What if we didn’t buy any new cars for a year? That’s a thought experiment suggested by Andrew Oswald, professor of economics and behavioural science at the University of Warwick, writing to the Financial Times recently.
Oswald used data from the RAC Foundation and Autocar to estimate that UK buyers will spend £80 billion on new cars this year. Which is, technically speaking, a shedload of money.
Relatively, we won’t spend vastly greater sums on public services like education (£110bn) or health and social care (£190bn) – both public expenditures that the government may be looking to trim.
Will we really spend that much on cars? Possibly. We’d need to buy two million at £40k a pop to total £80bn. We bought (or registered) 1.9 million last year. But for the purposes of the experiment, it doesn’t really matter if it’s a bit over or under: it’s still a ton of money.
What would happen, wondered Oswald, if we reviewed our private spending as we do public spending, so thoroughly in fact that we bought no new cars at all this year? “How much harm would that do to our citizens?” he asked.
I suppose the first thing to consider would be the practical harm. It would put thousands of people out of jobs, and a significant part of that £80bn will be tax, with VAT into double-digit billions and another chunk again from first registration fees (which vary dependent on CO2 emissions), plus the Expensive Car Supplement for cars costing over £40k.
The Treasury could lose £15bn or more before one even considers a drop in corporation and income taxes and an additional spend on benefits. I suspect Rachel Reeves would prefer this thought experiment to remain exactly that.
But the esteemed prof is, I think, more curious about what it would do to our overall happiness. “Humans are dragged into harmful ‘keeping-up-with-the-Joneses’ status races,” he wrote. The implication is that we might feel better if we gave up those and looked after one another more.
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To buy less new cars more used cars are required on the road. But far too many car owners treat them as disposable goods and actively avoid keeping up with the maintenance (albeit beacuse many could not afford to do so). Following WW2 there was a car shortage and older vehicles were kept on the road for longer but it is difficult to see a return to those days. Personally I do a lot of work on my cars myself and follow the service schedule (oil change every year regardless of miles and so on) but the manufacturers do not help by adding expensive systems that are not easily replaced (direct injection systems are one example and it is noteworthy that these are often not fitted to the same vehicles sold in countries where fuel is poorer and conditions rougher)
Legislation has a part to play in new vehicle purchase also. Scrappage schemes to take old, polluting vehicles off the roads? Worthwhile from an enviromentally good point of view? I don't think so. The "well to grave" costing of new cars should be published in the same way as efficiency ratings are for electrical appliances. I own three vehicles, all built in the early 20th century. One is a gas-guzzling JDM import, the other a 24 foot diesel motorhome and the third a fuel-sipping chevrolet volt. They have a combined annual mileage circa 12K, they contribute a miniscule amount to my carbon footprint compared to the millions of new cars produced each year to satisfy consumer demand and to keep the factories churning out consumer goods.
I have seen perfectly good, four year old cars written off for the sake of an electronic component and a crumple zone damaged in a collision. The insurance companies will not allow the good bits of the damaged car to be used in a repair further compounding the issue.
On top of that we have the supply chain farce. A client of mine makes rubber grommets for JLR wiring looms. Their factory is about 30 miles south of the Halewood factory. The grommets are shipped to France to shroud the wiring loom that is then shipped back to Merseyside for fitment. That makes sense. Not. How is that possibly enviromently friendly and cost efficient? I give up.....
British consumers are being taken for fools. The price of new cars in this country is extortionate, a new Landrcusier is £80k here and £50k in the rest of the world. A new Tesla Model Y £52k here and £36k in the US. This before tax credits. This article raises a good question, would a material drop in consumer demand result in lower prices? The government certainly won't help as inflated prices provide higher VAT and company car tax revenue so Joe Public should do something - Matt, want to make a real difference?...
Honestly Bob, talk to me when you've looked at pricing in Australia. Porsche would be a good place for you to start.