One of every six jobs in the UK automotive sector remains at risk from the coronavirus pandemic, the Society of Motor Manufacturers and Traders (SMMT) warned today, unless the government supplies a dedicated restart package to get the industry going again.
Over 6,000 jobs were cut already in June, while a third of all sector workers still on the government’s job retention scheme, which finishes at the end of November.
In order to safeguard these jobs and prevent the devastation of the £18.6bn industry, the SMMT has today reiterated calls for a support package to drive demand and ease cash flow.
In May, SMMT chief executive Mike Hawes told City A.M. that the industry would need a “quick stimulus” in order to get demand going again.
Today, he repeated the calls, saying: “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”.
According to the industry body’s latest report, the pandemic is expected to cut annual car and light commercial vehicle production volumes by a third to just 920,000 units this year.
Hawes warned that it was vital for the survival of the industry that the UK agrees a free trade deal with the EU which retains tariff free conditions for the car industry.
If this is managed, he said, recovery is expected to take up to five years, with output reaching pre-crisis levels of 1.35m units by 2025.
However, a ‘no deal’ scenario would severely damage these prospects and could see volumes falling below 850,000 by 2025 – the lowest level since 1953.
This would mean a £40bn cut in revenues, on top of the £33.5bn cost of Covid-19 production losses over the 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 ‘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.”
Last week the UK warned European counterparts that any trade deal would have to be concluded before the autumn, saying that it would not wait around to get one.