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Positive July figures mask long-term uncertainty

3rd Sep 2020 5 min read

New figures from the Society of Motor Manufacturers and Traders (SMMT) show that the number of new cars registered in the UK in July rose by more than 11%.


With dealerships open for the whole of July and benefiting from pent-up demand, this was the first month of growth in 2020.

The long-term outlook remains very uncertain, however, with the SMMT forecasting a market decline of almost a third this year, equivalent to around £20bn of lost sales.

The fourth quarter should offer a clearer picture of where the sector is headed, but further uncertainty is on the horizon in the shape of Brexit. Manufacturers still don’t know what the terms of trade between Britain and Europe will be from 2021 onwards – and most importantly whether tariffs will be imposed on goods and components. Free-trade agreements with both the European Union and other key markets are crucial to the sector’s long-term health.

More information from the SMMT’s Covid-19 hub here

On 5 August, we joined a Department for International Trade (DIT) Midlands event looking at the automotive supply chain in Mexico and specifically the Nuevo Leon automotive cluster, and the technology opportunities for UK businesses. More information from the event can be found here

On 29 September, we’ll be running a webinar with the DIT, the SMMT and the Basque automotive organisation Acicae, looking at the excellent trading opportunities in Northern Spain. Details of this event will be available in the next update.


Manufacturing sector news

At the start of the month, the CIPS/IHS Markit UK Manufacturing Purchasing Manager’s Index for July was confirmed at 53.3 – an improvement on June’s 50.1, and a sign that the sector had returned to growth. At the same time, businesses positivity has now reached its highest level in more than two years.

Manufacturing businesses should be aware that, according to new government guidance, furloughed employees who are subsequently dismissed are entitled to statutory redundancy and notice pay based on their normal wages rather than the reduced rate via the Coronavirus Job Retention Scheme (JRS).

Details of HM Revenue & Customs’ ability to penalise businesses that make excessive JRS claims have also been published, while the CBI has issued a very useful JRS factsheet for employers.

Manufacturers are pushing for more information from the Government on the new UK Conformity Assessed (UKCA) standards regime, which is set to replace the European Union’s CE label following Brexit. It’s unclear whether the CE mark will continue to be recognised for a period in 2021 in the event of a no-deal departure – and businesses urgently need to know exactly how stringent the UKCA scheme will be.

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