The UK Business Secretary, Lord Mandelson’s assertion that yesterday’s £2.3 billion in loan agreements for the UK car industry was no “bail-out” rang true for the country’s logistics providers. The lack of specific proposals to stimulate demand in the market in the form of consumer credit incentives will come as a disappointment to many who see this as the only way to halt plummeting sales and thus distribution figures for finished vehicles.
The proposals, which included guarantees to unlock loans of up to £1.3 billion from the European Investment Bank and another £1 billion in loans to fund investment in low-carbon vehicles, focussed on long-term research and design initiatives and not customer incentives or support for manufacturing. While the Association of European Vehicle Logistics (ECG) called for tax breaks and financial incentives to stimulate the sale of new cars, the UK government only stated that it was "looking at steps" to get credit for people to buy them.
Nick Cullen, Managing Director of Ceva Logistics UK, added that manufacturers and logistics providers could cut cost while maintaining their service but that they needed the government to support the freeing up of credit for new vehicle sales and maintain the skills base when economy recovers. "The automotive sector is currently one of the few manufacturing industries left in the UK and hence should be a key platform to be maintained and built upon as we move through recesssion to economic growth and stability," he said.
In the meantime the proposed initiatives are unlikely to have any impact on manufacturing for two-to-five years and the consequences of that lack of incentive for manufacturers and logistics providers was seen very clearly in today’s announcements that Toyota is considering further cuts in the UK.
Responding to the government proposals, Shadow Business Secretary Kenneth Clarke asked whether the secretary of state had not produced a bail-out “because the Treasury has finally won an argument inside the government and explained to him that they can't afford the kind of support for the industry that was being trailed."
The SMMT responded today, emphasising the lack of support in the form of specific proposals to stimulate demand in the car market. At the end of this week it will meet government and industry officials to discuss issues frustrating vehicle financing bodies that are seeking access to Bank of England funding.
What is also pertinent to the UK’s logistics providers is that the support for designing new greener vehicles comes without an equivalent initiative to scrap existing models that currently remain unsold and rusting around the UK’s ports.
