UK car industry warns one in six jobs at risk

The Society of Motor Manufacturers and Traders state that there is a ‘critical need’ for help as it claims up to one in six car industry jobs will be at risk as the furlough scheme comes to an end.

With one in three staff still on furlough across the industry – and with this support coming to an end in the autumn – the SMMT are calling for renewed support in the form of VAT cuts, to help prevent job losses.

Since shutting down in March, many factories are now operating with a reduced output while others remain closed, and in June alone, 6,000 job cuts have been announced across the sector.

The trade body’s recent survey found that nearly a million people are employed across the sector, including 168,000 in manufacturing.

With annual car and van volumes expected to fall by a third, April saw a 99.7% fall in car volumes – to the lowest number since the Second World War. This kind of decline surely cannot come without a lasting impact on performance, and in turn, job losses.

The CBI’s report on Monday cited transport and motor as some of the worst-hit industries of all, as it booked the biggest slow-down in output since records began. Going forwards, the SMMT predicts a combination of reduced demand and social distancing will continue to play a part in reduced productivity.

The organisation are calling for, “unfettered access to emergency funding, permanent short-time working, business rate holidays, VAT cuts and policies that boost consumer confidence”.

However, the SMMT Chief Executive Mike Hawes was keen to praise the government’s so far “unprecedented” support, by way of furloughed salaries through the Job Retention Scheme.

“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,” he said

Looking ahead, the SMMT is worried about the impact Brexit could have on any potential recovery:

“A ‘no deal’ scenario would severely damage these prospects and could see volumes falling below 850,000 by 2025 – the lowest level since 1953”.

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Jamie Gordon
Senior Journalist at the UK Investor Magazine. Also a contributing writer at the Investment Observer, UK Property Journal and UK Startup Magazine. Postgraduate of King's College London with a specialisation in Business Ethics. Interested in Development Economics and David Hume.