Credit help for the car industry, which manufacturers consider vital to revive the dire market and to save jobs, may be about to run into a fresh storm of controversy.
The Society of Motor Manufacturers and Traders believes that the Government’s credit package may be far too complicated to have an impact.
The industry had hoped that credit could be made available directly to carmakers’ finance operations from the Bank of England or via one bank, allowing them to offer customer loans. It is believed, however, that the plan is to ask the carmakers’ finance operations to offer their existing loans and mortgages to banks, which then will package them in a securitised structure. These portfolios will be valued independently by ratings agencies and the Bank of England will buy them as part of its remit to buy good-quality assets. When this is done, money would then be pumped back into the car finance divisions.
Car chiefs fear this will be a very lengthy and complicated process that may fail. One said: “We are being asked to forge links with the banks who don’t want to know us anyway and in particular with their securitisation specialists, which is not our speciality. Then we must win the approval of the credit ratings agencies, who think that anything automotive is junk.”
They had been hoping for a boost to the market in time for next month – one of the two critical months for British sales because of the change in registration plate numbers. Last month British sales fell by 31 per cent.
Opel said that it was adding extra shifts to a factory that makes the Corsa because of a surge in orders from customers using a €2,500 (£2,239) scrappage bonus introduced by the German Government last month. Opel’s rise in production at its Eisenach factory in eastern Germany is unprecedented in a climate in which carmakers are imposing lengthy shutdowns. Opel said that orders for the Corsa had trebled since the bonus was introduced. Opel, the German division of General Motors, is adding extra shifts.