Coronavirus: Keeping car showrooms shut costs UK government £61m a day

Jill Petzinger
Jill Petzinger, Germany Correspondent, Yahoo Finance UK
Imported vehicles sit at the docks near Immingham on May 05, 2020 in Grimsby, England. During the coronavirus lockdown new car sales have dropped 97%. Photo: Christopher Furlong/Getty Images

Britain’s automotive industry has called for the country’s car dealerships to be allowed to reopen, after the two-month coronavirus lockdown brought the industry to a standstill and snuffed out sales.

The Society of Motor Manufacturers and Traders (SMMT) calculates that keeping the dealerships shut is costing the treasury £61m ($74m) a day in lost taxes and wage support for furloughed staff.

The industry is now calling for the government to green-light the immediate opening of the country’s 4,900-strong network of new car showrooms.

“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,” said SMMT chief executive Mike Hawes in a statement.

READ MORE: Coronavirus: UK car sales hit lowest level since 1946

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

The coronavirus pandemic devastated new car registrations in the UK in April: just 4,321 new cars were registered in the month. Demand had already dropped in March, before tanking by 97% year-on-year in April. Most of those 4,000 cars went to fleets, and would have been ordered before the lockdown.

Hawes said that car sales in turn stimulate manufacturing and reopening showrooms is a “relatively safe next step” to kick-start the economy and boost the UK’s £82bn automotive manufacturing sector, which has suffered losses of over £8bn due to the crisis.

Hawes notes that about half of the UK’s car and engine manufacturing plants are expected to be back online by the end of May — but weak consumer demand will force an adjustment to production levels.

Nissan (NSANY) and Honda (HMC) have said that they will restart their UK plans next month, while Jaguar Land Rover (TTM ) has slowly started to reboot its UK factories this month.

Just a few weeks after Volkswagen (VOW3.DE) reopened Europe’s largest car factory in Wolfsburg, Germany this month, it was forced to idle some production lines again, as demand was simply not there.