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Fri
Sep 05 2008

Down another day

Julian Rendell

Haven't heard a peep from the green lobby yet on August's sales figures collapse, but I suspect they'll be smugly pleased, even though tens of thousands of jobs are at risk in the car industry.

52606kia I'd also like to know what mandarins in the Treasury, DfT and trade department, the architects of bountiful anti-car legislation, regulation and initiatives, are really thinking as they watch one of the country's prime income generators struggle away.

Is it too much to hope that both officials and greenies might feel at least a twinge of remorse that their actions are helping to depress economic activity and put jobs at risk? Of course it is. As Autocar has written many times before, the car industry generates billions for the UK economy and supports millions of families, two vital facts consistently ignored by our government and anti-car pressure groups who don't give a hoot.

We have to hope the industry is resilient enough to withstand this downturn on its own, although the long-term trend is worrying. Year-end sales are predicted to be down about four per cent, equal to a market of around 2.35m new cars - still a historically high level. But the general trend since 2004 has been downwards.

There's some interesting historical perspective on this - August's sales figures are worse than those in 1966, the SMMT tells us.

That year is more memorable in car circles as the one when British Motor Holdings was formed - the grim moment when Jaguar joined Austin, Morris, Riley and Wolseley in an unholy alliance that two years later turned into the shambles that was British Leyland.

One of the main reasons August 1966 suffered a sales slump was down to continuous government fiddling with the terms of credit and hire purchase, which was centrally controlled back then.

Seven changes between 1965 and 1967 left new car buyers dazed and confused. Another parallel with today - the reason for government fiddling with consumer credit in the mid-60s was the new Labour government blundering around to extricate the country from economic woes.

Sound familiar?

 

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About Julian Rendell

The man with the legendary contacts book. Once went 'under the wire' to scoop a secret Honda; also navigated a Fiat 127 in a road rally. Says the latter was only marginally more risky.

Comments

Bruce Wayne September 5, 2008 5:31 PM

I think the car industry has itself to blame too. Poor service and expensive products only get you so far. The existence of cheap credit and a buoyant economy has made it easy for this industry for too long. Cars are too expensive.

horseandcart September 6, 2008 10:35 AM

Here's a peak at how bad things will get in UK car industry:

"Jaguar, Land Rover Stop Reporting Monthly Sales"

subscribers.wardsauto.com/.../wall.html

Obviously connected with the collapse of sales in US and UK in the last couple of months.

Oh yeah, here's a funny one too. The execs at the SMMT are still comforting themselves with a 5%-ish total decline in units sold for 2008 against 2007. My money says current September - biggest month - will be a disaster, lucky to make 300,000 genuine sales, against near 400,000 predicted. 2009 will be back to recessionary 1980s levels. Kiss goodbye to anything beginnining with a '2' for millions of sales. Expect overall sales to be down a quarter minimum on average 2000-7 sales, so circa 1.8m.

Mini1 September 6, 2008 12:34 PM

I think dealers will be trying really hard now to shift new (and used) cars and try to make up numbers. We'll be seeing plenty of pre-registered examples, too.

horseandcart September 6, 2008 12:59 PM

Mini1,

they can try as hard as they like but credit has dried up. For instance in the US leasing as a runaway success sales model has crashed and burned. It was all predicated on high residual values at end of term which turned out to be mythical. Plus GMAC, GM's financing arm, is all but bust. The UK is following the US to a tee just somewhat delayed.

The key is credit, particularly for high-end flash-mobiles. Once that is turned off, demand vaporises.

Bruce Wayne September 6, 2008 8:19 PM

I'm loving Horse and Cart's commentary. I think its right on the money. This is also why I think that cars (especially high end ones) are priced far too highly. The zeitgeist is now back in the 70s and 80s way of buying things : you have to save up for them. If you don't have the money, you don't buy it.

horseandcart September 7, 2008 10:57 AM

Here's an interesting one with regards to SMMT's offficial figures for UK new car registrations. According to Audi themselves in a news bulletin, their sales in UK in August rose only 5.6% from 3,215 in Aug 2007 to 3,394 in Aug 08. Why then does the SMMT report Audi's registrations having risen by 15.0% from 3,191 to 3,669? Why is the Aug 08 figure greater by 275 units? A considerable difference.

Can the SMMT's figures be trusted? Are they somehow already inflating figures reported. Can this be checked by someone?

Audi AG Aug 08 sales figure source:

www.volkswagenag.com/.../Audi_Growths.html

KarlR September 8, 2008 8:32 AM

Julian, I'm not quite sure what point you are making in this story.  

It seems to start off blaming the 'green lobby' for the collapse in car sales but no specific evidence is cited.  By the end of the story the 'credit crunch' appears to be the main crutch in evidence.

I have to say that I'm erring towards Bruce's view that overpriced cars and lack of available credit are key factors here.  I'd love to see lower emissions but am now finding it ever more difficult to do the things I want to do without a car.  

Is my conscience stopping me?  No.  The lack of money in my pocket and the woeful shortage of parking space outside my flat in London are though.  Looks like I'll have to be putting up with the situation for a while longer or moving house before I can contemplate one.

horseandcart September 8, 2008 10:19 AM

SMMT have posted August's commerical vehicle sales figures:

light commericals less than 3.5 tonnes - Ford Transit class vans basically - down 25% in August compared to Aug 07. So that's a lot of jobbing builders, courier firms, florists? et. cutting back mightily. Don't look good.

Plus taxi vehicle registrations were down a monumental 51% and 38% year to date. As London Taxis International of Coventry hold 99% of the market that's real bad news for them; year-to-date sales up to Aug only 1,290 against 2,204 last year, It's no wonder that Lord Digby Jones et al were desperately trying to hawk them around Peking during the Olympics. What's the betting Coventry plant closes and black cabs sourced from Shanghai within couple of years.

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