Sector needs liquidity today for a successful restart tomorrow
News this week that the country will remain in lockdown until at least the beginning of May was tough for everyone to hear, even if expected. However, signs that this mammoth national effort is starting to stem the spread of the coronavirus should strengthen our collective resolve to get through this.
The automotive industry is resilient but the current crisis is testing the entire sector. Government has sought to support and reassure business and has announced an extraordinary pledge of emergency funding.
However, until that cash starts to flow to all businesses, we know that, for many, the future remains uncertain. SMMT continues to press for additional and specific measures and the rapid release of funding to the sector in almost daily calls with government ministers and officials.
So far the banking and finance sector has lent over £1.1bn to SMEs via the Coronavirus Business Interruption Loan Scheme. This is welcome but, out of a pot of some £330bn, represents a tiny fraction of what is available. All parties are working incredibly hard to support businesses but the devil is in the detail, with a huge backlog of applications for lenders to process that is taking considerable time.
We raised this issue again on a call this week with the Business Secretary, Alok Sharma – as well as the need to ensure the loan facilities for mid-cap and large-scale businesses get cash flowing to all that need it. It was good news, therefore, to see that ahead of its launch on Monday 20 April, Chancellor Rishi Sunak announced late yesterday that the Coronavirus Large Business Interruption Loan Scheme (CLBILS) will be expanded.
All firms with a turnover of more than £45m will now be able to apply for up to £25m of finance, and up to £50m for firms with a turnover of more than £250m. Moreover, the employer portal for the Coronavirus Job Retention Scheme opens on Monday, and members are advised to apply early to ensure payments are made in good time.
Whilst getting liquidity into automotive businesses remains our immediate priority, we must also start to look ahead at how we safely and successfully restart what is one of the country’s most valuable economic assets. Given the deeply integrated nature of the industry, and with countries emerging from the pandemic at different times, it will be challenging.
However, SMMT is already in discussion with members and partner organisations across Europe, as well as government, to help plot out how all parts of the industry, in the UK and globally, from supply chain, through vehicle production and retail, can transition out of this crisis in an orderly fashion.
Restarting the automotive sector will be addressed in SMMT’s next weekly COVID-19 webinar. I encourage you to sign up here, and, in the meantime, please do visit our dedicated online hub where you will find all the latest government updates, business support and guidance.
Finally, on Monday SMMT will launch its second automotive industry Covid-19 survey. Sent to companies from all parts of the industry, it will gather up to date information on the latest impact of the pandemic and challenges businesses are facing. Questions will focus on the financial impact and liquidity, employment, and industry restart and recovery.
Now more than ever it is critical for companies to share detail on their situation so SMMT can maintain dialogue with government to help provide the necessary support for the industry during this unprecedented and challenging time.