Carmakers are likely to resort to short-term working and production shutdowns again this year, experts said, after gloomy figures showed a large drop in the number of cars produced in 2009.
According to the Society of Motor Manufacturers and Traders (SMMT), production of new cars in 2009 was down 30.9% compared to 2008.
In total, 999,460 cars were manufactured in the UK last year. Commercial vehicle production totalled 90,679 – a 55.3% drop on 2008.
Most damage was done in the first part of the year when lack of consumer demand led to cuts in production. Honda, Bentley, and Jaguar Land Rover brought in shorter working weeks and shut factories to reduce output. Honda denied such measures would be needed this year.
Peter Cooke, KPMG professor of automotive industry management at the University of Buckingham, said sales of new cars were likely to slow further as the government’s scrappage scheme comes to an end and rises in VAT, fuel charges and interest rates choke demand. “We will see a return to short-term working, especially in the UK,” he said.
The scrappage scheme was an “Elastoplast”, he added, and governments across Europe were unlikely to be able to resurrect such schemes. “It’s been very expensive. The incoming government will not be able to afford a second programme.”
The SMMT forecast a 10% drop in car sales this year. Chief executive Paul Everitt said he expected the year ahead to be “extremely challenging” and blasted banks for refusing to lend money to struggling automotive firms.
Everitt said he had held talks with banks including Barclays, Lloyds and HSBC about loans to car firms. One banker is said to have told him: “We are not going to make any money out of that.”
Everitt said: “They are making a mistake because they don’t understand the strategic shift to our industry and economy.”
© PE Publishing, 27 January 2010
