Kwik Fit - Aftermarket Trends Nov 2020

MOT + Tyre Trends @ Kwik Fit BVRLA TOM Forum 4.11.20

BVRLA Forum 4.11.20

MOT capacity and trends during the COVID period Mileages and driving habits during the COVID period – impact on tyre wear

MOT capacity and trends during the COVID period

MOT actions during COVID19 period Government MOT 6-month extension commences 30/3/2020 Approx. 9m MOTs expiry’s effected by this extension MOT extension expires 1/8/2020 (1 month ahead of planned schedule) Approx. 3m MOTs completed during extension period DVSA launches “Beat the Rush” campaign in July in order to mitigate pressure on MOT network in peak demand period

MOT actions during COVID19 period Capacity forecasted to peak in October, November and continue in to December, January

MOT actions during COVID19 period Impact of DVSA “Beat the Rush” and other industry campaigns focused on early MOT completion

*Source – GiPA September 2020

•

MOTs set to expire in Oct / Nov drop by 12% / 5% respectively

•

Whilst this is a positive development MOT demand is forecasted at 16% / 34% above Oct – Nov completed tests

Kwik Fit MOT capacity vs . demand Cumulative MOT capacity at Kwik Fit October 26th > 4 weeks

74%

•

Availability on 0-7 days basis across the network at 12% is approximately 5% better than where we expected to be in Oct/November

•

Weekend MOT testing, additional slot openings due to rota management and better utilisation of the wider network has helped

68%

52%

12%

Kwik Fit MOT capacity vs . demand Average trend of cash and fleet MOT bookings actual lead-time August – October 26th

•

Fleet trend vs. pre-lockdown reflects a shift of 13% to customers making bookings on a >7 days lead time

•

This is reflective of MOT reminder activity such as “Beat the Rush” and other campaigns

Kwik Fit MOT capacity vs . demand Fleet MOT pass rate comparison, car and LCV (Class 4)

Completed Fleet MOTs

Jan-Mar

Apr-Jun

July-Sep

First time pass

83.8%

80.7%

82%

Same day fail/pass

15.9%

17.7%

16.8%

Fail

1%

1.7%

1.3%

Data reflects MOTs passed/failed within Kwik Fit network

• Significant drop in first time pass rate in initial national lockdown, pass rates recovering as lockdown rules were reduced • There are a mix of reasons for this, notably vehicles not having a consistent scheduled maintenance event during/due to national lockdown, especially if the Service was deferred along with the MOT

MOTs - summary Impact of DVSA “Beat the Rush” and other industry campaigns focused on early MOT completion has had a positive impact – August to October demand vs. capacity ran smoothly A new demand peak period has now been created which will require future focus for all MOT providers Currently no published plans for further MOT extensions/exemption, Kwik Fit would heavily lobby against an arbitrary MOT extension due to the general vehicle roadworthiness and maintenance deficit being somewhat realised in the MOT pass-rate data

Mileages and driving habits during the COVID period – impact on tyre wear

Road Usage, 2020

Use of transport modes: Great Britain, since 1 March 2020 https://www.gov.uk/government/statistics/transport-use-during-the-coronavirus-covid-19-pandemic

Road Usage, 2020 Cars LCVs

202003 77% 84%

202004 33% 41%

202005 50% 60%

202006 73% 82%

202007 83% 95%

202008 91% 101%

202009 92% 105%

202010 87% 102%

Percentages indexed against road usage in February 2020 – Week 1 Based on Traffic through 275 automatic traffic count sites Representative of national traffic

Figures demonstrate clear difference between car and LCV usage versus “expected” usage Significant and increasing use of LCVs: home deliveries, commercial usage, etc LCV usage from August to October over 100% of expected usage Car usage has not returned to pre-Lockdown levels Regional lockdowns in October probably impacting the October figures Use of transport modes: Great Britain, since 1 March 2020 https://www.gov.uk/government/statistics/transport-use-during-the-coronavirus-covid-19-pandemic

Tyre Volumes, 2020 Kwik-Fit, B2B % vs Feb'20 Reduction vs Feb'20

202002 100% 0%

202003 89.2% -10.8%

202004 37.5% -62.5%

202005 49.3% -50.7%

202006 70.7% -29.3%

202007 89.7% -10.3%

202008 83.2% -16.8%

Comparison, tyre volume as percentage of February volume (KF, B2B) March to September, 2020 Fitment for subsequent months versus February 2020 volumes • February - last month pre-Lockdown – used as base for unit / % variance • Analysis does not take “expected seasonality” into account

202009 88.6% -11.4%

Tyre Volumes, 2020

By Reason for Replacement (KF, B2B) DESCRIPTION WORN DAMAGED OTHER

202001 62.0% 33.5% 4.5%

202002 60.8% 35.0% 4.2%

202003 59.2% 35.0% 5.8%

202004 56.3% 40.3% 3.4%

202005 57.8% 39.1% 3.1%

202006 60.5% 35.6% 3.9%

202007 61.8% 33.7% 4.5%

202008 59.7% 35.1% 5.2%

202009 59.3% 35.8% 4.9%

Comparing reasons tyres are replaced, 2020, YTD Expect average of 60% - 62% WORN tyre replacements • Tyres have served expected / full life cycle • Average point of replacement is 1.8mm DAMAGED tyre replacements • More prevalent for LCVs (higher impact damage rates, commercial site surfaces, etc) • More local driving, even for Cars, will lead to more impact damage (kerbs, potholes, etc)

TOTAL 60.1% 35.3% 4.6%

Tyre Volumes, 2020

By Reason for Replacement (KF, B2B) DESCRIPTION WORN DAMAGED OTHER

202001 62.0% 33.5% 4.5%

202002 60.8% 35.0% 4.2%

202003 59.2% 35.0% 5.8%

202004 56.3% 40.3% 3.4%

202005 57.8% 39.1% 3.1%

202006 60.5% 35.6% 3.9%

202007 61.8% 33.7% 4.5%

Clear reduction of WORN replacements through April + May WORN increase in June + July due to return to “normal” usage • Delayed SMR activity (MOT / Service) Reduction of WORN tyre replacements in August + September • This is likely just a reflection in relative high usage of LCVs compared to Cars • Higher DAMAGED incidence on LCVs

202008 59.7% 35.1% 5.2%

202009 59.3% 35.8% 4.9%

TOTAL 60.1% 35.3% 4.6%

Tyre Volumes, 2020 Average mileage by replacement Comparing like to like replacements, by vehicle make + model Since February we have noted a small reduction in average WORN mileages • This is in the region of 1% overall • Higher % urban driving would reduce tyre wear rates • Multiple local journeys, significant reduction in motorway journeys Based on driver reports of type of road usage, 2020 Fleet Drivers

JAN - MAR

APR - JUN

JUL - SEP

Local

25%

80%

70%

Motorway

75%

20%

30%

Tyre Volumes, 2020 Average mileage by replacement Summary We can see – and demonstrate – that road usage is down and the pattern of road usage has changed since March Tyre replacements are down – but the percentage of those replacements due to damage has increased during the last 6 months We are tracking a small reduction in average mileage between WORN tyre replacements • Higher % urban driving, fewer long journeys on motorways, etc However, we may be understating the impact on average mileages of the last 6 months • Only a small % of mileage / tyre wear will have happened since March ‘20 in most cases • If we extrapolate into 2021, we might find that the real-time impact on tyre wear is much 10%+

Questions