Pandemic puts 93,000 automotive SME jobs at risk

T

he Covid-19 pandemic has placed 93,000 jobs under threat in the automotive SME sector, according to data from RealBusinessRescue. The research found 21,000 SMEs in “significant financial distress” – representing a 38% increase in the first quarter of 2021.

In addition, the number of start-up automotive firms in significant financial distress has increased 31% due to Covid. There are now 5,047 businesses in distress, up 123% from 2,259 at the start of the lockdown.

Shaun Barton, national online business operations director at RealBusinessRescue, said: “For many SME and start-up businesses, the financial challenge of the pandemic will continue throughout 2021.

“With a 15% increase in the number of smaller companies reported to be in significant financial distress during the first quarter of 2021 compared to the end of 2020, this continues the trend we have seen since the health and economic crisis first struck more than a year ago.

“The sector needs to stand firm in the hope that the unlocking roadmap begins to have a positive impact.”

Begbies Traynor set up the RealBusinessRescue site to advise businesses in financial distress. The data is analysed from Red Flag Alert.

Barton continued: “Considering restructuring action now so that when the creditors come calling, they are in a good space can help. Many options don’t mean extinction, such as CVAs, administration or fast-track CVAs for companies that were in a profitable position before the pandemic.

“Alternatively, there is a good market for investors and buyouts. We are advising these businesses daily and would recommend that they find out all their options before making rash decisions. The UK is filled with talented entrepreneurs; the challenge now is to help them take the next step.”