The automotive industry might not be
in meltdown – yet – but that is no thanks to the government. How
many insiders felt any help offered to the motor trade would be
just a matter of ticking the box and, when it fails, the motor
trade can be blamed?
The Chancellor has, amid much trumpeting, announced
£1,000 of help with scrappage – well, provided that manufacturers
offer the same. Manufacturers are already doing that in a lot of
cases – if not much more. Oh yes, and the vehicle manufacturers
have to handle the administration, too.
Look at what has happened in Europe. Germany has
offered a stonking €2,500 (£2,200) for nine year-old units scrapped
against a new car, or used car up to a year old. It planned for
600,000 scrappings, but the scheme is so successful the time period
has been extended and the scrappage count has been lifted to
900,000 units. That is commitment: it will cost a lot, but it shows
positive thinking – even if it does suck in a lot of imports.
France, on the other hand, has offered a much
smaller incentive of €1,000 with CO2 strings attached – and the
scheme is bumbling along gently without huge interest or
Britain has offered something close to the French
amount, the cynic would say, because that way it is highly unlikely
to utilise the full £300 million or so allocated to it.
Given that the thankful recipients of this largesse
will have to find the balance of the bucks themselves, who is
likely to benefit? My years in the sector would suggest those who
will find a £1,000 bonus attractive will be pensioners who have
kept a reliable runabout for years and to whom an update of a
small, relatively inexpensive car would be attractive. Fine.
Equally, I think the other group will be the
youngsters – students, those with their first or second car who
might just be able to persuade fond parents to make a contribution
to get them into something cool for university… we'll
So who has missed out? Without making a
generalisation, a lot of 10 year-old car and light van buyers would
today be classified as sub-prime borrowers – and would often be
imprudent if they wanted to swap their banger for a new car. Surely
that’s the group we should be looking to help?
A lot of old car buyers work in service industries,
and agriculture. Those are Bernard Shaw’s ‘undeserving poor’ – the
Alfred Doolittles of the 21st century.
Surely a little imagination might have been used to
let that group update – maybe a five year-old car instead of the 10
year-old? Dealers would get the business – and the administration –
and cash flows would roll again.
Two problems with that. Firstly, the box to be
ticked is for new car sales, not used cars, even if the greater
good might be served up shifting nearly-new. Secondly, do Treasury
officials know what a new car is? Do they understand in the UK we
sell three times as many used cars as new?
Of course, on the other side of the fence one could
argue that such financial largesse could be seen as a bargain
basement for the middle classes – the core of New Labour’s
support… and aren’t they the voters most likely to defect?
Am I a realist or a cynic?
A Grumpy Old Man