U.K. Carmakers Seek State Aid With Pandemic Threatening Jobs

Britain’s main automotive trade group called on the government to support the industry’s efforts to recover from coronavirus-related lockdowns, saying one in six jobs are at risk.

Measures should include emergency funding, tax holidays and policies to boost sales, the Society of Motor Manufacturers and Traders said in a statement Tuesday. The group sees U.K. production dropping by a third to 920,000 cars and light commercial vehicles this year.

The SMMT reiterated its call for Britain to negotiate a tariff-free trade deal with the European Union, saying annual output could otherwise fall to less than 850,000 autos by 2025, the lowest since 1953, leading to a 40 billion-pound ($50 billion) drop in revenues. With an agreement, it forecasts production could rise to 1.1 million next year and 1.35 million by 2025.

“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,” SMMT Chief Executive Officer Mike Hawes said at a virtual conference. “Brexit is still the biggest threat to the long-term future of the industry, that’s why we do need a deal.”

Britain’s car industry is sputtering back to life from a virtual standstill at the height of the health crisis. Dealerships closed since mid-March began reopening this month, while factories owned by the likes of Jaguar Land Rover, Nissan Motor Co. and Honda Motor Co. have gradually resumed production with social-distancing measures in place.

Scrappage Call

A vehicle-scrappage policy, in addition to steps such as a cut to Britain’s VAT purchase tax, would help stimulate demand amid low consumer confidence while also removing more high-CO2-emission vehicles from the roads, Adrian Hallmark, CEO of Volkswagen AG’s Bentley ultra-luxury arm, said in the webinar.

The U.K. automotive industry employs more than 168,000, according to the SMMT. Carmakers have announced 6,000 job cuts, while a third of workers remain furloughed. Some 20,247 vehicles were registered in May, the lowest tally for the month since 1952, though that was an improvement on April’s 4,321 sales, the worst reading since just after the end of the World War II.

France last month unveiled 8 billion euros ($9 billion) of measures aimed at reviving its struggling auto industry, including 5 billion euros of state-backed loans for Renault SA.

©2020 Bloomberg L.P.

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