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U.K. car industry at risk of losing one in six jobs unless government extends support, trade body warns

More than 6,000 U.K. automotive job cuts have been announced in June due to global lockdowns, closed markets and closed plants

Britain’s automobile industry is calling for a package of support measures, as it says one in six jobs in the sector are at risk.

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One in six jobs could be at risk of being lost from the British automobile industry unless the U.K. government extends its financial support for car makers and suppliers as they emerge from lockdown, the sector trade body has warned.

The Society of Motor Manufacturers and Traders (SMMT) on Tuesday called for a package of support measures for the sector to help drive demand and ease cash flow. These include “unfettered access to emergency funding,” permanent short-time working, business rate holidays and cuts in value added tax.

More than 6,000 U.K. automotive job cuts have been announced in June, a result of global lockdowns, closed markets and closed plants.

Mike Hawes, chief executive of SMMT, said the government’s intervention has been unprecedented but said 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,” he said, adding that 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,” he added.

Showrooms in England and Wales started reopening on June 2 and production lines have restarted, but reduced demand and social distancing measures are slowing productivity, the SMMT said.

Even once showrooms reopen, consumers may still be unwilling to make big-ticket purchases until they have a clearer picture of the longer-term health of the economy, the SMMT added in its second Annual Trade Report for 2020 — U.K. Automotive Trade in a post-COVID World.

Read:England takes a baby step out of lockdown, opening some junior schools and markets

Companies including Jaguar Land Rover, which is owned by India’s Tata Motors TTM, -2.61%, borrowed 5 billion yuan (£560 million) from Chinese banks after not being able to access the Bank of England’s loan guarantee scheme because of its poor credit rating.

Output this year is expected to fall by 920,000, but the SMMT said it could stage a full recovery to reach the precrisis levels of 1.35 million units by 2025, if trading with the EU can continue freely.

But it warned that a ‘no-deal Brexit’ would severely damage these prospects and could lead to volumes collapsing to below 850,000 by 2025 — the lowest level since 1953.

“This would mean a £40 billion cut in revenues, on top of the £33.5 billion cost of COVID-19 production losses over the period,” the SMMT said.

Hawes said that the COVID-19 pandemic has “consumed every inch of capability and capacity” and that the industry didn’t have 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,” he added.

Read:Tesla Model 3 is the top-selling car in the U.K. for a second month but as showrooms reopen it could be overtaken

New car registration in Britain plunged by 89% in May compared with the same month in 2019, as the coronavirus lockdown restrictions continued to affect the market, according to the SMMT in a report published on June 4. Tesla’s TSLA, -4.08% Model 3 was the U.K.’s highest selling car in May, the second month in a row that the electric vehicle outpaced rivals in a pandemic hit auto market.

Automotive is one of the U.K.’s most valuable economic assets, exporting more goods than any other sector, generating billions for the economy and supporting around 168,000 high-skilled and high-paid manufacturing jobs across the country.

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