Automotive sector

6 min read

Automotive

This is the latest weekly update from Santander’s automotive team on how the coronavirus pandemic is affecting our clients and the sector as a whole.

Automotive

UK plants coming back on line

Santander continues to work closely with partners and customers from across the automotive sector as they deal with the impacts of the coronavirus pandemic. This week, we’ve been particularly pleased to see news that some of the UK’s most important manufacturers are planning to get back to work:

  • Bentley, which employs 4,000 people in Crewe, is extending its plant shutdown by three weeks but will start gradually reopening from 11 May in the hope of reaching full output from 18 May.  
  • Nissan has reopened parts of its Sunderland site this week to test safety measures for workers: once these are approved, the main car plant – and its 6,000-strong workforce – will be able to restart production. However, no fixed date has been given yet.
  • Aston Martin plans to reopen its Wales manufacturing facility in May, after consulting with Public Health Wales and England on safety policies for workers in common areas.

In Europe, meanwhile, the likes of Toyota, Renault, Hyundai, Volkswagen and Volvo are preparing to reopen some plants. But the biggest challenges for the sector are likely to come from a lack of demand – with car sales having ground to a near-halt in recent weeks – and, in particular, supply chain issues. Many parts of the automotive industry’s long supply chains are struggling with a lack of liquidity, despite the more robust procurement plans introduced in the wake of the financial crisis. As such, a return to normal production levels is expected to take some time.

VW Group has urged the European Union to take more concerted action to protect and revive the continent’s car industry, by using stimulus measures to boost demand. These could include a return to the generous scrappage schemes last seen following the financial crisis more than a decade ago.

There are signs that original equipment manufacturers (OEMs) are looking to the post-coronavirus future. Daimler and Volvo have unveiled plans to create a €1.2bn fuel-cell company with the aim of bringing hydrogen-powered trucks to the market in the latter half of this decade.

The Society of Motor Manufacturers and Traders (SMMT) hosted its fifth coronavirus webinar last week, covering topics such as the government’s furlough scheme and the potential for restarting production. To listen again or to sign up for upcoming sessions, click here.

 

Manufacturing sector news

Industry body MakeUK has been working with colleagues in Europe, sharing intelligence on how lockdown policies around the continent have affected the manufacturing sector. The organisation will monitor closely the progress in countries such as Denmark and Austria which have started to lift restrictions.

Also last week, MakeUK’s CEO Stephen Phipson joined Santander’s Head of Manufacturing Paul Brooks on a podcast to share his thoughts on the current challenges facing the sector. Click here to listen again. He welcomed the government’s confirmation that the manufacturing sector should remain open during the lockdown period, but stressed that further state support was likely to be necessary over the weeks and months ahead.

The first hospital ventilator designed specifically for coronavirus patients has gone into production at the Advanced Manufacturing Research Centre in north Wales. Created by the VentilatorChallenge UK consortium, initially 5,000 ventilators – based on a model made by the Oxfordshire company Penlon – will be made. Staff from Airbus and Siemens have built assembly lines at the centre, while design skills have been supplied by firms from across the country.

The Chairman of one of India’s largest conglomerates has said that global manufacturers may need to reassess their supply chains in the wake of the coronavirus crisis. Anand Mahindra of the Mahindra Group said: ‘What people thought was a global supply chain was a Chinese supply chain,’ with the disruption caused by the pandemic only serving to highlight the importance of Chinese firms as a provider of inputs to factories across Asia and around the world. As a result, businesses are likely to move away from single-sourcing and build out their choice of suppliers, even if this results in higher costs and some loss of efficiency.

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