Currently reading: One in six UK automotive jobs under threat, says SMMT
Trade body is calling for government measures to help boost industry, such as VAT cuts
Rachel Burgess
News
3 mins read
23 June 2020

One in six jobs in the UK automotive industry are at risk, according to the Society of Motor Manufacturers and Traders (SMMT), which is calling on a restart package to aid recovery.

More than 6000 UK job cuts have been announced in June, a result of the lockdown, closed markets and factories, while a third of automotive workers remain on furlough. The one-in-six figure is based on an average of declared numbers of permanent jobs at risk from all respondents of an SMMT survey carried out this month.

The SMMT is calling on the government to address this with a support package intended help drive demand and ease cashflow. It suggested measures including “unfettered access to emergency funding, permanent short-time working, business rate holidays, VAT cuts and policies that boost consumer confidence”.

Such measures “would accelerate a sustainable restart for the market and manufacturing – a pre-requisite to the recovery phase,” said the SMMT, adding that it would also unlock investment needed to drive a green future for the UK. 

Notably, the calls don’t specifically mention the much-talked-about scrappage scheme, although such a scheme would fall under “policies that boost consumer confidence”. It was previously reported that the government was planning a scheme to offer new car buyers incentives of up to £6000 to switch from older petrol and diesel cars to new electric or hybrid vehicles, but this was later described to the Financial Times as “unlikely” by a government source.

Speaking today at the annual SMMT summit, SMMT chief executive Mike Hawes 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.”

SMMT also reiterated its insistence for a no-deal Brexit, asking for certainty that a full, zero-tariff deal will be in place by the end of the transition period. 

Hawes said: “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 ‘turbocharge’ 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.”

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The SMMT’s second annual trade report for 2020, published today, said that annual car and light commercial vehicle production volumes are expected to fall by a third to 920,000 units this year as a result of the pandemic. It claims that if a tariff-free deal is in place, full recovery is predicted to take up to five years, with output reaching pre-crisis levels of 1.35 million units by 2025.

However, it said, a no-deal scenario could result in volumes falling below 850,000 by 2025 – the lowest level since 1953. This would mean a £40 billion cut in revenues, on top of the £33.5bn cost of pandemic-caused production losses over the period.

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