Motor retail shows tentative signs of recovery

Analysis of new ONS data  by Institute of the Motor Industry reveals early signs of recovery as car showrooms re-open, but a long road ahead for confident forward planning as the UK inexorably heads towards a zero emission future

The Institute of the Motor Industry (IMI) which is the professional body for individuals working in the motor retail sector - a sector which in 2019 comprised 620,000 jobs in 95,000 establishments covering 167 occupations - has analysed the latest ONS data on UK business performance.  

Key Data

• 88% of automotive businesses are now trading, this has increased each reporting period for the past 8 weeks as the sector attempts to reopen.
• 5.9% of businesses have reopened in the past 2 weeks, equating to approximately 5,500 businesses.
• A further 6.2% (5,900) businesses are planning to reopen in the next 2 weeks.
• 31% of automotive business said that their cash reserves would last more than 6 months; this has increased by 2% since last reporting.
• However, 6.3% of automotive business said that they either had no cash reserves or less than a month, potentially putting 5,300 businesses at risk.
• 28% of automotive businesses who are continuing to trade are reporting turnover has decreased by more than 50%.
• Approximately 8,500 businesses have received financial assistance from banks or building societies, 80% of which stated that this assistance helped them continue to trade.
• Approximately 44,000 jobs have returned to work from furlough in the past 2 weeks, with an additional 13,000 planned in the next 2 weeks, however approximately 240,000 jobs remain on furlough with 81% of automotive businesses having accessed the coronavirus job retention scheme.

Steve Nash, CEO of the IMI said:  “There are definite signs of green shoots of recovery – but it’s clear the marketplace is still pretty fragile. The ONS data reflects the first 2 weeks when car showrooms re-opened so it’s not surprising that many businesses have only taken tentative steps with more than a quarter still reporting significant decreases in turnover. However, continued government advice to avoid public transport could be a boost for new and used car sellers alike – and their associated aftermarket services.

“But what really concerns us is the long-term impact on the skill-set of the sector. We know that many employers, large and small, are pausing or even cancelling apprentice recruitment. It is also too early to tell how the end of the furlough scheme will work and what further impact that could have on the range of skills in any one business. It’s a bit like picking a football team, with those who don't get selected inevitably wondering what it means for their future. A difficult time for employers and employees alike.”

“The IMI will therefore continue to lobby government to do what it cans to underpin the apprentice cohort; we will also continue to encourage a review of the 6 month MOT extension.  It really isn’t needed any more – the garages are open and observing all the right safety measures and the longer it continues the greater the risk of unsafe cars on the roads.”