Automotive needs urgent access to finance
SMMT is working hard to support members – and the entire automotive sector – and address the immediate challenges presented by Covid-19. This means working with other trade bodies at home and abroad at times, to coordinate efforts, but also daily dialogue with government. It is important we provide feedback to government on how its programmes to keep business going are operating – whether or not they are delivering as intended – but also how they should be refined for our requirements.
We know government is fielding an incredible number of questions and queries currently and we are trying to ensure programmes such as the Job Retention Scheme are fit for purpose, that they safeguard long-term employment and enable struggling businesses to remain viable.
The most immediate challenge, however, is access to finance. Companies of all sizes need liquidity and need it urgently. We were pleased to see government respond to some of our concerns by today making significant enhancements to some of the measures currently on offer for business impacted by the coronavirus.
The chancellor’s announcement that he is to launch a second business interruption loan scheme – the Coronavirus Large Business Interruption Loan Scheme (CLBILS) – to support more mid cap companies is welcome, as are the increased flexibilities in the scheme, in particular obviating the need for personal guarantees and the requirement that eligible companies obtain standard commercial loans in the first instance.
There are still significant challenges, however. Heavy demand for business support is causing delays and many larger companies – including inherently healthy, major automotive companies on which the whole industry depends – may not meet the investment criteria of the Covid Corporate Financing Facility (CCFF). This cannot be what the chancellor intended when he announced the scheme and reports that this initiative is to be “finessed” are welcome, but this must come quickly.
On a more positive note, government funding for the bus industry is extremely welcome, as we must keep all essential businesses and services alive and moving.
Even in the face of this unprecedented adversity, however, the automotive industry is doing what it does best – turning its vast expertise and every available resource to making a difference where it is most needed. This is not the first time the industry has helped in the country at times of crisis. During WWII, for example, many manufacturers turned their expertise to making planes, engines and military vehicles.
With vehicle production now paused nationwide, and showrooms closed, the sector is now focusing its efforts in extraordinary ways. A shining example of this is the work of the Ventilator Challenge UK Consortium, announced this week. This group brings together significant UK technology, industrial and engineering businesses from across the aerospace, automotive and medical sectors with a shared goal to scale up production of ventilators for the NHS – and it is now working at full speed.
Elsewhere, car brands and retailers are diverting resources to help, from loaning vehicles to deliver medical supplies and groceries, to supporting front-line public services and charities supporting society’s most vulnerable people, as well as making available production facilities to develop prototype PPE equipment.