Car plant shutdowns may cost auto industry more than $100bn

The continued closure of car plants across Europe and North America will cost the auto industry more than $100bn (£82bn) in lost revenues if the shutdown lasts until the end of April.

All major European carmakers have suspended production because of disruption caused by the spread of the coronavirus and if this continues as expected until the end of April, this will account for $66bn (£54bn) in lost sales in Europe, or 2.6m cars. In North America this will account for 2m cars, and lost sales of about $52bn (£42bn).

The calculations have been made by Ian Henry, the owner of the consultancy AutoAnalysis, who produces forecasts for the industry body, the Society of Motor Manufacturers and Traders (SMMT), as first reported in the Financial Times.

UK government support for workers and businesses during the coronavirus crisis

Direct cash grants for self-employed people, worth 80% of average profits, up to £2,500 a month. There are similar wage subsidies for employees.

Government to back £330bn of loans to support businesses through a Bank of England scheme for big firms. There are loans of up to £5m with no interest for six months for smaller companies.

Taxes levied on commercial premises will be abolished this year for all retailers, leisure outlets and hospitality sector firms.

Britain’s smallest 700,000 businesses eligible for cash grants of £10,000. Small retailers, leisure and hospitality firms can get bigger grants of £25,000.

Government to increase value of universal credit and tax credits by £1,000 a year, as well as widening eligibility for these benefits.

Statutory sick pay to be made available from day one, rather than day four, of absence from work, although ministers have been criticised for not increasing the level of sick pay above £94.25 a week. Small firms can claim for state refunds on sick pay bills.

Local authorities to get a £500m hardship fund to provide people with council tax payment relief.

Mortgage and rental holidays available for up to three months.

Assembly lines ground to a halt in March as the lockdown across Europe disrupted global supply chains, and analysts predicted large falls in demand in all key markets.

All volume manufacturers from BMW to Toyota and Nissan to Jaguar Land Rover sent their workers home after the worsening outbreak on the continent led companies to examine the health implications for their workers.

The story was repeated across North America as the Detroit carmakers, including General Motors, Ford and Fiat Chrysler, shut down their plants.

Auto firms initially closed their sites for a number of weeks, saying they would keep the situation under review, but the shutdown is anticipated to last longer than first expected.

Henry predicts that each additional week of plant closures in Europe will cost the industry an extra $8bn (£7bn) in lost production value and similarly $7.5bn (£6bn) in North America.

Experts have warned that Britain’s car industry, already struggling before the pandemic because of falling sales, a shift away from diesel vehicles and Brexit uncertainty, may never recover from the coronavirus crisis.

Britain’s new car registrations for March, due to be released by the SMMT later on Monday, are expected to show a drop of more than 40% compared with a year ago, a fall bigger fall than experienced during the financial crisis.

March is traditionally one of the strongest months of the year for new car sales as it is one of two months where new number plates are released.

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