SMMT calls for motor industry support as Budget 2010 announced

The UK motor industry has delivered a stark message to the Chancellor as the 2010 Budget was declared for Wednesday 24 March. Measures to encourage industry and boost consumer confidence will be required if the recovery is to be sustained and strengthened, the Society of Motor Manufacturers and Traders (SMMT) says.

In its annual pre-Budget submission the SMMT urged the Chancellor to implement measures to support long-term investment, employment and technological development in the UK motor industry as the industry recovers from a difficult couple of years.  Recommended measures for businesses include increasing the annual investment allowance for businesses, retaining and further enhancing the first-year writing-down allowance to 60 per cent to incentivise business and fleet investment in the van and truck markets.

Meanwhile the society-seeking to stabilise consumer demand for new cars- has also recommended removing or delaying the planned introduction of a first year rate of tax (VED) from April 2010. It has also suggested that the Government reconsider the removal of the 20 pence per litre incentive for biofuels due to end in April 2010. The planned removal of the incentive has lead to the decision by supermarket chain, Morrisions to withdraw the sale of B30 fuel. The largest retailer of B30-a fuel made from 70 per cent diesel and 30 per cent biofuel- Morrisons took the decision to stop selling the fuel as without the incentive it would be ‘far more expensive for our customers to buy, compared to other fuels’ it said in a company statement.

The car industry is bracing itself for a suppressed market for new cars as the scrappage scheme closes at the end of the month. Just as the scheme closes, the new showroom taxes are planned for implementation. The 2010 Budget may also bring news of further fuel duty increases, adding to the burden plied onto motorists and suppressing demand for new cars.

“Government has recognised the importance of manufacturing and has signalled its commitment to working collaboratively with industry. This has been vital in minimising the impact of the recession on the motor industry. The scrappage scheme has been a lifeline for the new car market, but further measures are now necessary to build confidence and encourage new investment,” said SMMT chief executive, Paul Everitt.

“The level of collaboration between government and industry is set to increase significantly as the Automotive, Supply Chain and Technology Councils work to realise the new opportunities from the transition to a low carbon economy,” continued Everitt.  “Budgetary measures that support the Councils’ plans will help to signal a long-term commitment to manufacturing that will in turn boost business confidence and the attractiveness of the UK to inward investors.”

This month sees the end of the successful Scrappage Incentive Scheme. Combined with a lack of consumer and business confidence and continued market challenges 2010 is expected to see fewer registrations (1.8m) than in 2009 (1.99m).

Author: Faye Sunderland, March 10th, 2010
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