SMMT presses for government action to support automotive sector

Posted on 19 Nov 2008 by The Manufacturer

The Society of Motor Manufacturers and Traders (SMMT) has called upon the government to ease the plight of producers in the ailing automotive sector – one of the most badly hit by relentless economic uncertainty and dwindling market support.

The organisation, which represents retail firms in the sector as well as manufacturers, has joined forces with the Retail Motor Industry Federation (RMIF) to address a letter to Chancellor Alistair Darling and Business Secretary Peter Mandelson. In the letter they outline a number of proposals which they are suggesting for government adoption. The organisations are concerned about UK firms’ prospects in the increasingly global environment that the automotive industry has become.

The proposals 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.

Further specific manufacturing support suggested includes:

• 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.

“The motor industry faces a set of unprecedented market conditions. The dramatic falls in demand for new vehicles in the UK, Europe and 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, SMMT chief executive. “The pre-Budget report should set out the strategy and measures needed to restore consumer confidence and support valuable industrial capability during this difficult period.”

This news comes on the same day as Chrysler, General Motors and Ford appealed to the US Congress for a $25 billion bail-out.

“We’re nearly 10% of the US GDP, and if one of the automobile manufacturers gets into serious trouble, it has just tremendous implications for the entire industry,” said Ford’s president, Alan Mulally.

They want the money to re-tool factories for developing high-demand, fuel-efficient vehicles to allow them to compete internationally. This is something man-in-waiting Barack Obama has promised to help with when he gets his feet under the Oval Office table early next year.