The UK motor industry has called for a dedicated “restart package” to drive consumer demand and ease cashflow problems as the sector gears up again, warning that the coronavirus crisis has put one in six jobs at risk. VAT cuts and a possible car scrappage scheme were suggested by industry bosses to help the sector recover. A third of automotive workers remain furloughed as production slowly restarts, with some plants still closed. With the government’s job retention scheme due to end in November, there is a critical need to safeguard jobs, according to the Society of Motor Manufacturers and Traders (SMMT). The SMMT said a possible hard Brexit on top of the pandemic was “still the biggest threat to the long-term future of the industry” in the UK and called on the government to “turbo-charge” talks towards a free trade deal with the EU. A survey of SMMT members found that one in six jobs in their businesses – or around 24,000 jobs - were at risk of redundancy. More than 6,000 UK automotive job cuts have already been announced in June. The knock-on effects could imperil thousands more jobs in the wider industry, which employs around 800,000 people in the UK. Showrooms in England and Wales are reopening and production lines restarting, but reduced demand and physical distancing measures are slowing productivity. The trade group urged the government to come up with a support package for the sector, with measures including unfettered access to emergency funding, permanent short-time working, business rate holidays, VAT cuts and “policies to boost consumer confidence” and drive demand. The latter could include a scrappage scheme, which the SMMT has privately urged, although it is anxious not to dampen current sales should consumers anticipate discounts ahead. Mike Hawes, the SMMT chief executive, said: “UK automotive is fundamentally strong. However, the prolonged shutdown has squeezed liquidity and the pressures are becoming more acute as expenditure resumes before invoices are paid. “The government’s intervention has been unprecedented. But the job isn’t done yet. “Just as we have seen in other countries, we need a package of support to restart; to build demand, volumes and growth, and keep the UK at the forefront of the global automotive industry to drive long-term investment, innovation and economic growth.” Graham Hoare, chairman of Ford of Britain, said a scrappage scheme would give a more targeted boost to demand: “A VAT change would be helpful but we’re looking to get people with older vehicles into the showroom.” Adrian Hallmark, the chief executive of Bentley, said: “I think both scrappage and VAT adjustment have a role to play.” He added that replacing 100,000 cars with old Euro 4 engines with models at the newest Euro 6 standard would make a significant difference to pollution: “We want old cars off the road – a scrappage scheme can make the fleet cleaner faster.” The SMMT has privately lobbied for a scheme that would include all petrol and diesel models, but more than half of British adults believe taxpayers’ money should only be used for low-polluting or electric vehicles, according to YouGov polling from environmental law charity ClientEarth. It found 71% of respondents did back grants and VAT exemption to make greener vehicles more affordable. Simon Alcock, the head of public affairs at ClientEarth, said: “Using public money to keep petrol and diesel vehicles flowing onto our roads is directly against the public interest as it ignores the urgent need to tackle air pollution and the climate crisis.” Manufacturers also gave stark warnings about the effects of a hard Brexit. Hawes said the pandemic had “consumed every inch of capability and capacity”. He added: “The industry has not the resource, the time nor the clarity to prepare for a further shock of a hard Brexit. That’s why we do need to ‘turbo-charge’ the negotiations to secure a comprehensive free trade agreement with the EU that maintains tariff and quota-free trade. Hoare added: “Fundamentally, a free trade agreement is essential for the survival of the auto industry.” The impact of the coronavirus crisis on manufacturing is expected to cut annual car and light commercial vehicle production volumes by one-third, to 920,000 units this year. The SMMT said a tariff-free trade agreement could allow full recovery in five years, with output reaching pre-crisis levels of 1.35m units by 2025. But a no-deal Brexit would severely damage prospects and could lead to volumes falling below 850,000 by 2025 – the lowest level since 1953. This would mean a £40bn cut in revenues, on top of the £33.5bn cost of Covid-19 production losses over the period, the SMMT said.