CEO Update

Job Support Scheme offers some relief but major challenges remain

25 September 2020 #CEO Update

The Chancellor’s job support scheme announced yesterday is welcome and should provide some temporary relief for the automotive sector, which has been so badly hit by the pandemic, as too will new flexibilities on government loan schemes and tax deferrals. However, it is crucial that these initiatives are more than just a short-term lifeline and, like schemes elsewhere in Europe, they must support jobs for the duration of the pandemic and recovery – no matter how long this takes.

For the UK to remain a viable place for vehicle production, every automotive manufacturer needs to hold on to skilled, viable jobs, and government and business must do everything to improve competitiveness. It’s also crucial to keep a close eye on demand, as it remains to be seen how increasing restrictions on daily life will further impact the market, and in turn production, for the foreseeable future.

Business remains fragile as we head into a winter of uncertainty, and a 2021 recovery is immensely challenging and far from guaranteed. Indeed, UK car production declined -44.6% in August with just 51,039 units made as efforts to ramp up production stalled amid the coronavirus crisis, with weak demand in key overseas markets compounded by a significant fall in output for UK buyers.

Almost 85% of all cars built in Britain last month were destined for markets around the world, underlining the importance of this trade to the sector and UK economy. So far this year, UK car production is down -40.2%, representing a loss of 348,821 units worth more than £9.5 billion to manufacturers – losses that will be impossible to catch back.

On top of this incredibly challenging situation, the prospect of ‘no deal’ at the end of the Brexit transition period is fewer than 100 days away and we need urgent agreement of an ambitious free trade deal with our largest market to avoid the devastating shock of crippling tariffs.

So as we go into the last quarter of 2020, we are seeing the coalescence of a number of key issues which will determine the health – or otherwise – of our sector for many years to come. The stakes are getting ever higher which is why we need support not further expensive and competitiveness-threatening challenges. The industry is adept at overcoming obstacles but if these are too many and too high, no sector can survive.

Finally, next Tuesday 29 September I invite you to join SMMT Open Forum Digital: Funding and Support – the first in a new digital event series focussed on automotive and supply chain issues. The event will focus on what manufacturers of all sizes should be considering during these increasingly fluid times, and importantly what support is out there to help, be it through funding, insights or advice and guidance. Sign up here.