UK new car sales and the recession
Posted by Euan Mearns on March 17, 2010 - 10:21am in The Oil Drum: Europe
I just finished reading a book called Anatomy of the Bear where the point was made that rising new car sales are a leading indicator for the end of recession. No wonder then that many OECD governments introduced incentive schemes to boost new car sales following the dive off the cliff that accompanied the credit crunch (Figure 1). Cash for clunkers in the USA was called the Scrappage Scheme in the UK. No prizes for spotting when the credit crunch recession began in the UK. But what will happen now that the scheme is due to end shortly?
Figure 1 Year on year change in monthly new car sales. Source is The Society of Motor Manufacturers and Traders. The decline in new car sales accelerates from July 2008 with 20 - 30% year on year declines. The Scrappage scheme, introduced in May 2009, helped pull car sales around, but by December 2009 it seemed to be running out of steam and will end in March 2010.
So why are new car sales of interest to The Oil Drum? Transportation is of course one of the main consumers of petroleum. But since the oil price spike of 2008, I think many have become aware of the links between economic growth, energy consumption, energy prices and how this impacts forward production capacity. It's a much more complex web than I ever imagined. New car sales are but one economic indicator of things to come.
The UK car scrappage scheme
The UK car scrappage scheme was introduced in May 2009 to rescue the auto industry from car sales that were plummeting in response to high energy prices and the credit crunch. Cars that were 10 years old or older, most of which would have no intrinsic value, could be traded in for £2000 part exchange for a new car. The government provided £1000 of this subsidy and the motor manufacturer the rest.
As figure 1 shows, this £2000 subsidy did the trick and car sales began to recover immediately. I personally took advantage of the scheme in December and discovered that the incentives on offer went way beyond the £2000 scrapage. As described below, Volvo made me an offer I couldn't refuse.
The government initially allocated £300 million to the scheme (300,000 cars) but in September 2009 the scheme was extended by £100 million which meant that it carried on into 2010. It should have ended at the end of February but has been extended again to the end of March and is therefore still active. I'm expecting car sales to decline once the scheme ends but April's statistics will come too late to influence the outcome of our General Election that will be held in early May. It is hard to not suspect some cynical electoral manipulation at work here.
The UK car market
Pre-recession, the UK car market was running at approximately 2.4 million units per year. Monthly sales are highly distorted by a quirk of UK license plate system where the first two numbers of the plate indicate the date of manufacture. This used to reflect an annual period, and motorists would wait to buy a car when the new annual plate was issued. Since this distorted the market, this was changed to a 6 monthly date mark, but the market is still hugely distorted. In March and September when the new license plates are issued sales are more than double the monthly means. In the preceding months, February and August, sales are less than half the monthly means, as motorists delay purchases in order to get the new license plate.
Figure 2 UK new car sales are heavily distorted by new license plates issued in March and September of each year. The September 2009 peak is pulled up by the scrappage scheme but is still well below pre-recession levels.
Figure 3 The recession began mid-2008, hence the 2008 figures are affected by only 6 months poor trading. The Scrappage Scheme introduced in mid-2009 has inflated the 2009 figures which are still below 2008. 2010 figures will benefit from 3 months of Scrappage and then we will see how robust UK economic recovery really is.
The other notable seasonal effect is that June is always the peak sales month outside of the March and September peaks.
Given the highly variable monthly sales figures, it is tricky to discern trends from the raw data, though the March and September peaks are clearly down in 2008 / 9 as a result of the recession. Hence, it is easier to view trends from the year on year (YOY) changes to monthly sales (Figure 1) but even these need to be viewed with caution since the spectacular rebound from July 2009 needs to be viewed against the very depressed sales figures from the previous year. Since July 2009, car sales are still running well below levels of two years ago.
As of 28 September 2009, 227,750 motorists had taken advantage of the scheme.
In the period June to September 2009, 768,348 new cars were registered, thus the scrappage scheme accounted for 30% of new car sales in this period. Of course we do not know how many scrappage buyers may have bought in any case, but as described in the box below my own decision to buy a new car was totally swayed by the discounts that were on offer.
In 1995, whilst I was still running a small business, I bought a new Volvo 850, 2.5 L estate car. My children then were 5 and 3 years old, and this car was to become a much loved family work horse. 15 years later, and with 140,000 miles on the clock, this old car still had much life left, but year on year was costing an awful lot to keep on the road. With the scrappage scheme knawing away at the back of my mind, I ventured up to the Volvo dealer mid December 2009, thinking about buying a second hand replacement. And there in the middle of the showroom was a spanking new Volvo V50.
I told the salesman I was wanting to buy a used car. He told me that in addition to the £2000 scrappage, Volvo were offering additional discounts to existing Volvo owners. At this time UK VAT (sales tax) was reduced form 17.5 to 15% and all in I was offered £5,500 discounts on the new V50 in front of me. Not only that, this 1.6 diesel model did over 60 miles per gallon and because it was so green :-) the annual road tax would only be £35 (compared with our other car that costs £220 to road tax per year). I thought about all of this for about 3 seconds, and told the salesman that the breadwinner would have to approve. We concluded the deal the same day. Without all these incentives I would have bought a used car.
Where next?
On the back of £200 billion in quantitative easing (QE), the car scrappage scheme, a cut in value added tax (VAT) from 17.5 to 15%, reduction in tax on property transactions and running up mind boggling debt, the UK managed to squeeze out 0.3% growth in the 4/4 of 2009. QE has been suspended though looks likely to return, the VAT reduction has now been reversed and car scrappage is in its final month.
Figure 4 UK GDP quarterly figures and 4/4 running mean from UK government statistics.
The impact of car scrappage looks like it peaked in the 4/4 of 2009 (Figure 1). Most of those who owned a 10 year old car and who felt inclined have traded already and the stimulus looks like it has run its course. When it ends, motor manufacturers will do what they can to fool the public with false bargains. I'd guess that by the 3/4 of 2010, when YOY growth will be compared against months with positive impact from scrappage, that contraction will return to the auto industry, and with it contraction in the UK economy as a whole.
The UK has a general election in May. A cynic may think that the recovery has been finely engineered to benefit the incumbent Labour Party. In my last post I gave a gloomy prognosis for the economy and energy prices and nothing has happened since then, apart from stubborn optimism in the markets, to make me change my mind.
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I think everyone knows that the 'scrappage' or the 'cash for clunkers' programs do nothing for creating demand, but simply move purchase timing around, usually stealing sales from the future.
That does not make them totally useless however. When in a serious crisis such a complete panic stop of purchasing, the first key is to get the patient (the economy) breathing again, get the heart pumping. You may break some ribs doing the CPR, but at that moment you as a government do not care.
At the worst moments of the crisis, and knowing that those worst moments were temporary, the governments felt they had no choice, they had to do the things needed to avoid a full scale meltdown. So they used the "clunkers bills", "incentives", and other bailouts to simply get something moving again.
The other justification for the "clunkers" buybacks is simply to get the junk off the road. There is no denying that (with the exception of certain high level collectable cars), many cars over 10 years old emit far higher levels of emissions, consume more fuel, and in some ways are generally less safe than new cars.
The larger problem for the auto industry still remains...there is so much manufacturing capacity compared to the number of customers who can afford a new car, that something has to give...either more prosperous customers will have to be developed...or some capacity has to disappear (painful to auto workers and assuring the bankruptcy of some manufacturers). Usually in these cases, only time will heal the wound as the junk ages off the road, but now the industry has already borrowed from future sales and made that process even longer and potentially more painful in the longer haul. This means that another possibility is to essentially nationalize the auto industry...and guess what? Welcome to the United States of General Motors. (all this is much less of a shock to the Japanese and Europeans, where the car industry, the banks and the government have always had an incestous relationship.
RC
Roger - agreed that cash for clunkers is not all bad - I'd probably have done the same thing. But as you point out, it is borrowing more from the future. One feature of this recession in UK is that unemployment has been kept under control, along with company failures. Now I know the working class and socialists like this - I understand why. But it means we have a workforce and commercial framework locked into a failed model and the system is not freed up to grow into the new model that will most certainly emerge one day. So we have auto manufacturers, flag carrying airlines, banks, hedge funds, still all doing pretty much what they did before.
So, after reviving the corpse last year, this year the auto industry will face:
1) VAT back up to 17.5%
2) Scheme ends in March
3) No one will need to buy cars again for a while
4) Continued recession
5) 3p increase on petrol due soon.
Seems to me they brought the corpse back to life so they could watch it assplode properly.
I do feel bad for the auto makers, but it's an industry that should never have existed in this size and effect in the first place.
Yeah, that's all fine and dandy except for the fact that the old geezer of the economy now has this faintly beating heart still in danger of flat lining but what is worse it is completely brain dead. It is sucking up resources while in the ICU with no hope whatsoever of recovering. It has already suffered massive organ failure. Perhaps it is time to let it go. May it rest in peace.
The funeral service will be held by an Irish peadophile priest, on the Iberian peninsula, the casket, (made of African ivory in China) provided by the undertakers of Wall street will be transported on a barge full of Middle Eastern Oil to a funeral pyre of Amazonian hard woods in the Greek Islands. All are welcome to attend. Gaia will give the eulogy from the ecologically devastated shores of the now silent seas...
When the service is over we shall spare the goats and sacrifice instead, politicians, economists, bankers and lawyers to the golden gods of free market capitalism!
The UK scrappage scheme may have been good for Mandelson's Bilderberg buddies, but it has removed the cheap transport for about 20% of UK drivers. There will be far less sub £1000 cars for a decade. Since the UK, like the US is now designed for cars, the poor are screwed while the rich get discounts and those in between get more debt.
pondlife, that is actually a good point and one often overlooked...in the recession of the 1970's, we used to say that the biggest anti-poverty program in the U.S. at that time was the Chevrolet Chevette...I used one that I got for 250 dollars to get to a city where I could make any decent wages at all in those days! :-)
RC
Absolutely, the Chevette saved the bacon of a lot of poor people who necessarily had to commute.Too bad it only lasted about half as long-if you were lucky-as a Nissan or Toyota of that era.
Only once in my entire life have I ever owned a vehicle with less than 75,000 miles on the odometer, and it was old when I got it.
That Volvo the author had scrapped would have lasted me at least a decade or another hundred fifty thousand miles.
All the yakety yak here on the Drum about everybody getting on a bus is about as silly, in terms of short and medium term solutions, as it can get.Our built housing infrastructure and our existing codified zoning laws are for alll intents and purposes as hard and durable as granite bedrock.These things cannot change very fast, and the brie and chablis set will fight any changes as vigorously as any right wing yuppie puppy.The better off elements of our society don't want to live intermingled with the poor people-they don't even want to see them around, except as they make thier duly appointed rounds cleaning and cutting the grass and hauling away the garbage.
We (as a short and medium term practical matter) simply do not have the option of abandoning our suburban and deep country commuting life style-housing to put all the people in doesn't exist downtown , and if it did it would be priced in the stratosphere.
We have somehow arrived at a time and place where things are fossilized in terms of business and cultural evolution.Too big to fail means to big to change, and yet powerful enough to prevent change.
The idiots who are running things, except at the top , are running strictly on the go along to get along plan-nothing gets done because we have one vast interlocking and interlocked buercracy incestously wedded to the various large businesses industries and professions.No that's not quite right-All the parties involved are mostly faithful to thier primary partners but it is more of a shacked up hippie commune kind of deal-everybody is free to grab a little extra sex here and there without getting kicked out of the house for doing so.
Then we have the useful idiots involved, as Stalin once called his dupes who did his work for him for free out of love for an idea.Some of the environmentalists fall into this category-either as religious nut case purists(no wind turbines because of the birds, regardless of the actual facts) or no wind turbines out oif hypocrisy and selfishness(The Kennedy family and thier water front megabucks).
I have numerous idiot friends who are rabidly conservative who THINK they are defending a free enterprise system that no longer exists-that in fact has not existed in a serious and robust form for nearly a century , or even longer.
We have a media that is except for the internet pretty well a wholly owned and operated subsidiary of the people the media should be keeping an eye on.
The average citizen nowadays has no time to poinder the incredibly large number of ways his govt is BEING MANIPULATED by special interests and the way the govt MANIPULATES our lives.His attention in respect to govt, unless he is a lonely principled conservative, is focused mostly on what he can get the govt to do for HIM OR HER, rather than what he can do for himself.
If we had a functioning system, rather than one captured, owned, and operated by all the people going along to get along, we would be able to buty all the different car models sold in EUROPE by FORD and GM which get excellent gas mileage.
But somehow we have a set of rules here that keep such cars from beinmg built and sold here.This could not be , except by a defacto convergence of interests and deal cutting among strange bedmates.
But as a redneck old farmer I should be used to it by now-after all, some of my nieghbors are paid to plant, others to not plant,and yet they are absolutely convinced one and all that they are conservative freemarket businessmen.As a matter of fact they are fast learning that the key to suiccess is a good working relationship with the federal govt-all the ones who are prosperous and prospering have learned this lesson a long time ago;you can make more money in a few hours closeted with a man with govt money to spend or give away than you can in a lifetime out in the fields.
So we will continue to have zoning that makes it imposssible to walk to the store, or bike to work.we will continue to have a regulatory appartus that keeps better cars off the road,and that keeps medical expenses much higher than usual.We will continue to have a tax code that noboby understands-because this is to the advantage of the accountants and lawyers and corporate managers who owe thier living to a PARTIAL understanding of it.
On top of all this, STILL have all the REAL PROBLEMS , such as overpopulation, and resource depletion-which WILL NOT BE DEALT WITH for the very reasons briefly outlined above.
In the end we will have a revolution of some sort when the bau dinosaurs finally die as the result of a colder than usual winter, or dinosaur flu, or dinosaur aids.The credit overshoot crisis may turn out to be the bug that gets'em.If not the resource depletion and environmental collapse storms which are only getting started almost certainly will.
Once upon a time we lived in such a way that we were free to MOVE in the biological sense -we could actually physically move, we could eat different foods,we could adapt.Nowadays we have essentially poured concrete around our own feet, and we are locked in place.such of us as are still able to move in terms of change culturally speaking can only move as if we were up to our necks in deep mud-this is to say only very slowly, and only with great difficulty.
And change, which requires agility, is coming fast.I guess since most of us as individuals and most of us as societies have lost the capacity for fast and drastic change, most of us as individuals ans most societies are at very high risk of disappearing.
It seems that the only serious question is when.
This comment and rant is US centric, but so far as I can see , it applies almost as well to Europe.
I enjoyed the rant, thanks. Just one small addition and you nearly quoted mine own grumbling thoughts this morning. Lets not forget MY numerous idiot friends who think they are ATTACKING "a free enterprise system that no longer exists-that in fact has not existed in a serious and robust form for nearly a century , or even longer". Good day.
Here's a U.S. centric link to an article suggesting that our federal DOT may be waking up a bit. I can tell you my state's DOT is far behind. (Sorry if already posted--I didn't see it)
http://www.treehugger.com/files/2010/03/transportation-secretary-ends-fa...
And not only because of the zoning and lack of density, but also because it seems to cost just as much per mile to ride a city bus as to drive solo. For the moment, that inconvenient fact is well hidden by the lavish gifts received by the insignificant handful of bus riders in the form of subsidies from all taxpayers. However, 1) said gifts will be diluted as more people try to ride the bus, (2) they're largely being put on the never-never, which can't last unless rapid economic growth resumes, and (3) if rapid growth does resume, then as a matter of tautology, people will be able to afford e-cars or whatever and the issue goes away outside of Manhattan and a few thousand other acres. (Oh, and on past form, one likely rejoinder will be twaddle about giving up cars for mules fed on thin air because the cars won't work on the potholed mud roads. Well, perhaps, but the fancy, prodigiously expensive, mechanically finicky low-slung kneeling buses currently in use won't work either, and the continual bumping and swaying will make it too "dangerous" to permit standees, which will double the cost again.)
And a lot of all that stuff is not just about nefarious Powers That Be, or mysterious closeted self-serving elites, but about the Great God property values. It's hard to envision any scenario where the Great God is ever dethroned, since the middle class looks to property values (in UK-speak, the property ladder) as a limitless never-never, a road to a living standard impossible on current income alone. Plus, they look to costly petty restrictions as a means of keeping riff-raff and "traffic" out; this is a major reason for the meandering cul-de-sacs, the clothesline and garden bans, and the often fierce resistance to walking or bike paths or even (in places where they might actually work) bus routes.
This thread seems to be dominated by angry Americans, rather than mellow Europeans.
Nearly there!!
She ain't no God.
Check out the hooves.
And she is panicking. And flailing about.
All that is fair is called foul, and all foul, fair.
It is her world.
And she is loosing it.
I think moving is a great idea!
Move to a country which isn`t as car dependent as the USA.
Since all other countries in the world are less car dependent it is easy. The USA has about one-third of all the cars in the world. And 5% of the population. It is way out of balance and a true outlier.
You are correct about the cement being a problem. I love that image: we`ve poured it around our feet and now we`re stuck. Yes indeed.
But if you can emigrate then you are essentially free from that problem. The nimble can do well!
I managed it and it is lots of fun to try new arrangements, new food, new language. No car! Only the bike! Plus health insurance and tons of public transportation.
There are so many interesting countries all over the world. I`m sure you can find one where you would feel happy!
I often think it would be fun to try living in yet another country.....that is emigrate yet again. To one that is not in the G-7 this time. Getting out of G-7 would be a great idea I think!
I wish I could follow you..., I'd rather live in Europe..., but my family is here.
:(
Bitter much???
I'm certainly no fan of Mandy but your assertion "There will be far less sub £1000 cars for a decade" doesn't stack up. Roughly 2 million new cars are sold per year and there are around 30 million cars in the UK. About 250,000 cars have been bought taking advantage of the scrappage scheme so there's still plenty of older cars around. Anyway supply and demand comes into the picture!
I bought a 1 yo second hand car as soon as the scrapage scheme came out. It cost me 55% of the list price and still had
2 years manufacturer's warranty. (I have already needed this twice). Since I bought this car, the removal of so many cars from the market has increased the price for an equivalent 1 yo car by £2000.
The effect is real.
Yes.. the £2k fiesta we got just over a year ago is now worth £2.5k. Never had a used car go up in value before, never mind a 9 year old one..
I can't speak for rural dwellers but in UK urban areas (and that include more than 50% of the population) the reality is many people, rich or poor, do not actually need a car. Public transport, despite the negative press actually may be better option financially for many. My neighbour, my brother and at least 2 other groups of friends have all given up permanent car ownership. They walk, cycle, or take the bus/train. When a car is needed they use a car club or car rental (or scrounge a lift off of a mate). The motivation in all cases is a combination of 'convenience' (weighing up the pros and cons of public transport may work out as 'less grief' than owning a car in London) and 'saving money'. Owning a second hand car, assuming you pay road tax and insure it, plus service and MOT it, is a sizeable chunk of cash. When finances are tight running a new car, an old car, or even a second or third car may be a luxury that can be dropped. This applies to rich and poor alike.
Spot on. I gave up having a car two years ago when I moved to Brighton. The buses here are excellent, the cabs are not too expensive and very quick to come and the train network is fine (except peak hours going to and from London, which mercifully I don't do often).
I actually sat down and drew up a spreadsheet of the costs of car ownership. Once annual depreciation, road tax, petrol, insurance, parking and maintenance are added up I was spending easily £3,000 per year for not many miles. So now I am happy to spend £1,000 on buses and cabs and another £500 or so renting when needed. I come out better off, the planet comes out better off and there is a lot less stress.
Would either of you too like to trade places with me in the U.S....???
Los Angeles...???
Would either of you too like to trade places with me in the U.S....???
Los Angeles...???
leduck:
If you are in L.A., certainly that might not be the best place to be post-peak. But remember, nobody knows for sure how any of this is going to play out.
The U.K.'s economy has been supported for the past twenty years with North Sea oil and gas, which is on the decline. They don't have much to offer the world except for financial services of dubious value. They are overpopulated and immigration continues, and they may not have enough farmland to support their population if world trade breaks down. They are knee high in debt, and their population is obsessed with real estate speculation, which will go nowhere. They have some offshore wind developments but otherwise no real energy policy, unlike some of their European neighbors. And to top it off, they might find themselves frozen, ironically enough, on an otherwise cooked planet if there are disturbances to the atlantic gulf stream.
Bottom line, I wouldn't bet on the U.K. in the coming years. But then again, there are few places I would bet on.
Relocation is important, but think hard and know what you are doing beforehand. Flexibility may continue to be the key going forward, and I have no sympathy for those who move prematurely thinking they will prosper in a failing world, or build a doomstead only to realize they have no water, no food, and no neighbors.
One thing we do have is a lot of ocean around us and it seems we're finally starting to press ahead with wave and tidal projects. Perhaps 30 years too late but all that pesky oil and gas got in the way.
Milestone' for wave energy plans
I know what's happening to the North Sea. I have no interest in moving to the UK. I know it's over populated. I was thinking of the European mainland.
The UK is too much like us for my taste.
A deep and cutting insult. Made deeper by its accuracy. England seems to follow America like a snotty kid following the local bully around.
Los Angeles? No thank you. I don't know who thought putting 13 million people in the middle of a desert with 3 day supply of water was a good idea, but I can guess that it will not end well.
I bought a (just) sub-£1000 secondhand Toyota Corolla last September.
The secondhand car dealer, who had targetted the sub-£2000 market, told me that his supplies were hard to find as many perfectly good older cars were now being scrapped.
Not only does the scrappage scheme distort the high end of the market, it has a pretty bad impact on the poor, who find themselves unable to replace their existing old gas-guzzlers with more efficient less-old vehicles. And with rising fuel prices, they're going to be less able to save up for a replacement.
Phil
so whats the new total for cars on the road..or total passenger road mileage?
Which I guess is the true measure of utility.
If we all buy new more efficient cars or at least some of us is the net result;
A less mileage for less petrol?
B same or more mileage for less petrol?
if B then the notion of economic growth in a country of decreasing consumption is not a total write off (yet?)
I think there's little doubt that aggregation of small incremental energy savings will enable a reduction in per capita energy consumption - that in itself will lower GDP.
Those who are more energy efficient will be able to pay higher prices for energy - but energy efficiency comes at a price.
I think if a country positioned itself to target low energy, high value GDP, then growth with decreasing energy consumption could be possible for a while at least. Not many signs of this happening in UK.
I'm struggling in how to articulate this..
IIUTC its the energy intensity per unit GDP that is a measure of high(or low) value GDP?
or am I misunderstanding you?
OK u got me thinking.
I think you are right to say that per unit of GDP, lower energy content will equate to higher value since for constant energy (or resource) input, we can make more low energy content stuff.
ok same page... cheers
The most recent UK government stats site shows a slight reduction in both congestion and average journey distances for urban areas. My own unofficial analysis, based on driving the same journey to work for the last 18 years is that yes, there has been a noticeable reduction in road traffic on the main routes over the last 3 years. I'll leave it to others to analyse if that is due to less travelling salesmen, more home working, more part time (clearly a lot less people now work Fridays - as the Friday morning commute congestion is massively reduced) or less industrial goods transported by road etc etc.
http://www.dft.gov.uk/pgr/statistics/datatablespublications/roadstraffic...
This is the most recent government report showing road usage statistics: to my untrained eye there does seem to be an inkling of a plateau, or even decline in what I would call 'road traffic' the last few years. Useful graphs etc for those interested in the detail.
UK transport trends 2009 edition
http://www.dft.gov.uk/adobepdf/162469/221412/190425/220778/trends2009.pdf
cheers
To my eye this decline in use but growth in GDP "suggests" that the UK internal economy grew (a little) while consumption fell
in other words our GDP increased in intensity value
I suspect that the economy headline figures could grow in a energy declining system as measured internally...
thou I also guess it will be more akin to some treadmill like scenario for the near to short medium term... (1-5 years)
total gut feeling
This link keeps crashing my browser (safari).
I suspect in UK, a large part in recovery of GDP is based on the spectacular recovery in markets - Phantom GDP from the City.
yeah same here.. unfortunately for those who like to operate in a more real time outlook this phantom stuff was all in place before the price spike... and what was the price relative too?
like your juggling a bunch of quadratic functions with all the values unknown
I think you have to look at it in the terms of utility... which is really difficult to address because of the fungible factors of replacing one type of utility with another. Eg interwebbery rather than travel etc.
God knows how you untangle all of that stuff..
as for cars? The energy pay off on efficiency limits the number of times you can replace the fleet with scrappage incentives... I mean we can't do all this cash for clunkers thing again next year
Link works for me with Firefox browser and Foxit PDF reader. But it's 178 pages long!!!
You can get a free hardcopy it says.
Remove .nospam and replace at with @ obviously.
I agree with you suspicion that the continuation of the "scheme" is an attempt at electoral manipulation by the Labour party. I wonder if they think they can pull out a win in the election with some cooked economic indicators or if they are simply trying to cut their potential electoral losses as much as possible.
I also agree with you about the industry outlook.
The question is how will the UK government react? Will it try and revive the old economy again or will it take a fresh approach and realize that the day's of happy motoring are over. Forever.
I guess time will tell.
Great car BTW. I used to sell Volvos and Jags in Boston, Massachusetts years ago. Volvo makes solid cars. Enjoy it.
Roger McGillicuddy
PeakSigns.org
Unless the Green Party win by a landslide, then the UK government will try and revive the old economy again.
If the Green Party wins, then they will probably try and revive the old economy again.
(for non - UK readers, the Green Party has a decent chance of winning ONE seat - out of 650 ).
that seat being Brighton Pavilion, and I will bet you all the money in my pocket that they don't even come close. It makes for good PR though to being discussing it.
Not much money in your pocket, then?
There is genuine chat at the moment about a hung parliament (no overall majority) - not happened in living memory as far as I know. The paralysis that brings is generally viewed as a bad thing - would be followed by a second election later this year - keep asking till u get the right answer is the European way.
With massive cuts to public spending in the pipeline and all the life support being curtailed, I just don't see how growth will continue through this year. How will government react? Well common sense would suggest they would have to sit on their hands - but common sense seems to have departed economic policy so anything might happen. I suspect QE will return sooner rather than later.
"not happened in living memory as far as I know" well that depends on your age and memory:-) Harold Wilson led Labour to victory in 1964, with a majority of four seats which was practically unworkabke but won a larger majority of 96 seats a few months later.
The pound was devalued in 1967 from $2.80 to $2.40 with his famous quote "It does not mean that the pound here in Britain, in your pocket or purse or in your bank, has been devalued". Entrance to the EU was rejected by France. He lost an election to Ted Heath in 1970 but then won again with another minority government in 1974 after the miners strike.
I note that in the UK, you have a fairly different Volvo V50 than we have in the US. In the US, we have only a gasoline powered version, that comes with automatic transmission, and a larger engine (2.4i). The 2.4i is rated as 20 mpg city; 31 mpg highway.
In the US, there is also a T5 AWD R-Design, which uses a turbocharged inline five-cylinder. It has lower milage--27 mpg highway; I didn't see the city milage.
In Europe, there seems to be quite a wide range of combinations available. The prices and MPG seem to vary as well.
I suspect that a lot of this comes down to the fact that pretty much all US cars are automatic transmission, which seems to require a bigger engine, and petrol/gasoline powered. So we have the choice of manual cars and diesel engines.
(It may also be a units difference between US and UK gallons).
Personally, haven driven both auto and manual, I'd prefer manual; you get a lot more control, although there is more of a learning curve. And if I was driving a light truck/SUV, I'd positively want a diesel; especially with modern diesel engines, you get a much better driving experience.
Here's the problem. We own to Fords (A Mondeo and a Fiesta). Both get reasonable fuel economy (~35mpg petrol) and handle very well, especially the Mondeo. You cannot buy these Fords in the US, only models with poorer fuel economy and worse handling. It would be interesting to work out why this is..
Lots of reasons.
One is tighter emissions controls leading to a cleaner burning but less fuel efficient engine. Another is harder to meet crash testing standards, making the cars heavier. A third is the larger , heavier, thirstier, air con units and other accessories. Another is the higher average power and performance demanded by the market.
Sometimes cars with the same names are in fact completely different models, UK and US. US ones invariably larger.
Also of course, the US milage figures are based on smaller gallons and the US measurement of economy is less optimistic than the UK standard.
The automatic transmissions are less efficient, as are petrol engines relative to diesel.
And with all this, US fuel prices are less than half UK ones, and the typical US driver has no concept whatsoever of driving a given vehicle economically.
A long shot I know, but how about we quote car 'mileage' in the European terms of 'litres/100km'? That way we can avoid the US/UK 80% (4/5ths) gallon conversion factor? UK has gone half way to metrication: we buy fuel (and fruit juice and wine) in litres but assess our cars' performances in terms of 'mpg' and 'mph' and we still buy beer in pints (UK 20oz pints, not those 16oz US ones!).
Joking aside - and allowing for differences in national testing criteria - a new car buyer in the UK would reasonably be looking for a car with a mileage capability of in excess of 50-60mpg (UK) or 40-50 mpg (US). I guess once the US public are paying 6 dollars a gallon, they may start to demand a better fuel economy, and stop aspiring to something capable of pulling a horse box over the Rockies, when all they really need is something to get down to Walmart in.
http://cars.uk.msn.com/features/green-motoring/articles.aspx?cp-document...
Absolutely correct about the typical U.S. driver having no concept of how to drive efficiently.
I see this every day. I have learned how to hypermile my Prius. $4.00/gal gas two years ago was a big incentive for me to learn, but for everyone else....Not so much.
I know I'm the only one out there driving the way I do. On the other hand, I have a conventional technology vehicle too, and the truth is, it is harder to drive conventional technology vehicles economically. For sure, it can be done, but it is much harder because the technology just doesn't help you out like in a hybrid, where driving economically is aided by a combination of the power characteristics of the power train and the instrumentation available to help monitor the situation.
The drivers who come the closest to matching my techniques are the tractor trailer drivers.
I drive a hummer with a bad oil leak.
:|
The car I bought, 1.6 L diesel is of course manual transmission. Much of the construction is light for a Volvo - though all the expected safety features are there. It is underpowered, for a fast getaway. But extremely quiet and comfortable on longer journeys.
It seems to me that such a small engine is only possible because of the torque advantage of diesels (which is why you can even get that thing off the line without stalling.) There are few diesel models in North America; my understanding is that manufacturers are resistant to introducing them. A possible reason for this is added certification expense (there are fewer versions of gas models here as well); I also recall reading that the diesel here is dirtier, creating maintenance problems and making it hard to meet emission standards and/or reach a critical mass of users to change fueling infrastructure.
I've stalled a few times when cold in town. But on trunk roads, with cruise control on, it is amazingly smooth. I think about 50% of Euro car sales are diesels now. The engines are more expensive, and now that diesel costs more than gasoline, the cost benefits have been eroded. But the Volvo V50 seems to have taken a leap towards new efficiency levels. "Sporty", low drag exterior, being utilised for efficiency not performance
My car is a 1.6l petrol engine, by far the biggest engine of car I have driven (7 seater). Previously I have had 1.0, 1.2 and 1.3 l cars. The 1.2 had 3 cylinders and did stall occaisonally. If I stalled the 1.0 litre I could drop the clutch, turn the key and be away in just over 1 second.
How about, in the U.S., we scrap most cars, make cities foot friendly by making them denser with smaller roads, and build a real mass transportation system like Europe.
???
Cars are over rated.
Europe is heavily import reliant, just as much so as the U.S. The only thing the cities will be useful for is burning to keep warm. Efficiency doesn't matter as it is the imports that will be drying up. If everyone were to care about efficiency, export-land model would be nonexistent as the exporters would care about actual consumption, not quality of life.
At a cost of how many tens of trillions of dollars, to be raised how, in a society that's already borrowed to the hilt and well beyond?
It beats cannibalism....
But this doesn't explain or even suggest how all those tens of trillions are to be conjured up...
Weren't most of our cities built on much less oil then we use now?
I just don't think we have much of a choice.
We need to do something.
Motorcycles, scooters and mopeds will only work so long.
What about kids and grand kids..., what kind of country will they inherit??
We made the mess, we should fix it.
Yes, it will cost trillions.
Or,
Our we just going to let kids and grand kids figure things out for themselves....???
Let me put it another way...,
Should we pass the mess or the bill for our mess onto future generations?
Oh, for crying out loud, if mopeds and scooters (perhaps most likely electric in the long run) are to become impossible, then there's no need to fret about the grandkids. Either they won't exist, or if they do they'll be so miserable they'll wish they didn't.
Look, you have to get food and supplies into those rebuilt cities and sewage and waste out. With resources so exhausted that mopeds and scooters are impossible, that's simply not going to happen effectively. Down that road lies eighth century Anatolia, thinly populated (compared to now) rural feudal farm/doomsteads, with maybe one principal town for a very wide region, certainly not cities and towns on any scale remotely like now. Very few of anyone's grandkids would be there.
Oh, and in the late 19th century, when the cities you're talking about were really being built out, population was less than one-fourth of what it is now, and even so, the people and animals were oftentimes only just barely fed. So please let's not indulge in any more fatuous rubbish about supplying those rebuilt cities by horse and mule, there's been enough of that nonsense in the last couple of days to last a lifetime. As the real farmers here have made crystal clear time and again, there would be no way to feed the critters on the necessary scale. Especially when you consider that with things so far gone that mopeds and scooters are impossible, fertilizer haulage will be very, very limited, or nonexistent, so
yield per year per acre will be much less than now. (Remember, people used to go through an awful lot of trouble just to get a bit of guano to raise yield slightly - and there's nothing like enough guano left to make any difference.)
One of the troubles with these partial doom scenarios - e.g. things so far gone that mopeds and scooters are impossible but lots of cities still mysteriously live on fairy dust - is the failure to think the scenarios through and see how utterly and fatuously self-inconsistent they really are.
Um, yeah. So now, despite your seemingly self-serving remark elsewhere about mellow Europeans, I guess I need to figure you for an American after all. That's the typical American response, rush around and do something, anything, just to look busy and concerned. Never mind results, concern worn conspicuously on one's sleeve is the only thing. No, before we do something we need to stop and assess first, and at least try not to make things worse than we would by doing nothing.
All schemes begin with a single step and it doesn't have to cost trillions of dollars. Where do you get that figure anyway. It is mainly a function of political will. Just think what they did in Times Square. Put out a few blockades and hundreds of lawn chairs and voila, they had themselves a car free pedestrian zone.
Start by closing every other street to cars. Put up some barriers on each end of the street. Make it increasingly harder for people to get around by auto until they naturally gravitate to alternatives like walking, biking, busing, and other forms of mass transit. Change the zoning to allow things like corner stores on each corner. Prohibit big box stores. Increase density by allowing backyard dwelling units for rental or relatives.
Keep doing things that don't necessarily cost a lot of money and do the things that cost a lot of money gradually.
In the mean time, change national priorities and get some of those trillions over time by cutting the defense budget in at least half.
Announce a national policy that our goal is to make all cities over 100,000 substantially car free within ten years. Provide generous subsidies to those cities which are most aggressive in moving towards that goal.
Fully tax gasoline so that it actually pays for road maintenance. Right now, the general taxpayer is subsidizing the car driver to the tune of billions. Add a surtax on top of that to help fund the carfree program.
Alternatively, continue bau until there is not enough affordable gas to run the current system. Wait until the average person's income is used up just trying to get to work and do basic functions and the suburbs and cities are unlivable.
It is the status quo that is not affordable economically or ecologically.
Having an economy that is 70% related to consumption is not sustainable, that is the problem. Luddite nonsense is not the answer.
Um hum. If you seriously densify some places in only a ten-year time frame, then you do it by depopulating other places, such as the places where the vast majority now live, i.e. most suburbs, that are too sparsely populated to support mass transit unless someone can find an infinite supply of fairy-dust to subsidize fleets of empty buses. (Unless the idea is to densify everything by matching China's population in ten years.) Sure, some of the zoning steps could and should be done, but they're not going to revolutionize the country in only ten years.
It seems like the discussions here assume that most Americans live in Times Square or something like it, where the traffic patterns are so insane that some models indicate you can actually improve traffic flow by closing certain stretches (notice that Times Square is that sort of spot; they didn't close, say, the approach to the Lincoln Tunnel.) But most Americans live in the aforementioned suburbs, or else in places like Podunk, Minnesota.
Podunk is not Times Square. People aren't going to be biking in Podunk (or in any other northern-tier location) at -30C on several inches of rutted ice, not in enough numbers to make any difference. They aren't going to be taking mass transit because there simply aren't masses of them because it's not Times Square. There's not the traffic to support even a bus - and anyway a bus seems to be every bit as expensive per passenger-mile to operate as a solo-driver car. So I guess we've got to abandon not only the suburbs but Podunk as well. But, oh, wait a minute, then where do the farmers in the surrounding area go for parts and supplies? Oh, right, they've got to drive that much further.
We haven't got the money. We spent it. And watch the people in those cities flee for places that are deemed to have 90,000, rather than waste their whole life walking from place to place.
---
Yesterday, I alluded elsewhere to a sociopolitically tone-deaf engineering/science mindset. And have we ever got it right here, and in spades. Just wave the wand and prattle about "political will", and people will conform as though they are electrons moving mindlessly and passively in accordance with an applied electric field. Good luck.
Your obsession with green paper is noted.
Just because one idea doesn't work in one area does not mean we should sit on our hands. Frankly, there are going to be losses. Goodbye Podunk. End of story.
Solutions are possible as long as you understand that no-one can raise the dead and nothing is going to be perfect. They just have to be better than the alternative.
End of car culture in coming decade (PDF file)
http://www.crudeoilpeak.com/pdfs/17
It is a long held (2500 years) principle in Western philosophy that you can't be right for the wrong reason. That is, if you do what appears ethical, but your ulterior motive is immoral, you are not really being ethical. Or if you have a true belief, but your reasoning behind that belief is flawed, you are not really knowledgeable. IOW, you can't fake it (or get lucky).
Hence to my point...
If the government introduces a program to artificially inflate new car sales, but the economy generally is not recovering, does the artificial jump in new car sales do anything to end a recession? Or can it be a sign of recovery? I would think not.
the rabbits foot school of economic thinking
Ok, no wonder that most governemnts can't distinguish correlation and causation... But that is still an interesting fact.
It would be worth mentioning VAT in all this.
With an typical car price of £10000, the govt gets £1750 in VAT, which is greater than the £1000 govt contribution.
The scrappage scheme moves money to government by increasing sales. Its a tax cut, not a subsidy. The biggest losers are the non-car owners who live with the noise, pollution, crashes etc. (2 out of three fire service call outs in my hometown of Turriff are car crashes. This is big money)
Although the scrappage scheme has helped to stimulate demand in the car market, and ease the recession, it sends out the wrong message as regards sustainability. I noticed in a brochure from a dealer recently that the scheme has now been extended to include V registration cars (registered in 1998). This means that we are now scrapping cars which are in perfectly good working order, with all the environmental impacts associated with disposing of the parts.
The Oxfordshire Environmental Blog:
http://theenvblog.blogspot.com/