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UK motor group seeks more energy help as rising costs hurt investment

Nearly half of UK car makers and parts suppliers have held back or postponed investments due to rising energy prices, industry trade groups warn, urging government ‘long-term action’ on corporate costs did.

The Association of Automobile Manufacturers and Traders on Thursday said manufacturers were experiencing a £100m rise in electricity bills and the sector would be at risk without additional government support.

From October 1st, the government will freeze corporate energy prices for six months as part of an estimated £150bn package to help homes and businesses with high gas and electricity bills.

More than two-thirds of the 800 UK-based car or parts makers are worried about their business viability in the spring, when energy prices are expected to double after the lifting of current caps, according to a SMMT survey. said there is.

The survey found that 69% of businesses fear “the impact of cumbersome cost increases on business operations.”

Four in 10 companies have postponed or canceled future investment plans due to rising energy costs. Meanwhile, 13% canceled worker shifts to save costs, and an additional 9% cut costs further.

SMMT has calculated that the sector will face a £100m increase in energy prices this year, bringing total bills to £300m.

SMMT CEO Mike Hawes welcomed the government’s decision to cap energy prices, but [were] It is expected to more than double next year. ”

“Some manufacturers anticipate even steeper increases, so we need to find long-term solutions to ensure the sector’s survival after the end of the cap in six months,” he added. I was.

The cost of energy is just one of the challenges facing automakers and their suppliers, with logistics costs and raw material prices rising nearly 40% in the last 12 months.

Nine out of 10 companies tell SMMT that they have been forced to pass on higher costs to their customers. This means that automakers pass on higher costs from suppliers to consumers, driving up the final price of the car.

Hawes warned that businesses “need to take drastic steps to protect their businesses in the face of myriad challenges,” including reforms to business fees, increased capital deductions to encourage investment, He called for radical changes, including increased investment in training.

His comments show that UK car production rose 34% in August compared to “dismal” figures for 2021, according to manufacturing figures released by SMMT on Thursday.

The 49,901 cars built in August are typically among the quietest cars for automakers, and represent nearly half the levels produced before the coronavirus pandemic.

SMMT said August saw a fourth consecutive month of growth in production compared to the four months through August 2021, but overall levels were well below pre-pandemic production. I added that there are.

The Office for Business, Energy and Industrial Strategy said the current protection scheme means the auto industry “will pay wholesale energy costs less than half the prices expected this winter”.

“Last week, we also announced new measures to help businesses, such as canceling plans to raise corporate taxes and rescinding a 1.25% increase in national insurance premiums,” it added.

https://www.ft.com/content/1f364365-2136-44d4-adbc-70f1ca9f946b UK motor group seeks more energy help as rising costs hurt investment

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