Motor industry call for further action from chancellor

24 November 2008 #SMMT News

The Society of Motor Manufacturers and Traders (SMMT) supports the substantial, but temporary, economic stimulus package announced in today’s pre-budget report. It provides positive incentives for consumers to begin spending, but will need to be accompanied by a more active approach to lending by banks and financial institutions.

Commenting on the report, Paul Everitt, SMMT chief executive said, “The chancellor has made a positive first step to help restore consumer confidence and kick-start responsible spending. We now need to see action to remove the constraints on credit and finance so consumers and businesses can take advantage of the changes announced today.”

Motor industry response to cut in VAT: “The 2.5% cut in VAT combined with the recent cuts in interest rates will encourage consumer spending, impacting on both the new and used vehicle markets. Any move to boost responsible spending is welcome but specific action to improve the affordability and accessibility of credit is needed if the vehicle market is really going to benefit,” said SMMT chief executive, Paul Everitt.

Motor industry response to postponement of VED rises: “Now is not the time to be increasing motoring taxes so the scrapping of penal increases to VED is welcome. We are disappointed the chancellor hasn’t taken the opportunity to reverse his plans for a first year rate of VED and would urge government to reconsider its approach to vehicle taxation policy, aligning it to EU CO2 legislation and providing a more consistent and long-term framework,” said SMMT chief executive, Paul Everitt.

SMMT reiterated its call for government to implement a package of measures to bridge short-term cash flow problems created by the banking crisis.

“The motor industry faces a set of unprecedented market conditions. The dramatic fall in demand for new vehicles around the world, combined with the limited availability of funding and liquidity now puts at risk valuable industrial capability. Urgent action is required to boost demand for new vehicles and ease pressure on UK automotive suppliers,” said Paul Everitt.

Senior executives representing the UK automotive sector from component manufacturers, through vehicle producers and the retail network will meet the secretary of state for business, Lord Mandelson, on Thursday 27 November. The automotive sector is calling for support measures to include: Allowing manufacturers’ finance companies access to the funding available to banks through the special liquidity arrangements. This would allow them to support customers and their franchise networks. Scrapping plans for increased VED and new first year rate. This would provide a strong signal to buyers and help to improve residual values. Increased capital allowances for fleet buyers, particularly for buyers of commercial vehicles, to stimulate immediate demand. Shelve plans for reform of business car capital allowances, as overall impact and timing is unhelpful. Remove expensive car restrictions under capital allowances to help demand for UK higher end manufacturers.

And, manufacturing support to include: UK support for the European Investment Bank’s (EIB) proposed €40bn automotive industry loan package so UK companies throughout the supply chain can support their operations and continue to invest during the economic downturn. National arrangements to allow manufacturers and suppliers access to loan facilities, including potential government guarantees, to maintain liquidity and investment. Help to speed up the allocation of existing funding to support training, R&D projects and energy efficiency measures. This would help upskill employees, accelerate innovation and provide an immediate stimulus for green collar jobs.

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