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One in six automotive jobs at risk of redundancy says SMMT as it calls for package of support for car industry

Time 11 months ago

One in six automotive jobs are at risk of redundancy when the job retention scheme comes to an end, says the SMMT.

The Society of Motor Manufacturers and Traders is today calling for a ‘dedicated restart package’ to save jobs and ‘pave the way for recovery’ as a survey of its members found that a third of their staff are still furloughed.

It surveyed 290 of its members who generate a combined £77bn turnover and found they were planning to cut just over 15 per cent of jobs when the furlough scheme comes to an end.  

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Car dealers in England and Wales are now reopening and production lines restarting, but reduced demand and social distancing are slowing productivity, the SMMT said.

The SMMT wants the government to throw the industry a lifeline with a package of measures which it believes should include:

  • Unfettered access to emergency funding
  • A VAT cut to boost demand
  • Permanent short time working
  • Business rates holidays
  • And policies that would ‘boost consumer confidence and accelerate a sustainable restart’

The SMMT goes short of asking for a full scrappage scheme to boost car sales, but hints in this last point that the policies should ‘unlock the investment needed to drive a green future’.

At the SMMT Automotive Industry Summit, which takes place today, chief executive Mike Hawes will warn that staff in the sector are seriously at risk if help is not given.

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He said: ‘UK Automotive is fundamentally strong. However, the prolonged shutdown has squeezed liquidity and the pressures are becoming more acute as expenditure resumes before invoices are paid. 

‘A third of our workforce remains furloughed, and we want those staff coming back to work, not into redundancy.

‘Government’s intervention has been unprecedented. But the job isn’t done yet. Just as we have seen in other countries, we need a package of support to restart; to build demand, volumes and growth, and keep the UK at the forefront of the global automotive industry to drive long-term investment, innovation and economic growth. 

‘Support delivered now is an investment in the future of one of Britain’s most valuable assets… investment that we will repay many times over.’

The SMMT said that the impending jobs crisis is also ‘amplified’ by the prospect of a ‘bare bones’ or no deal Brexit – which could stifle production and lead to £40bn of production losses by 2025. 

These would come on top of the £33.5bn cost of Covid-19 production losses over the period, the SMMT said.

850,000
Figure annual car production could fall to by 2025 after no-deal Brexit

The impact of the pandemic on manufacturing is expected to cut annual car and light commercial vehicle production volumes by a third to just 920,000 units this year.

The SMMT said that with an ambitious, tariff-free FTA in place, full recovery is expected to take up to five years, with output reaching pre-crisis levels of 1.35m units by 2025.

But the trade group warned that a no-deal scenario would severely damage these prospects and could see volumes falling below 850,000 by 2025 – the lowest level since 1953.

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Hawes added: ‘Covid has consumed every inch of capability and capacity and the industry has not the resource, the time nor the clarity to prepare for a further shock of a hard Brexit.

‘That’s why we do need to turbo charge the negotiations to secure a comprehensive Free Trade Agreement with the EU that maintains tariff and quota free trade… With such a deal, a strong recovery is possible, we can safeguard the industry and our reputation as an attractive destination for foreign investment and a major trade player.’

Is a VAT cut a better way to boost demand than a car scrappage scheme?

James Baggott

James is the founder and editor-in-chief of Car Dealer Magazine, and CEO of parent company Baize Group. James has been a motoring journalist for more than 20 years writing about cars and the car industry.

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