Coronavirus: 'Safe Harbour' scheme launched to save UK auto sector jobs and businesses

Thousands of used cars lined up at a site in Corby, Northamptonshire, waiting to be distributed to car dealerships around the UK. (Photo by Joe Giddens/PA Images via Getty Images)
The auto industry and its supply chains have been hit hard by the coronavirus pandemic. Photo: Joe Giddens/PA via Getty Images

Efforts to save jobs in the hard-hit auto sector are being ramped up, as a trade body launched its “Safe Harbour scheme” to help protect against further damage from the fallout of the coronavirus pandemic.

Trade association Society of Motor Manufacturers and Traders (SMMT) has said the scheme, which is supported by the Automotive Council and the government, provides a mechanism for automotive businesses to engage with their customers, lenders, creditors and other stakeholders to find ways to minimise the risk of insolvencies.

The new industry initiative allows multiple companies to come together to support critical suppliers without falling foul of anti-competition rules.

It is available to any company operating in the UK automotive sector, including in the supply chain.

The automotive industry in the UK accounts for £82bn ($105.4bn) turnover, employing 168,000 people directly in manufacturing and some 823,000 across the wider industry.

But the impact of the pandemic and subsequent challenging market conditions has had a devastating effect on the sector.

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According to the SMMT, producers are struggling to ramp up operations, with output down -40.2% in the first eight months representing a year-on-year loss of 348,821 cars, worth some £9.5bn to the sector.

Commercial vehicle production is also down, -20.0% in the year to date equivalent to more than 9,000 units worth almost £730m.

This has already led to a loss of at least 9,000 jobs across the sector as a whole with an additional 5,000 in the UK supply chain. Yet, as industry across the world prepares for a potential second wave of the virus, this is likely to be just the tip of the iceberg.

The SMMT said: “The industry is doing all it can to safeguard jobs for the benefit not just of the companies themselves but for the economy, society and individual livelihoods.”

Mike Hawes, SMMT chief executive, said that the scheme “should provide valuable breathing space as the sector restarts and business and consumer confidence recovers.

“Ultimately, however, the industry must maintain its competitiveness to grow and for that we still look to the government to deliver an ambitious trade deal with the EU.”