The Society of Motor Manufacturers and Traders (SMMT) has backed the findings of a Business and Enterprise Select Committee inquiry that expresses ‘serious concern’ about the effectiveness of the UK government’s ‘Automotive Assistance Programme’ (AAP).
The programme announced in January 2009 set out GBP2.3bn in loans and loan guarantees for the motor industry, yet to date no companies have benefited from the scheme.
SMMT has called for greater flexibility in AAP eligibility to ensure quicker delivery of credit to companies throughout the automotive sector.
“There is an urgent need for the Automotive Assistance Programme to start delivering the support the UK motor industry needs”, said SMMT chief executive, Paul Everitt.
“The availability of affordable finance and credit remains the number one priority for companies at all levels of the supply chain. It is essential that a more flexible approach is adopted so that viable businesses can access the working capital they need in the short term and support investment in future technologies for the long term.
“Industry remains concerned that the reluctance of banks to provide direct support to the automotive sector is limiting the effectiveness of the programme and its benefit to companies in the supply chain.”
In giving evidence to the inquiry on the AAP, SMMT identified the following key issues:
- Banks remain reluctant to lend to the automotive sector;
- The majority of companies need access to working capital above project finance;
- The removal of trade credit insurance has further undermined the banks’ attitude to risk in the automotive sector.