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Coronavirus: UK car industry warns one in six jobs could be lost after pandemic

Jill Petzinger
Jill Petzinger, Germany Correspondent, Yahoo Finance UK
Thousands of unwanted new and used cars at Thurleigh Airfield in Bedfordshire, England. Photo: Chris Gorman/Getty Images

 A third of the automotive industry workforce in the UK is still on furlough after coronavirus lockdowns and a collapse in demand brought the sector to a near-total halt in the past couple of months.

According to a new survey by the Society of Motor Manufacturers and Traders (SMMT), there were more than 6,000 redundancies in the car industry in the month of June — and one in six jobs will remain at risk when the government’s furlough scheme ends in November.

SMMT chief executive Mike Hawes today called on the government for a specific ‘restart package” to safeguard against jobs losses, and help boost recovery for the important industry.

“The prolonged shutdown has squeezed liquidity and the pressures are becoming more acute as expenditure resumes before invoices are paid,” said Hawes in a statement.

Hawes described the government support so far as “unprecedented,” but noted that the job is not done yet.

“Just as we have seen in other countries, we need a package of support to restart; to build demand, volumes and growth, and keep the UK at the forefront of the global automotive industry to drive long-term investment, innovation and economic growth,” Hawes said.

He also warned that a no-deal or a ‘bare bones’ Brexit trade deal with the EU was essential for the recovery of the UK car industry.

READ MORE: New car sales in the European Union plunge over 50% in May

The German government last month announced a plan to boost its core automotive sector by increasing the buyer incentives for all-electric and hybrid vehicles.

The French government in May announced an €8bn (£7.2bn, $9bn) financial aid package, also with a focus on boosting a switch to e-vehicles, as well as keeping manufacturing in France.  

“We are in danger of being overtaken by international competitors like France who have stepped in to support and sustain their car industries through this crisis,” said Lucy Powell, Labour’s shadow minister for business and consumers in a statement.

“With the right action now, the UK could lead the world in a green revolution in automotive. No action will lead to devastation and long-term damage to communities who rely on these jobs.”

New car sales across the European Union slumped in May, even as dealerships reopened, as the consumer demand is simply not there. The UK suffered the worst hit across the region, with May sales down by 89% compared with the same month in 2019.

According to SMMT, the UK car industry accounts for £82bn turnover  annually and accounts for 14.4% of UK’s total goods exports. It directly employs 168,000 people in manufacturing and 823,000 across the wider car industry.