Bosses in the UK automotive industry are in disagreement about whether the sector needs government support to ride out the rest of the year.
Jaguar Land Rover UK managing director Rawdon Glover believes it’s hard for the sector to ask for help when car sales have picked up dramatically since showrooms reopened in June.
‘If we look at the state of various industries across the UK, it’s harder for the automotive industry to make a case for support with where we are today, relative to the travel industry, hospitality and so on,’ Glover exclusively told Car Dealer in the video at the top of this story.
‘At the moment, we expect September to be on a par with last year. August was up, July was up and at the moment and that’s what the government will be looking at. It’s not a strong case to make,’ he said.
Glover admitted that times will be tough later this year and the sector might be ripe for assistance. He hopes that should the economy make a turn for the worse, the government would ‘quickly’ step in and assist the automotive sector.
‘It’s a fine balance,’ he said. ‘I can see there might be much tougher times ahead, but we’ve got to put it into context with the amount of public debt we are carrying, and the government is going to have to make some tough choices about where it does support.
‘We just need to be ready – we’ve done a lot of work as an industry on what a stimulus package could look like and we would hope the government would react quickly when the need presents itself.’
However, Bill Berman, boss of listed dealer group Pendragon thinks the government ‘has to’ step in and give help.
‘I think they’re going to have to,’ Berman told Car Dealer in the interview above.
‘Automotive is too large a piece of the overall economy, and I think at some point they’re going to have to do something – whether it’s a scrappage scheme or a continuation of the rate or VAT holiday.’
Berman was adamant that the government will need to wade in with a package of incentives in order to stimulate new car sales.
‘The government will have to do something later this year or early next year to get people back into the market,’ he said.
‘A perfect example is what the government did with stamp duty on real estate – it’s one little thing, but the amount of money people are saving and the rise in house prices has outstripped that and it’s propping up the economy. I think the same thing would happen if there was support for automotive.’
When pushed, Berman said a VAT holiday would be his chosen support package as it would affect a ‘wider swathe of the economy, buyers and brands’.
It’s believed the SMMT has a ready-to-go incentives package to revitalise car buying.
In an interview with Car Dealer, SMMT chief Mike Hawes said: ‘The government was never going to allow dealers to reopen and then hand out a market stimulus package.
‘Let’s not forget the government’s support for the economy has been huge – billions invested to keep the economy alive. Without that so many automotive businesses would be in a much worse position.
‘We’ve been having a dialogue with the government and informing them of the situation and that will take time to work through.
‘We need to monitor what’s going on very closely and be able to foresee what that underlying level of consumer demand is. We have to report the facts about what is actually happening so that you don’t just read the headlines.’