UK auto industry seeks government help on energy costs as trade ‘worsens’ | Automobile industry
Britain’s car industry has called for government help in the face of soaring energy costs, with a car boss saying the sector faces the toughest operating environment he has ever seen .
Rising energy costs, ongoing computer chip shortages and parts delays caused by Covid lockdowns in important supply markets such as China and Russia’s invasion of Ukraine are are combined to hit manufacturers.
According to an estimate by the Society of Motor Manufacturers and Traders (SMMT), a lobby group, rising energy prices will cost the UK car industry £90million this year. Automakers do not count as an energy-intensive industry and therefore cannot qualify for any government assistance under existing programs, although battery production is eligible.
Mike Hawes, SMMT’s managing director, said: “Energy costs are hitting consumers, but they’re also hitting manufacturers, and we don’t have a price cap.
“Tackling the UK’s high energy costs is the industry’s number one demand.”
Matt Windle, chief executive of Lotus, the British sports car maker owned by China’s Geely, pitted strong demand against supply chain difficulties. Windle and Lawrence Drake, managing director of truck manufacturer DAF Trucks, said they had been forced to hold daily meetings to find out which parts had been delayed.
“The commercial conditions are also [bad] like I’ve ever known, and they’re also getting worse,” Windle said. “We are seeing pressure at all levels, especially in material nomenclature.”
The SMMT also warned the government against moves that would jeopardize the relative stability of trade relations with the EU, as it seeks to push through unilateral changes to the so-called Northern Ireland Protocol, the post-Brexit rules governing trade between Great Britain and Northern Ireland.
“Brexit has undoubtedly been a trauma and despite what many people claim it’s not over yet,” Hawes said. Businesses need “confidence, not uncertainty” to trade, he added.
“Investors around the world will take notice and potentially suspend their investments,” he said. “If there’s uncertainty, if there’s instability, that’s just another reason not to look at the UK.”
For the auto sector, there are still several post-Brexit regulatory regimes to be put in place, such as the process for obtaining safety approvals, but Hawes said working groups involving government and industry that were supposed to discussing these regulations had not met in the 18 months since the Brexit deal was struck.