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Calls on Government to open car showrooms and earn taxes

Car showroom closed

The UK Government has been challenged on car showrooms’ continued closure, with claims their lockdown is costing it £61 million per day in lost tax revenue and business support measures.

The Society of Motor Manufacturers and Traders has led demands for the UK’s 4,900 new car showrooms to reopen and is launching a ’10 Reasons To Unlock Auto’ campaign.

It comes just days after the National Franchised Dealers Association wrote to UK prime minister Boris Johnson outlining the measures dealers have already taken to abide by social distancing when their showrooms can open and highlighting that dealers play a huge part in "getting the country moving again".

The Government’s annual tax income take from VAT, VED and other taxes on new car sales to private buyers alone amounts to some £5.4 billion, said the SMMT.

Lockdown restrictions that forced showrooms to shut up shop will, by the end of the month, have cut this figure by 23%, it said, with every additional day of closure costing £20 million.

In addition, furloughing the retail sector’s 590,000 workers under the Job Retention Scheme, which has provided a lifeline to many during the crisis, is costing an estimated £41 million a day.

The SMMT has highlighted that car showrooms are generally large spaces, so social distancing is not a challenge, and manufacturers and retailers have been working hard to implement comprehensive measures to ensure the safety of customers and staff during every interaction.

It hopes dealers and motoring bodies will add their voices to the calls across social media, using the hashtag #unlockukauto.

Mike Hawes, SMMT chief executive (pictured), said: “Government measures to support the critical automotive industry during the crisis have provided an essential lifeline, and the sector is now ready to return to work to help the UK rebuild.

“Car showrooms, just like garden centres, are spacious and can accommodate social distancing easily, making them some of the UK’s safest retail premises.

“Allowing dealers to get back to business will help stimulate consumer confidence and unlock recovery of the wider industry, boosting tax revenue and reducing the burden on government spending. 

SMMT chief executive Mike Hawes“Unlike many other retail sectors, car sales act as the engine for manufacturing and reopening showrooms is an easy and relatively safe next step to help get the economy restarted.

“With every day of closure another day of lost income for the industry and Treasury, we see no reason for delay.”

NFDA has also urged the Government to include automotive retailers in the first wave of non-essential retail opening and ‘get the country moving again’.

Director Sue Robinson said: “The motor industry and retailers have been making enormous strides to creating a greener fleet of vehicles on the nation’s roads. The Government has set us a challenging target for a ban on petrol and diesel cars by 2035. The longer we remain unable to sell new cars, the harder it will be to hit this target.

“The Government has told people they should avoid public transport and return to work on foot, by bicycle or by car and the majority of the UK population will be relying heavily on cars to get to work, and on vans and trucks to move goods around the country.

“Franchised dealerships provide reliable motor vehicles – cars, vans and commercial vehicles – which are essential for many people to get to work and to undertake their work safely and efficiently. Automotive retailers need to be open to serve the workforce and get the country moving again.”

The SMMT's 10 reasons to #unlockukauto

  1. SAFE SPACES Car showrooms are some of the easier retail premises to accommodate social distancing. They are generally spacious with outdoor areas, and can easily allow measures such as one-way walkways, shielding, and contactless transactions.
  2. RETAILERS ARE READY Dealers have been preparing to reopen for weeks, with many already offering ‘click and collect’. New cleaning and test-drive processes, appointment systems and showroom layouts will keep customers and staff safe, helping get Britain back on the move.
  3. SUPPORTING JOBS UK automotive retail employs 590,000, who together work to drive a sector worth £200 billion. Opening dealerships now will accelerate the market’s recovery, help return the sector to profitability more quickly and reduce the risk of redundancies.
  4. BOOSTING THE ECONOMY Automotive retail, including aftersales, contributes an annual £36bn to the public purse, and with new car sales to private buyers alone generating £5.4bn in VAT and VED, getting the market re-started to stimulate consumer confidence will give the economy a vital cash injection at this critical time.
  5. HELPING PEOPLE BACK TO WORK SAFELY Government is encouraging people who cannot do their jobs from home to return to work if they can, and, where possible, to travel by private transport if they cannot walk or cycle, to avoid overcrowding on buses and trains. For many, this makes access to a car more important than ever.
  6. REDUCING THE BURDEN ON GOVERNMENT The Government’s Coronavirus Job Retention Scheme has provided a lifeline to automotive businesses and their employees, safeguarding thousands of livelihoods. However, reopening showrooms will allow many to get back to work, saving the tax payer up to £41m a day.
  7. CUSTOMER DEMAND Many people were unable to take delivery of new vehicles or shop around as their finance and lease deals came to an end before lockdown, and re-opening showrooms will allow this demand to be fulfilled. Further, research suggests that many drivers who don't own a car are now thinking about buying one to help them make essential journeys safely.6
  8. ACCELERATING FLEET RENEWAL Allowing buyers to return to showrooms will speed up the replacement of older, more polluting vehicles with the latest, cleanest technology. With every new model to market emitting on average 8.3% less CO2 than those they replace, boosting fleet renewal will support a greener recovery for the UK.
  9. SUPPORTING UK MANUFACTURING Vehicle sales drive manufacturing and reopening markets – including the UK’s – is essential to boost productivity. British car manufacturing delivers £18.6bn to the economy every year, supports 168,000 highly skilled and well paid jobs across all regions, and, as our biggest exporter of goods, is critical to the UK’s international trade. 
  10. TECHNOLOGY AND CHOICE There are more than 440 car models to choose from in the UK in shapes, sizes and fuel types to suit all driving needs, with almost a quarter (23%) alternatively fuelled. Re-opening showrooms will help people make the switch to these leaner, greener vehicles, while also benefitting from the latest cutting-edge safety and infotainment tech.

Kia's president and chief executive Paul Philpott told AM that his dealers were 'champing at the bit' to reopen, and that "keeping two metres apart in a 300sq m showroom is easy".

Vauxhall managing director Stephen Norman added his voice to the SMMT's campaign, pointing out that vehicle manufacturing will not go back to business as usual unless the retailers can sell the vehicles. Its Ellesmere Port car production plant has not yet restarted manufacturing.

"There is one thing that we're missing, that other markets on the continent benefit from, and that's the ability to open car dealerships," he told Sky News.

"So it really is important now that the UK government allows retail dealerships to open for sales, so we can develop orders to build the vehicles."

Last week, the United Kingdom’s retail motor industry signalled its readiness to get back to work, with the publication of new sector-specific guidance by the NFDA and SMMT to help ensure all showrooms are safe spaces for employees and customers.

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