UK carmakers form united front to save suppliers from Brexit
[LONDON] Carmakers including Jaguar Land Rover and Nissan Motor Co have joined with lenders to create a network to protect the industry's supply chain from succumbing to Covid-19 and a no-deal Brexit.
Under the so-called safe harbour plan, suppliers in financial difficulty can lean on carmakers for improved payment terms, and lenders will be called upon to step in with financial assistance, according to the Society of Motor Manufacturers and Traders, which is organising the network.
With Britain's future relationship with the European Union yet to be agreed, the industry faces the spectre of border chaos if the trucks criss-crossing the channel with components are held up. The SMMT's goal is to minimise the risk of insolvencies while staying within the boundaries of UK and EU competition law.
The UK left the European Union at the beginning of the year, and the transition agreement with the bloc comes to an end on Dec 31. Without a deal, UK carmakers will face the prospect of duties being levied on exports to the EU, the largest market for UK-made cars, as well as tariffs on parts.
The erosion of the domestic supplier base is "just one potentially devastating consequence" of tariffs potentially being implemented in the midst of a worsening pandemic, the SMMT said in the statement. "Given the integrated nature of automotive supply chains and reliance on just-in-time manufacturing techniques, if one link in a chain hits trouble it can undermine all the companies involved, including vehicle manufacturers, threatening an entire sector." The SMMT has repeatedly warned that uncertainty about the economy and the UK's exit from the EU would weigh on carmakers that are already struggling to recover from the effects of Covid-19. Car production plunged 40 per cent in the first eight months of the year.
BLOOMBERG
GET BT IN YOUR INBOX DAILY
Start and end each day with the latest news stories and analyses delivered straight to your inbox.
KEYWORDS IN THIS ARTICLE
BT is now on Telegram!
For daily updates on weekdays and specially selected content for the weekend. Subscribe to t.me/BizTimes
Transport & Logistics
India’s IndiGo gets into long haul game with Airbus A350 deal
Hertz reports US$392 million loss as it unwinds Tesla fleet burden
Changi Airport’s Q1 passenger movements surpass pre-pandemic levels
Toyota and Nissan pair up with Tencent and Baidu for China AI arms race
China's largest auto show displays all-electric future, local brands dominate
Toyota hits record annual output, sales on robust demand