Mandelson industry rescue package 'just not enough'

Jan 28 2009 by William Green, The Journal

Short of credit

THE collapse in demand for new cars coupled with a lack of credit available for motor manufactures and dealers has created “an unprecedented market situation”, industry experts have said.

Even customers who do want to buy a new car are finding it difficult to get finance deals to pay for them.

Cuts in interest rates have failed to make an impact on consumer spending, the Society of Motor Manufacturers and Traders (SMMT) said.

Consumers’ reluctance to spend and inability to get credit is inevitably having a knock-on effect on dealers and suppliers, who are both suffering from immediate cash flow issues, the SMMT has told the Government.

They have demanded fast access to credit for vehicle manufacturers and the supply chain in the UK and help for vehicle finance companies so that they can begin lending again.

There are 27 car and commercial vehicle manufacturers in the UK producing 1.75m vehicles every year and more than 2,000 businesses making car parts.

The industry as a whole has a turnover of £51bn a year and employs around 800,000 people in the UK.

It is also a key customer to the steel, chemical and plastics industries.