Land Rover businesses in the UK are having to fight hard – but all is not lost
Difficult economic conditions have been hurting all types of UK Land Rover business, with some sectors affected more severely than others. Manufacturing is being hit by inflation, as well as the rising costs of energy and materials. But, although the data points to severe challenges for the winter months ahead, business owners have been giving LRO some reasons for optimism.
According to a survey by the Society of Motor Manufacturers and Traders (SMMT), the cost of raw materials used by UK firms has increased by 38 per cent, while logistics costs are up 43 per cent; most businesses (87 per cent) are having to pass these costs on to their customers.
Balancing the books
‘We’re getting battered,’ says Chris McCormack, co-founder of Oak Ridge Engineering (ORE), which makes Land Rover accessories in the UK. Despite wider economic challenges, ORE recently expanded into new premises, bucking the industry trend by acquiring new staff to meet growing demand.
‘Steel prices have shot up, and the last thing I want to do is charge more because it’d look like we’re taking advantage,' says Chris. 'I’ve decided to put the price up by five per cent every two months, but it’s not keeping up with the cost increases. Some of the ingredients of our powdercoat have gone up too – Brexit hasn’t helped with that.’
Rising prices understandably cause customers to seek cheaper alternatives from overseas, but ‘supporting British business is more important than ever right now,’ says Chris. ORE 4x4 is spending £650 a month on intellectual property insurance, which has already quashed at least five attempts by overseas-based copycats to make inferior versions of its products.
‘Wages are going up, margins are being eroded – everything’s against us. Fortunately, though, I think Defender owners a willing to pay for good quality products.’
The plight of Bearmach
The sudden news that Bearmach was going into administration took most of the Land Rover community by surprise a few weeks ago. The 64-year-old enterprise was among the first Land Rover businesses to specialise in parts and accessories for the Green Oval. Their colourful adverts on the back cover of LRO will be remembered by our long-term readers.
A spokespearson from Britpart told LRO: ‘It is very sad to see a historic brand such as Bearmach close after many years supporting the market. As an industry we have all faced many challenges due to Brexit and Covid, which have caused price escalation and increased bureaucracy. Most parts are bought in US dollars and the pound has fallen to its lowest level for almost 40 years since Brexit. This is compounded by increased costs of raw materials, a 400 per cent increase in shipping costs and domestic challenges such as energy and fuel costs, and increased salaries.’
Causes for optimism
Land Rover businesses catering for high-end or US buyers seem to have fewer concerns. Tom Parry, MD of upgraded Defender specialist Arkonik, told us: ‘Our order levels have been pretty consistent, so we still have a two-year pipeline of about 120 customers. At least 90 per cent are in the US.
‘One thing that is new is that some customers are trying to use market conditions as grounds for negotiating the price!’
There are further glimmers of optimism from parts supplier Rimmer Bros, which saw a brief spike in Transatlantic trade when US buyers took advantage of the rapid fall in the pound, brought on by the now-infamous ‘mini budget’ in late September. Sales and marketing manager Andrew Mundy told us the business was in a safe position due to its lack of reliance of parts from overseas, but noted that its suppliers were feeling the pinch.
‘It’s all very volatile. Oil prices affect the cost of vinyl and trim; steel affects suspension parts, and rubber is now more expensive too. Businesses buying parts in dollars from the Far East will be finding it tough.
‘The good thing would be stability. But if you’ve got a British car and you’re buying parts from British supplier, you'll probably be alright.'