July 14, 2024


Choose Automotive

One in six UK car industry jobs could be lost, warns trade body

The UK car industry’s trade body says one in six jobs are at risk of redundancy without help from the government in restarting production.

The Society of Motor Manufacturers and Traders (SMMT) said emergency funding, permanent short-time working, business rate holidays, and VAT cuts are needed to stem the flow of job losses.

Showrooms are reopening and production lines are restarting, it said.

But more than 6,000 jobs have been lost in the automotive sector this month.

In common with many manufacturers, carmakers have high fixed costs to pay, such as rent, during a period where sales are sharply down.

And many workers remain furloughed as companies work out how to operate while allowing for social distancing.

“A third of our workforce remains furloughed, and we want those staff coming back to work, not into redundancy,” said Mike Hawes, SMMT chief executive.

“Government’s intervention has been unprecedented,” he added. “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.”

The lobby group estimates the impact of lockdown will cut annual car and light commercial vehicle production by one-third to 920,000 vehicles this year.

As well as assistance to restart production, the industry is anxious about securing a trade deal with the EU.

Mr Hawes told the BBC’s Today programme that UK car manufacturers could not afford to pay import tariffs on components arriving in the UK from abroad, as the cost would be more than their profit margin.

He added: “It is vitally important that the government achieves its ambition, which is a trade agreement before the end of the year.”

Lower output

The UK left the EU on 31 January, but remains in the single market and customs union until 31 December, while the two sides try to hammer out a trade agreement.

“Certainty that a full, zero-tariff deal will be in place by the end of the transition period will give businesses on both sides chance to prepare, and help drive investment into the new skills, facilities and technologies that will be integral to delivering a zero-carbon future for the UK,” the lobby group said.

British car manufacturing came to a screeching halt in April, down 99.7% against the same month last year.

It was the lowest output since World War Two. Just 197 premium and luxury sports vehicles rolled off factory lines, with 45 of those sent to UK customers.

Some plants refocused to make 711,495 items of personal protective equipment for health workers.

The loss of 400,000 cars that would normally have been made is expected to cost the British car industry up to £12.5bn in revenues.

In April, there were 830 new car engines made at UK plants, 781 of which were exported. This level was down 99.5% on the year before.