The UK car industry is facing a double threat of a second national lockdown alongside a possible no-deal Brexit at a time when production and sales are suffering and thousands of jobs have already been lost.
According to a recent report in the Financial Times, the UK automotive industry faces a gloomy outlook. UK car manufacturing fell 44 per cent last month compared with a year earlier with both domestic and international orders collapsing in the face of the ongoing coronavirus crisis with just 51,039 cars produced on British production lines.
Car manufacturers had hoped to avoid a second lockdown, with firms worried about the effect further restrictions will have on sales. New car registrations in 2020 are already down by 603,401 (39.7%) compared with the same period in 2019, and manufacturers are concerned that a second lockdown will cause sales to plunge at a time of year that would normally see robust numbers.
Despite generous schemes from the Treasury to help companies keep workers on staff, industry body, the Society of Motor Manufacturers and Traders (SMMT) calculated that at least 13,500 jobs have been cut across the UK car sector this year, and has warned that up to one in six positions could be at risk if the situation does not improve.
Industry reports of a precipitous decline in sales of new cars is supported by similarly troubling statistics coming from the car finance industry, with the Finance and Leasing Association (FLA) reporting a 78% drop in new customers in May 2020, compared with the same time last year. Since April, motor finance firms have also been required to offer payment freezes to those struggling to make payments on their car, with the scheme continued for a further three months until October.
The tough economic climate for all elements of the car industry come as the UK prepares to leave the orbit of the EU when the transition period ends on 31 December. When leaving with no-deal was believed to be a real possibility last year, many car manufacturers shuttered factories and paused production lines to give themselves time to adjust to new trading conditions. This year, however, with the spectre of no deal once again on the horizon, automotive firms are already struggling and may not have the flexibility to handle the abrupt change of regulations and supply chains that a no deal Brexit could inflict.