“Motor Industry Bail-Out”
The motor industry has been grabbing headlines over recent months but among the coverage has been a great deal of inaccurate theories and perceptions. The Society of Motor Manufacturers and Traders has developed MotorIndustryFacts.com as a portal to gain truthful insight into the UK automotive sector.
Below are a selection of the inaccurate comments we have seen about the industry and the detail needed to help separate the fact from the fiction.
“The motor industry has had a bail-out and is now asking for more”
Fiction: The motor industry has had a bail-out and is now asking for more.
Fact: The term ‘bail-out’ describes an injection of working capital into a business which has neither been received or asked for by the motor industry. The industry has been given a package of loans and loan guarantees but more must done to ease access to credit and stimulate demand in the market.
The package of measures asked for by the motor industry has not changed since the onset of the recession in October 2008. The industry has called for a package of measures which centre on access to finance and credit and stimulating market demand. The industry has not asked for a government bail-out and has not received one. On 27 January 2009, the secretary of state for business, enterprise and regulatory reform, Lord Mandelson, announced measures to support the UK motor industry which included £2.3 billion in loans and loan guarantees – there was no working capital injected into the industry. The following day, industry met with Lord Mandelson and welcomed his announcement but reiterated the need for action to address concerns over credit and market demand and support for short-time working.
The full package includes:
- Fast access to credit for vehicle manufacturers and the supply chain in the UK through the UK government loan guarantees and the EIB European Clean Transport Facility.
- Allow vehicle manufacturer finance companies access to special liquidity arrangements.
- Introduce UK scrappage incentive scheme of £2,000 for pre-2000 cars or vans.
- Increase capital allowances for business and fleet buyers.
- Review legislation regarding changes to business rates relief.
- Scrap plans for increased VED and new first year rate. This would be a strong signal to buyers and should help to improve residual values.
- Help to speed up the allocation of existing funding to support training initiatives.
- Help to speed up the allocation of existing funding for R&D projects.
- Use existing funding to support investment in energy efficiency measures at automotive facilities. Long-term energy saving and immediate stimulus for green collar jobs.