Another week, another set of grim statistics from the SMMT, which on Monday revealed a 30.5 per cent fall in sales from this time last year. This is particularly worrying, as March, which sees the arrival of new number plates, is usually the busiest month in the auto industry.
All immediate hopes are now pinned on this month’s budget, and the calls are growing louder for a European-style scrappage scheme that would offer car owners incentives to replace older vehicles.
Similar schemes have already worked in Germany, where car sales are reported to have soared by 40 per cent in March, but it hardly seems like a recipe for sustainable recovery. Indeed, opponents to such schemes believe that any government rescue packages should, instead, be geared around the development of low-carbon high-efficiency technologies.
Others believe that an industry facing one of the biggest crises in its history requires even more fundamental change to ensure its survival.
Last week The Engineer went to visit Dr Clive Hickman, a veteran of the UK auto industry and now head of engineering at Indian car giant Tata Motors.
Though Tata is far from immune to the economic downturn, it’s probably fair to say that it’s struggling less than others and Hickman lays this relative success at the feet of engineers, who he believes are more motivated than their rivals.
It’s a controversial view, and one that won’t win him any popularity contests, but Tata’s engineering chief does have a unique vantage point, and claims that the passion and drive shown by his Indian engineers has been lacking in the UK auto industry for many years.
It will be no consolation to the thousands of people currently out of work, but if Hickman is right, perhaps in the long term something positive may rise from the ashes of the current economic crisis. After all, there’s nothing like a fight for survival to instil a bit of passion.
A full interview with Tata’s Clive Hickman will appear in the next issue of The Engineer – out on 20 April.
Jon Excell, Deputy Editor
Scrapping cars prematurely to increase sales of new cars is environmental madness. The car is the one possession we own that does the most damage to the environment, not only in terms of fuel consumed and pollution produced, but in its production and disposal.
This is the worst idea for kick starting the economy that I have heard so far.
Typical scrap values are approximately £2000.
My car is worth less than this. A new version of the same car is £25000. Exactly where do you think I am going to find £23000 for a new car, only to watch it depreciate over the next seven years?
My car will never, in the next ten or so years, consume as much energy in terms of fuel, oil, and consumables, or do as much harm to the environment as the making of a new car.
Then what becomes of my perfectly serviceable and relatively clean (emissions are on a par with a new car) transport? More energy is thrown at it, allegedly breaking it for recycling (I’ve seen my local EOL breaker burning tyres) and more energy goes into making a new car.
The unpalatable truth is that governments the world over don’t want to see auto workers lose their jobs (and neither do I) and see this as a means to make people buy new cars. It is disguised as a green issue but isn’t. The Big Three car makers have sufficient clout to drive governments into these hare-brained schemes under cover of green issues. The truth is that there isn’t much of a market for new cars. Few people are prepared to take on high levels of debt to purchase a rapidly depreciating asset.
Driving an efficient older car is the greener solution. There are too many cars on the planet as it is.
Although I recognise the problems of the car industry, how does the encouragement of scrapping old cars and buying new ones sit with the stated intent of creating a “greener” Britain? I have yet to see the oft made claim that “it takes more out of the environment to produce a new car than it does to continue running an old one” refuted. I also have a worry that, rather than purely encouraging the buying of new cars, the government will try to make it even harder to keep older cars on the road. Mooted draconian definitions of “classic cars” and limitations on their use are already pointing in this direction.
Is it just me, or does it seem strange to make new cars when perfectly good older cars can be maintained and made to last for a long time? Yes, new cars will have lower fuel emissions, but a reduction in emissions could be achieved by modifying the cars we already have. Has no one considered the large energy, emissions and materials used to make a new car from scratch? Or is this just about propping up a car industry that has already saturated the market?
I do not think that forcibly scrapping cars is the answer. Solutions to economic problems from now on in really do have to be greener than that.
A lot of engineers and experienced oilmen think that global oil production capacity is about to peak so we should be looking more at alternative fuels. The problem, of course, is that money from car sales is needed to finance research.
I heard on the news this morning that Gordon Brown is looking at more support for manufacturers of electric cars in the forthcoming budget. Although this does not in itself solve the problem of our overconsumption of the planet’s resources, it could be a more efficient solution than hydrogen fuel cell technology, which in any case is not likely to be safe enough or cheap enough for mass car production in the foreseeable future.
It seems crazy to me that companies are complaining that people in this country are not spending money, when these same companies moved production to other countries and made British workers redundant.
They sowed the seeds of their own destruction in my mind.
Surely the higher level of new car sales of the last few years reflect the easier credit which has been available, an availability which has been one of the main authors of the present crisis.
Are we now looking at a level of new car sales which can be sustained by more responsible spending, and should we not just accept that this is the true level we should get used to? I realise that jobs and personal income depend on these inflated car production figures, but throughout history nothing has lasted for ever.
Regarding the scrappage schemes, why is there not more prominence given to the very large amount of energy used and pollution emitted in manufacturing a new car from raw materials, and which can therefore be saved if a car is kept operational for longer, offsetting this against the extra fuel used and pollution emitted by an older vehicle.
I view a scrappage scheme as simply an attempt to stimulate demand back to unsustainable levels for the benefit of the auto industry, and cringe when it is wrapped up as a worthy ‘save-the-planet’ scheme. I drive a 14 year old diesel Volvo estate which returns 40 miles per gallon, and it is showing every sign of lasting at least 20 years reliably. Also, I can largely maintain it myself. What is being proposed is that I crush this very capable vehicle long before it is worn out, and accept a “gift” of £2,000 towards a new replacement which, if it is any kind of equivalent, will cost in the region of £20,000 plus, and can only be maintained at great expense by the main dealer.
Is anyone really surprised when I am not tempted?
Is scrappage really the answer? For years this has been put forward as the solution to old polluting cars, old unsafe cars and now the solution to a struggling industry. I can’t help feeling that the industry is trying to find any way to bring this kind of scheme in. Is it really environmentally sound to propose the scrapping of vehicles which are still perfectly serviceable – no doubt there are cars that should be taken out of circulation, but for £2000 there are perfectly serviceable (and reasonably recent) cars that really should continue to be used.
You have to ask fundamental questions like do we need an auto industry in UK?
Certainly, there is a lot of talent and jobs tied up in the industry, both directly and indirectly.
However, as I say, we should not assume we have a right to a slice of the industry. We need to prove that we have something to offer – and we do have expertise at the high tech and specialised end.
We need to explore new innovations, this is the way forward. Whether it is cars that run on 100mpg or car technology which the UK can develop and which is world leading in terms of “green”; these must be the new hot topics.
The idea is utterly facile. New cars, mostly built abroad, depreciate by more than the proposed government hand-out in the first year!
Far better to keep perfectly good cars longer by eliminating road tax for all cars over 10 years old. This will create local car orientated service jobs and benefit the car parts industry. Safety is ensured by the existing MOT system.
“Scrappage” is absurd, an unsustainable bribe. Make cars last longer.
Perhaps many people are thinking just how little use they get out of the lump of metal sat outside the house. The silliest is a new one depreciating, unless it is used for many thousands of miles per year.
Cars were already in surfeit before this lot, new cars parked all over the fields, all built speculatively: all with old technology to burn carbon for many years ahead.
Find some other/better way to use a lot of this skilled labour. E.g. earthquake proof all vulnerable buildings (new as well as old & priceless) in Italy – over to Impregilo, the mother of Fiat.
And at the other end of the scale, pick our own fruit and veg.
Re: An unpalatable truth?
The reason the hand out for scrapping older cars in Germany is working is because they make the cars. Most of our cars are made by foreign companies and so the profits will go abroad giving the long-term effect of draining money from the UK.
How is scrapping low mileage cars green? The idea is environmental madness.
If the scheme is introduced, insurance will have to go up for all. Why? Because if my car is written off, it becomes the property of the insurer and so I don’t have one to scrap to get the grant. I therefore lose the grant. To compensate, I therefore need to insure for a higher value and so the premium increases. Our taxes will go up as well to cover the grant. I suggest somebody takes the blinkers off – you don’t get something for nothing.
I totally agree with Steve Higginson comments, today’s problems arrived from yesterday’s short-sighted decisions.
The main market for new cars is amongst those that bought a new car in the previous 3-5 years. The number that go from a £500 car to a showroom-new one must be very small. The only effect the introduction of such a scheme would have is to make the £500 car appear to be worth four times as much. The other point is that when you drive a brand new car away from the showroom, the initial depreciation is greater than £2000 on most cars anyway.