LONDON (Reuters) – Britain’s car sector needs immediate cash and the government should introduce measures to support suppliers, some of which only have enough money to handle the coronavirus crisis for weeks not months, the head of the main trade body told Reuters.
The country’s biggest exporter of goods employs over 800,000 people, many of whom work for component and part-makers supplying big factories operated by the likes of Jaguar Land Rover <TAMO.NS> and Nissan <7201.T>, all of which are shut.
The government has announced several schemes including paying 80% of salaries, up to 2,500 pounds ($3,065) a month per employee, to those placed on a leave of absence known as furloughing. It is not available until the end of the month.
“Companies need cash immediately,” the Chief Executive of the Society of Motor Manufacturers and Traders Mike Hawes told Reuters.
“The supply chain are really concerned about how quickly they can access finance because they need it now. They won’t have weeks upon weeks of funding to sustain them,” he said.
The temporary suspension of tax contributions on personnel, business rates administered by local councils and a levy on apprenticeships should all be options, he said.
Whilst vehicle manufacturers should be better placed to weather the impact of the pandemic in the short term, they risk some of their suppliers going bankrupt, making it harder to re-open factories after shutdowns end.
Sales figures for March, one of only two occasions each year when a new licence plate series is issued normally leading to bumper demand, are due on Monday, and will show the extent of the hit after dealerships and plants shut.
Britain is expected to reach a peak of cases in the next few weeks, its health minister said on Friday, but lockdown measures could be in place for months, making it unclear when businesses will be able to reopen and how difficult a task they will face.
“To a certain extent, closure is the easier bit,” said Hawes, adding that different suppliers and plants will not likely resume at the same time, placing differing demands on firms.
“Coordinating all of that is going to be really challenging.”
(Editing by Stephen Addison)