New figures out this week from the British Chambers of Commerce (BCC) have shed further light on some of the financial pressures currently being faced by the UK car market. Their findings suggest that 33% of companies have found it difficult to access finance over the last three months, despite the Bank of England injecting £200bn in to the wider economy with the intention of re-inflating the credit market on behalf of beleaguered businesses.
According to recent surveys by Baker Tilley and Motor Trader, the overriding cause for the current reduction in sales is falling public demand, but a full third of dealerships cited this lack of access to credit as the main reason. This will be seen as yet another indictment of the Bank’s ongoing quantitative easing scheme as the extra cash continues to be used to store up banking cash reserves rather than trickling down to the small and medium businesses that it was intended for.
There was good news for Jaguar Land Rover however as they announced a £170m finance deal with GE Capital. This new money will be secured against vehicles that have already been built but not yet delivered to new owners, thus allowing Jaguar Land Rover quicker access to the vast amounts of working capital tied up in vehicles currently sat around their showrooms waiting to be sold. On the surface at least this appears to be a clever and innovative way to keep the production lines rolling without having to deal with the strict conditions of the government loans available.
Another sector of the industry that is trotting along happily despite the recession is the second hand 4×4 spare parts market. This is because that although overall spending has reduced, more owners are turning to breakers yards and other used part stockists in an attempt to reduce their own running costs.