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Halfords may raise garage prices for drivers to cover 23m cost hit from Budget

The car parts-to-bicycle chain said the cost implications of next April's rise in national insurance contributions and the minimum wage increase were 'particularly acute'

[A Halffords store front]

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Halfords said changes made in the Budget would send its wage bill soaring (Image: PA Wire/PA Images)

Halfords has said it may have to increase repair garage prices, warning that Budget measures will cause its wage bill to soar by around 23m.

The company highlighted the "particularly acute" cost implications of next Aprils rise in national insurance contributions (NICs) and the minimum wage increase, given its workforce of over 12,000. It also stated that the impact of Budget measures on consumers was "unclear".

Halfords revealed that only about 9m of the additional cost burden was already factored into its plans for 2025-26 and mitigated. It suggested it might "pass through" the higher wage costs to customers across its Autocentres division.

The group admitted: "It will inevitably be challenging to fully mitigate a single-year cost increase of this magnitude, particularly in the retail business where many of our product categories are discretionary and/or big ticket and substantial cost has already been removed in recent years."

"We anticipate being able to pass through wage inflation more easily in the Autocentres business, where a greater proportion of revenue relates to services."

Halfords is urging the Government to consider revamping the Apprenticeship Levy to help cushion the blow. Half-year results released on Tuesday showed the car parts-to-bicycle chains pre-tax profits plunged 23.3% to 17.8m in the six months to September 27 as revenues dipped 0.1%, with tougher retail trading counterbalancing growth in its Autocentres division.

Profits at Halfords have dipped by 1.4% to 21m and the CEO Graham Stapleton commented on the recent UK Budget's impact, saying: "The cost implications from the recent UK Budget are particularly acute for a specialist retailer that provides expert advice and assistance to customers, face to face."

While we will work hard to mitigate these costs, we urge the Government to consider alternative ways of supporting businesses like ours, including the acceleration of Apprenticeship Levy reform, which would help us to upskill existing colleagues and offset some of the new headwinds.

It also faces increased costs in the second half linked to shipping and temporary garage closures for upgrades related to its new Fusion Motoring Services concept.

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