Could car retail bounce back make retailers ineligible for Job Support Scheme?

The strength of the car retail sector’s bounce back recovery from the UK’s full COVID-19 lockdown period could make businesses ineligible for Government's new Job Support Scheme (JSS), it is feared.

While many car dealer groups start to consider to what extent they could make use of the new salary support for part-time workers – outlined in Chancellor Rishi Sunak’s speech yesterday – concerns have been raised about the new Job Support Scheme’s scope and the qualification criteria.

Finer detail of Government’s ‘Winter Economy Plan’ have yet to be published but MHA MacIntyre Hudson’s initial response picked up on assertions that the JSS has been designed to support only viable jobs and cases where turnover has fallen among larger businesses.

“In the (automotive retail) sector this scheme does not necessarily protect jobs, as we have seen a number of dealers report a ‘bounce back’ albeit who may now find that the next six months could well be very different,” MHA said.

“A measure based on how well they have weathered the storm so far may leave many dealers not qualifying and having to make staff cuts where they project the next six months will not be as good as the last.”

ASE chairman, Mike Jones, recently reported in his monthly profitability report that the average UK car retailer had recovered more than half of the losses suffered during a Q2 trading period devastated by the COVID-19 coronavirus lockdown.

In a statement issued after yesretday's announcedment by the Chancellor, Jones reasserted that "at the moment UK automotive is having a very strong time", adding: "I'm still looking for UK automotive to end 2020 in profit."

As yet there are no published details on Government’s required measure of how much a business’ turnover needs to have fallen as a result of the COVID-19 crisis in order to qualify for the JSS, MHA said.

Government’s new JSS offering is designed to support staff which businesses are keen to retain for the future.

Although an ongoing 77% (minimum) salary for furloughed staff on an ongoing basis seems generous, a business’ obligation to return a member of staff for a third of their contracted hours and yet contribute 55% of their wage may not be viable in many cases.

Access to the Jobs Retention Bonus, which will pay car retailers retaining staff on a wage of over £520-month-until January £1,000-per-employee, could soften the financial impact in some cases.

ASE Global’s Chris Cummings said: “The changes are welcome because there was sense that the economy and jobs in particular would fall of a very steep cliff on November 1, when existing (CJRS) measures end.

“Whether they are enough to solve all of the issues is unlikely – indeed reference to supporting viable jobs probably sets the tone for what might be achieved – but the economy and individuals in particular needs support.

“The devil is in the unpublished detail of which we will hear more soon.”

National Franchised Dealers Association (NFDA) chief executive, Sue Robinson, welcomed the Government’s JSS and its extended VAT and loan repayment measures. She said: “Franchised dealerships have had to implement new working patterns to reduce costs, as a result, the Job Support Scheme could help dealers retain employees whose job is at risk.”