow suit. So the OEs have to oblige by ensuring that they pass that level of competence information through with the relevant certification or the right type approval.

07:04.78

Andy

um But the UK, if they're not in the same position, the OEs, the original the ah original equipment manufacturers could say, well, you don't have a set up. You don't have the regulations in place. You don't have the approval set up. And in which case I don't have to provide you any information.

07:22.08

Andy Brooke

And this is also related to, not to confuse people too much on the podcast, related to SIRMI as well.

07:28.85

Andy

Yeah, so CERMI is another one. Yeah.

07:30.97

Andy Brooke

Yeah.

07:31.76

Andy

but sey then The original intention of CERMI was all around security access security information and and access on a vehicle.

07:32.43

Andy Brooke

So,

07:35.52

Andy Brooke

yeah.

07:38.47

Andy

um Every European country needed to create a CAB, an approval board, um that then administers and manages all the certifications and to confirm and prove that a technician or workshop is able to access certain characteristics on a vehicle.

07:54.24

Andy

um There's about three countries in Europe that have now actually got a CAB set up. So it is still slow and it's behind and it's lagging. um But in the UK, we still don't have a CAB in the UK. So there isn't a way of um achieving a CERMI certification to say that you can't.

08:10.59

Andy

Now, at what point does that get turned on so that you have to have it before you can access certain aspects of the vehicle? We don't know. But so, yeah, there is no CAB at the moment. There are organisations and there's bodies that are trying to set that up and to establish a CAB in the UK, as there are in other countries.

08:27.60

Andy

Now, some of the type approval piece, they're saying that they'll use a CERMI equivalent or a CERMI light to achieve and manage this access. But of course, that's all so much in its infancy. You don't know exactly when and where and how.

08:40.29

Andy Brooke

yeah

08:40.52

Andy

So it's it's a similar it's a typical thing where, and it's a little bit like the whole transition to EV, the legislation and the statements are made by the governments as far as the target points for transition, but does the infrastructure, is it in any way going to keep up with and achieve that momentum?

08:56.88

Andy Brooke

So

08:59.01

Andy

And that's the challenge. and it EV transition one thing. But the whole access to vehicle is ah is a similar challenge. The infrastructure is not ready yet to be able to consistently and um equally and on an open environment be able for everyone to be able to to provide those services.

09:20.74

Andy Brooke

so As you're rolling LKQ, are you trying to support those independent workshops towards electrification and decarbonisation as well?

09:30.69

Andy

Yes, absolutely. i mean, ah the the primary, my primary role, and it was the same in the yeah UK, and I've taken the same responsibility from a European level, is the preservation of the independent workshop.

09:32.60

Andy Brooke

Big question, sorry.

09:41.99

Andy

That is, if you if you're going what's the heart of the organizational goals? It's to ensure that the there is an independent aftermarket, um that the independent workshop has the ability to be able to service and repair those vehicles.

09:56.15

Andy

The elephant in the room around CO2 ah c o two is we all need to keep cars longer.

10:03.36

Andy Brooke

Yeah, agreed.

10:04.48

Andy

The biggest thing we can do is keep cars longer in every single market. um Yes, of course, in ultimate sums, transitioning to EV, when that vehicle has achieved somewhere between probably 70 and 150,000 miles, the EV vehicle will be producing net net lower carbon than a petrol diesel vehicle.

10:25.91

Andy

but you've to get that to that 80 to 150,000. So depending on the country and the cleanness of the energy, so are you in renewable energies or not? um If you're a country in Europe that still is chugging away on coal, then even transitioning the vehicle parts to EV just means you're just moving the issue.

10:43.82

Andy

So there are so many other things involved, but um yes, as far as mandate, um and current legislation and the move to EV, then we need to support independent workshops being able to work on those vehicles.

10:57.23

Andy

There is a lot less moving parts on an EV, and there'll be a lot more from the software and kind of data, digital diagnostics responsibility for working and servicing those vehicles.

11:09.39

Andy

However, there will also be failures, but the failures will be more technical and the failures will need more support. um And it won't be a well, one one way will be plug and play from the OE. So you need a new battery, then change the battery. But unfortunately, the battery will cost more than the car. um So you have an issue. So um I think remand, renewed, um recycled will play a big part in the future aftermarket of those vehicles and the servicing and repair of those vehicles as well.

11:38.84

Andy Brooke

And obviously the the diagnostic capability, we we did touch upon that just to explain cybersecurity, which is, what was it? 555.

11:46.81

Andy Brooke

And that,

11:46.81

Andy

Oh, no. So that that's why I normally would default to Neil. So i yeah he'll start quoting references and I give up at that point.

11:50.82

Andy Brooke

so that means, yeah, I do as well.

11:54.54

Andy

But yeah. Yeah.

11:55.41

Andy Brooke

we I know this one, but it got drilled in into me at the IAAF with Neil when I sat there last time. that And that's basically, um the manufacturers have access to over air of the vehicle for the life of the vehicle, which is actually slightly terrifying as well.

12:09.81

Andy

yeah

12:10.50

Andy Brooke

And that's already happened with Tesla. We've been trialing a Tesla, which is now five years old and seeing if it's still got software updates and it has, and it, um, can I put it in, it improves its own battery life sometimes as well, and, or says it does and various other things we we've been monitoring.

12:25.57

Andy Brooke

So that's a slightly terrifying thought to the aftermarket as well. I'm having that complete control of the vehicle.

12:31.28

Andy

Yeah, and there's other bits as well because there's legislation coming out next year across Europe, um which is around the life of the battery as well and the responsibilities of producers of batteries.

12:45.67

Andy

So it's going to be, yeah, it's going to be interesting to see how that plays out.

12:46.03

Andy Brooke

state of health then isn't it this is a state of health that's in november next year oh that's that is that is um actually that's really good because we had a number of products out in the market people like avali who were trying to put push state of health um who were building up big data to try and say you know this is what the manufacturers are quoting and this is actually what you're getting and hopefully that will disprove that sort of side of it where they they will have to be very very honest and uh

12:51.03

Andy

Yeah.

13:13.56

Andy Brooke

The battery warranty always thought it was a bit big issue as well because we seem to have different battery warranties for each vehicle at the moment. it's supposed to be eight year and 120,000. That doesn't seem to work, doesn't it?

13:23.82

Andy

Yeah, they're ranging. I mean, most seem to be between 7 and 10. um But of course, there's ah there's a convenience around the 10 because the average age of the vehicle park in Europe is about 12.

13:34.27

Andy Brooke

yeah

13:34.58

Andy

So when the car gets to its current European average, it will be completely outside of any warranty support. And the course, that's the killer question will be is how confident are you in buying a 12-year-old EV with 100,000 kilometers on the clock?

13:51.54

Andy Brooke

yeah

13:52.82

Andy

um So we've got some work to do and of course dealerships, OE outlets, authorized franchise, all those um businesses, there isn't sufficient of them to be able to then suddenly deal with all these vehicles.

13:53.28

Andy Brooke

Is it?

14:08.77

Andy

So the aftermarket will continue to play a significant part. The aftermarket sees around 70% of all repair and service of vehicles on the roads in Europe. um Those figures may wee um sway five ten percent each way over the next 30 years or 20 years, etc. But ultimately, it's still going to play a significant role.

14:27.09

Andy

And so we have to make sure that those workshops can are equipped and are capable of able to keep those vehicles moving.

14:34.09

Andy Brooke

So you can see a standard vehicle workshop adapting to specialization maybe.

14:39.77

Andy

Yeah, i think I think we saw this in evolutions. I mean, this is I'm showing my age now. So I remember when a lot of the diagnostics started first coming out, um you'd end up with you'd end up with one or two enthusiastic independent workshops buying and sourcing all of the tooling and all the capabilities.

14:54.40

Andy Brooke

Yeah.

14:58.37

Andy

And then a lot of the other workshops would refer work to them. And it's kind of almost a hub to spoke. And then as things get commoditized, as confidence levels grows, as the capability of the systems and diagnostic tools improves, then more people become more capable or confident with it.

15:13.70

Andy

And the same thing will probably happen. We'll end up with specialist workshops on certain capabilities. As that starts to commoditize and as people are aware of how things are working, then it will start to probably filter back in. So, yeah, um I think ADAS, EV, um ah some, you know, even the more aggressive kind of diagnostic requirements, there'll be specialisms and then it will start to filter back out again.

15:37.87

Andy Brooke

Absolutely. I couldn't agree with you more. In fact, a lot of this podcast is about exactly that, specialisation and move towards it. and And also the fear that aftermarket workshops have, because personally, I mean, I go out, even as a CEO, I go out and actually visit workshops every week pretty much to go and see what's going on there.

15:54.67

Andy Brooke

And there is a massive, we we really are polarised at the moment. We've got the house and the have not side, which is, I don't want to know about EVs, I'm going to retire.

15:58.31

Andy

Mm-hmm.

16:03.76

Andy Brooke

I'm 60 odd. I'm going to retire. i own a workshop, which seems to be quite typical now. I only want to do diesels and petrols. And then the younger generation, which are coming through, thankfully, not to the amount we'd want them to, who really do want to push it into the EV side.

16:18.55

Andy Brooke

I've got level four techs on board are already starting to look at batteries. So I think that, you know, so LKQ, obviously you do a lot of training as well. So you're you're trying to push that to independence as well, obviously, at the moment.

16:29.61

Andy

16:39.65

Andy Brooke

Yeah.

16:42.83

Andy

um And it's just, it's again, it's that putting in that basis because the trickiest for the independent workshop now it's it's like that slow death.

16:54.30

Andy

So the the issue and the demand isn't necessarily really visible today, but it just will creep up over time because more and more vehicles will trigger past that three, four, five year anniversary.

16:58.95

Andy Brooke

yeah

17:05.44

Andy

They'll start to get into flows. and And the risk will be is that the the garage just keeps turning around that work and say, it keeps turning away that work. And then eventually your your pool of of available cars that you can service and work on is going to get smaller and smaller. And that's the issue.

17:19.88

Andy Brooke

There's only so many.

17:19.78

Andy

So we've got to try and give them the confidence. And I think Things like independent concept groups um and kind of almost forums and communities of workshops working together, I think play a really important part in the future in helping each other, being able to work and support each other on those sorts of vehicles.

17:37.27

Andy Brooke

Absolutely. so So specialization, specialization in tooling as well. And I guess i guess one of the problems is at the moment, If you're a small independent garage, what do you invest in? Do you invest in an OE tool to specialize in, say, Jaguar Land Rover? Do you specialize in an ADAS system? you know and it's It's finding that guidance, finding that road that's very difficult. But guess you guys are really on this. You're very much there to help at the moment with the advice side.

18:02.48

Andy

Yeah, i mean, well, we certainly try on the advice side. I think we're probably still quite, um we respond to the customers needs, thoughts rather than necessarily how we help them sometimes.

18:11.24

Andy Brooke

Right, yeah, Paul.

18:14.05

Andy

I think our concept groups and our forums, our customers are good environments and good platforms for those sort of conversations. um And we are constantly and collectively working with various different groups. And and obviously there's lots of conversations with the IAAF as well with Mark and the team just around what we can continue to do to support.

18:32.57

Andy

um But it is a major, I mean, this is a fundamental shift in the whole automotive environment. We're going through probably one of the biggest changes, if not the biggest change that I've seen them in my time.

18:44.15

Andy

And that's now racking up as well.

18:46.03

Andy Brooke

Yeah, well, I've been in 40 years and I was one of the guys who read the flash codes in the 80s and then moved through to the most advanced level of diagnostics, and obviously. And this is amazing. I mean, I jumped on EVs 10 years ago because I've just went, you know, I've worked on ah hydrogen projects as well.

19:02.21

Andy

Yeah.

19:02.69

Andy Brooke

And then everybody shouts at me about hydrogen. And I'm just saying, it's just not there. It's not the infrastructure, i'm sorry. And no one's really investing in that heavily either. Yeah.

19:13.45

Andy

No, there's still a bit of a question, Mark, whether, I mean, I think it will play a role within more commercial based applications ah in the future, whether it gets down to the car.

19:20.08

Andy Brooke

Yeah.

19:24.83

Andy

I mean, we've actually, we had a pilot, we have our own hydrogen vehicle in in Switzerland. um

19:31.97

Andy Brooke

A Mirai by any chance, was it? Toyota Mirai or the Honda?

19:34.82

Andy

Yeah, I think it was.

19:35.42

Andy Brooke

Only two. A choice of two.

19:36.97

Andy

um

19:37.18

Andy Brooke

Yeah,

19:38.27

Andy

And you're almost governed by where you can refill rather than where you want to go.

19:43.72

Andy Brooke

know.

19:44.20

Andy

um

19:44.46

Andy Brooke

It's a problem.

19:45.26

Andy

So it's, um yeah, it's a bit of a challenge. But um yeah I think it will play a role in some of the bigger applications.

19:48.23

Andy Brooke

It is, you know, it's a bit...

19:51.38

Andy

I'm not sure. Well, it may get back down to car. I'm going to be careful because someone will then put a bet on me.

19:56.55

Andy Brooke

Well, I have this all the time when, so obviously I'm not allowed to mention the names, but there's ah projects that I've worked on and looked at and

19:58.38

Andy

Yeah. You quoted.

20:03.51

Andy

Yeah.

20:04.54

Andy Brooke

um And gone, wow, this has been very, very expensive. And actually, hydrogen is incredibly expensive and incredibly difficult to handle. So if only someone invented some nice liquid fuel, you could put in a tank like that's petrol or go EV.

20:16.76

Andy Brooke

So, you know, it's been crazy.

20:18.18

Andy

Yeah.

20:20.12

Andy Brooke

So just on the LKQ side as well. So are you offering apprenticeship programs these days? and This is obviously internal in LKQ.

20:29.44

Andy

um So we do, i mean, do various different things, at different markets. In the UK, we've got um grad schemes and intern schemes. We um we do ah we focus an awful lot on training we haven't stepped over the line where we are recruiting um technicians to implant into workshops from an apprenticeship perspective we've sponsored lots of training programs we've sponsored apprenticeship programs but we haven't physically there are some fantastic organizations that do that auto tech recruit is one of them and

20:51.71

Andy Brooke

Yeah. Okay.

21:02.76

Andy

and so we So we work with them and support, but it's just sometimes you've got to be a little bit careful which lines you cross. um And ah you don't want to get into effectively competing with our customers on supplying resource to certain garages over other garages and other bits and pieces.

21:10.76

Andy Brooke

Yeah.

21:17.84

Andy

So um we support the principles, we support lot programs.

21:18.74

Andy Brooke

Absolutely.

21:21.14

Andy

We don't necessarily, yeah ah we haven't specifically jumped over that line to say we're going to have a whole network of apprentices that we recruit and train and put into the market.

21:31.37

Andy Brooke

Okay.

21:31.44

Andy

um but just, yeah, can get a little bit more umch challenging.

21:35.51

Andy Brooke

So what do you see as the future for LKQ in the next five to ten years? Where is it going?

21:41.28

Andy

As I said, the aftermarket plays a bigger role in the full length of the vehicle across Europe. So the whole life cycle and lifespan of a vehicle, the aftermarket still plays the major part.

22:08.48

Andy

and I think it will continue to play the major part. We need to adapt and evolve with it um as in the aftermarkets. And certainly from our strategy point of view, we are um very clearly on that roadmap and all of our initiatives and plans are ah set there to support the garages and to provide that service.

22:25.90

Andy

I think in the future, it will be beyond just new replacement parts with diagnostic and technical. I think it will have a ah wider portfolio of solutions because it will need to.

22:36.54

Andy

The technology on the vehicle will be more valuable than the car. And so finding ways of repairing and servicing that, you're going to have to figure out different ways of doing it. And that's what we're clear. And that's the plans we've got in place for it. So I think hopefully we'll be in a strong position across all of our markets to support our customers and make sure that they can keep these vehicles moving.

22:58.75

Andy Brooke

thank you very much for your time andy, that was that was absolutely fascinating.