The Society of Motor Manufacturers and Traders has backed the findings of a Business and Enterprise Select Committee inquiry that expresses ‘serious concern’ about the effectiveness of the Automotive Assistance Programme (AAP).

The programme announced in January 2009 set out £2.3 billion in loans and loan guarantees for the motor industry, yet to date no companies have benefited from the scheme.

The inquiry also highlighted the importance of the UK’s dealers and the part they play as the face of the industry.

• To view and download the full Business and Enterprise Select Committee report as a PDF click here.

Paul Williams, chairman of the Retail Motor Industry Federation (RMIF), said: “It was refreshing to see that the House of Commons Business and Enterprise Committee’s Report recognised the significance of the motor retail sector and the part it plays in providing the conduit through which vehicles are sold, and the servicing back-up it provides to millions of UK motorists.”

Williams gave evidence before the committee in May.
He said: “It is important to remember that there is no point in making cars if there is no way to sell them. It is the retail motor sector that sells cars, and is the public face of the motor industry for consumers, with outlets in every town and city in the UK.

"It must be remembered that the annual turnover of the UK retail motor industry is £14 billion, and it employs 570,000 people in 70,000 businesses.”

Williams said the report recognised the help the scrappage scheme had provided but also warned that a long-term view was required and the RMIF would lobby for measures to enable further growth in the motor retail sector.

The SMMT called for greater flexibility in AAP eligibility to ensure quicker delivery of credit to companies throughout the automotive sector.

Paul Everitt, SMMT chief executive, said: “There is an urgent need for the Automotive Assistance Programme to start delivering the support the UK motor industry needs.

“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