Industrials sector feels impact of COVID-19
15 Mar 2021Between automotive and aerospace, the industrials sector was one of the most impacted by the COVID-19 situation. Richard Lewis looks at how our team can support you through 2021.
As the events of 2020 saw all of us on lockdown, buying new cars and booking international travel became inadvisable. The industrials and automotive sector felt the impact and there's still concern that previous consumer behaviour won't return any time soon.
It's been vital for you to effectively manage cash, take the government backed support available and optimise the structure of your organisation. Here's how we've been helping our clients do just that.
Our highlights in industrials and automotive
Discover our key credentials in the sector
The state of the industrials sector
No business has been completely unaffected by the COVID-19 situation. Some have prospered, while others have suffered, and one of the sectors facing the greatest challenges is automotive.
This is particularly unfortunate, given the sector was already facing a range of issues:
- uncertainty over whether a Brexit deal would be reached and the potential for tariffs
- the move to electric vehicles presenting opportunities and challenges
- manufacturers seeking to rationalise dealer numbers.
Despite pent-up demand being released over the summer months, new vehicle sales finished 29.4% lower compared to 2019, with automotive production down a similar level.
While the industrials sector breathed a huge sigh of relief when the Brexit deal was agreed at the end of the year, and although initial difficulties with paperwork at the border are expected to be resolved over time, compliance with increasing Rules of Origin requirements are expected to be more challenging.
Additionally, there are concerns over existing overseas manufacturers' appetite for remaining in the UK, despite many currently showing continued commitment.
We're now also starting to see the impact on the aerospace sector. With limited aircraft usage over the last 12 months and concerns that normal activity levels won’t resume for years to come, the industry is seeing investment delayed and projects move to the right.
We've already seen some failures of precision engineers and other suppliers to the sector.
Case study
Roanza Limited
We were appointed administrators of Roanza Limited and its subsidiary Premier Vehicle Rental Limited on 8 September, and successfully delivered a pre-pack sale following an accelerated disposal process.
The sale proceeded our undertaking short-term cash flow and options reviews and included five of Roanza’s eight dealership sites, saving over 340 jobs across Trafford Park, Liverpool, Warrington, Deeside and Stoke-on-Trent locations, with the secured lender being settled in full.
Our core team overcame significant challenges in balancing support for the management team and co-ordinating multiple stakeholders interests whilst working remotely during lockdown.
How we help our clients
Our team has worked on a number of engagements supporting management teams, lenders and other stakeholders in navigating through this difficult period with business reviews, refinancing projects and other advisory engagements. We have also been appointed on a range of insolvencies in the sector.
We're fortunate to be supported by the firm’s automotive advisory consulting team, comprising individuals who've worked within franchised dealers, used car supermarkets, parts manufacturers and distributors.
