Britain’s car industry is urging the government to introduce additional measures such as a sales tax cut to boost the sector as a third of automotive workers remain furloughed due to the outbreak of the coronavirus.

Infinity Tyres

Factories closed in March as a lockdown was enforced to curb the spread of the pandemic. Some of the factories are still shut and many are operating at highly reduced output, introducing the industry to the lowest level of production in decades.

Car and van volumes are expected to fall by a third to 920,000 units this year and up to one in six jobs are at risk, the Society of Motor Manufacturers and Traders (SMMT) industry body said.

The government has introduced a series of policies to support the economy including a furlough scheme which pays 80 per cent of salaries, up to 2,500 pounds ($3,120) per month, for staff who are placed on temporary leave.

“Government’s intervention has been unprecedented,” said SMMT CEO, Mike Hawes.

“But the job isn’t done yet. Just as we have seen in other countries, we need a package of support to restart, to build demand, volumes and growth,” he said, calling for measures to boost consumer confidence and unfettered access to emergency funding.

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The sector, Britain’s biggest exporter of goods, is also bothered that trading terms with the European Union could worsen after a Brexit transition period finishes at the end of 2020.

“A ‘no deal’ scenario would severely damage these prospects and could see volumes falling below 850,000 by 2025 – the lowest level since 1953,” the SMMT said.

The government has pledged to support business throughout the coronavirus crisis and talks are ongoing between London and Brussels to secure a trade agreement with the EU to come into force from Jan 1.