UK car groups seek more energy aid as rising costs hit investment

Almost half of UK carmakers and parts suppliers have cut or delayed investment due to rising energy prices, the industry trade group has warned, as it urged the government to “long-term action” on business costs.

The Society of Motor Manufacturers and Traders said on Thursday that builders had seen a £100million rise in electricity bills and the sector would be at risk without further state support.

The government will freeze business energy prices from October 1 for six months as part of an estimated £150billion package to help households and businesses with gas and electricity bills are high.

More than two-thirds of the 800 UK-based car or parts makers told an SMMT survey they were worried about the viability of their businesses in the spring, as energy prices are set to double after the levies current ceilings.

The survey found that 69% of companies feared “the impact of onerous cost increases on their business operations”.

Four in ten companies said they had delayed or canceled planned future investments due to rising energy costs. Meanwhile, 13 percent had canceled workers’ shifts to save money, and a further 9 percent were making additional savings.

According to SMMT calculations, the sector has faced a £100million rise in energy prices this year, taking its total bill to £300million.

SMMT chief executive Mike Hawes welcomed the government’s decision to cap energy prices, but said “business costs [were] is expected to more than double again next year.

“With some manufacturers anticipating even stronger increases, longer-term solutions must be found to ensure the viability of the sector beyond the end of the cap in six months,” he added.

The cost of energy is just one of the challenges facing automakers and their suppliers, whose logistics costs and raw material prices have soared around 40% in the past 12 months.

Nine out of ten companies told the SMMT that they had been forced to pass on rising costs to customers. This means that automakers will have passed on higher costs from suppliers to consumers, driving up the end price of vehicles.

Warning that companies “need to take drastic measures to protect their businesses in the face of a myriad of challenges,” Hawes called for sweeping changes, including corporate rate reform, increased depreciation to spur investment and more. investment in training.

His comments came as manufacturing figures released by the SMMT on Thursday showed a 34% rise in UK car production in August, compared to what he described as “dismal” 2021 figures.

The 49,901 cars made in August, generally one of the quietest for automakers, is almost half the level produced before the coronavirus pandemic.

The SMMT said August was the fourth consecutive month of increased production from the four months to August 2021. But it added that overall levels remained well below pre-pandemic production.

The Department for Business, Energy and Industrial Strategy said the current protection scheme means the auto industry “will pay wholesale energy costs less than half of projected prices this winter”.

He added: “Last week we also announced new support measures for businesses, including the cancellation of the planned corporate tax hike and the reversal of the 1.25 percentage point hike. national insurance contributions.

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