CEO Update

Budget a missed opportunity to help transform automotive sector

05 March 2021 #CEO Update

With all eyes cast towards the Chancellor this week as he delivered the Budget, there was some encouragement to an automotive sector hit hard by the pandemic and additional trading costs. The extension of the furlough scheme until the end of September, in particular, provides a lifeline to many businesses, not least car showrooms which remain closed, and was a welcome response to the industry’s calls.

Yet a lack of measures to help transform the industry and market as we transition away from pure petrol and diesel cars and vans within just nine years, especially in this crucial year, with COP 26 in the autumn, is a missed opportunity.

Even with the industry investing significantly in new zero emission technologies for consumers, and businesses, increasing the uptake of these vehicles to the levels required by 2030 remains a mammoth task and will require more than strong supply. We had hoped, therefore, to see more measures to support the transition, not least consumer encouragement and investment in infrastructure. Whilst we welcome in principle the announcement of a ‘super deduction’ for investment in plant and machinery, it is not clear if it will work for many manufacturers in the sector. We will assess the fine detail of the measure but we still seek fundamental reform of business rates which are a disincentive to investment in plant and machinery at a time when we are trying to encourage innovation in products and processes to support the transition to Net-Zero.

The closure of showrooms since 5 January, and in some regions December, has continued to have a significant impact on the number of new cars purchased so far this year. February saw registrations drop by -35.5% – the weakest performance since 1959 – continuing a worrying trend as dealership’s head into the crucial month of March. Retailers have delivered outstanding results using Click and collect but the dramatic fall in the market is proof that this is not a viable alternative to the showroom experience. With the Government roadmap suggesting that showrooms will not be allowed to open until 12 April at the earliest – and even later in Scotland – we could well be heading for a third consecutive dismal ‘new plate month.’ If UK automotive is to re-energise the consumer demand needed to support manufacturing, therefore, secure employment across manufacturing and retail, and continue on the Road to Zero, dealerships need to be able to open as soon as possible.

There was, however, better news for the light commercial vehicle sector this month with demand from the construction sector and online deliveries driving new vehicle uptake up by 22.0%. With the vaccine roll out providing that path out of lockdown, businesses can look to the next few months with increasing confidence and upgrade their fleets with the many latest, most efficient vans on the market.

Finally, a reminder that SMMT’s Electrified 2021, which will focus on what is needed to create a sustainable transport system fit for today and tomorrow, is now just a few weeks away, and we are pleased to announce that Andreas Krüger, Head of E-Mobility, Volkswagen Passenger Cars will be one of the keynote speakers alongside the Secretary of State for Transport, Rt Hon. Grant Shapps MP, Jonathan Goodman, UK Chief Executive and Head of Global Communications for Polestar, and other leading industry figures.

For more information and to register for the event, please click here.


Update Newsletter