Our Automotive Team is led by Sam Talby, an insolvency practitioner and chartered accountant, who has a broad range of experience in this and other sectors.
For those companies in the automotive industry, the future looks challenging. Leaving aside Brexit and its effects, the rush to ban the use of fossil fuels in motoring may have also have a severe impact on the existing supply chain. Already, this very issue has brought into doubt the future of the Vauxhall plant in Ellesmere Port and further disruption is inevitable as the industry moves into the age of the electric car.
The impact of Covid-19 cannot be ignored. It is clear that this has had a direct impact on vehicle sales, however, the government support mechanisms such has furlough, have cushioned the industry thus far, but this could be masking an underlying issue. While furloughing reduces staff costs to adjust to supply and demand, the overheads of businesses continue at the same pace which, in a relatively low margin sector, can tip a business into a loss-making position quite quickly, leaving it reliant upon its reserves for continued operation. Some certainty as to a return to normality would be helpful, and 12th April is a date when we might see showrooms open again, but we know these are not set-in-stone."
The question will be whether the reserves will be sufficient to weather this storm, as well as the other uncertainties on the horizon.
Companies need to be using this time now to identify potential “pinch-points” in cash-flow terms and to identify what needs to be done to keep pace with the changes in the industry.
Some companies, however, might be on borrowed time and the withdrawal of various Covid protection could be a crunch point. In these circumstances, advice should be sought immediately, as there may still be time to preserve the business and jobs.”
Should any of the issues outlined above be affecting you, please contact Sam Talby.