Damage to the car market

The latest industrial output figures for the UK are disappointing but not surprising. In part they reflect a general decline in industrial activity, which was more pronounced in France and Germany last month than here.

They also reflect local matters that are longer term and more worrying. A strong domestic car market up to March 2017 has been transformed into a weak one in the four months since by a combination of higher taxes and tougher regulations. The new levels of Vehicle Excise duties for dearer cars has hit that part of the market badly. The new messages against diesels with the longer term threat to both diesels and petrol vehicles has also had an impact. More people are waiting for further clarification, and to see if electric cars are going to become cheaper and easier to use. Meanwhile the Bank of England is tightening the availability of credit to buy or lease a new vehicle. One of the recent successes of the UK economy in increasing car sales and output has just been damaged by a combination of an attack on the idea of the purchase, and tougher controls over innovative ways of financing it.

Those who dislike cars, wrongly seeing them as the source of all the pollution that matters, may be pleased. They usually ignore the pollution coming out of the bus, train and household boiler. Those who fear any kind of borrowing by anyone to do anything may also rejoice. I think it does matter. I see no special dangers in more people leasing a vehicle. All the time they have the income they will make the lease payments and all will be well. If someone loses their job or struggles to meet the payments then the lending institution will take the car back and sell it on to someone else second hand. They will get something for it, and if they have run a sensible business may even get all their money back on that customer. None of this need be bank threatening!

The UK now has a strong car industry with some excellent factories, products and employees. The fact that these are in foreign ownership does not affect the important underlying reality that the factories, jobs, ideas and energy for these businesses are here in the UK. They export a lot to non EU destinations as well despite the absence of EU trade deals with the main markets. Public policy should look after the industry in a sensible way. Working with them to produce greener and better products is fine. Taxing too much and stifling credit is not such a good approach.

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78 Comments

  1. Bob Dixon
    Posted August 12, 2017 at 6:13 am | Permalink

    The governing party need to wake up to the damage they are causing to the economy.Carney should have been handed a P45 some time ago. When May gave Osbourne his marching orders, she should have told Hammond to cut taxes. Brexit will be blamed.

    • Lifelogic
      Posted August 12, 2017 at 10:39 am | Permalink

      Indeed cut taxes, cut government, cut energy prices and cut regulation. Instead we have mad subsidies for renewables & for electric cars which are totally impractical with current technology and anyway are far, far less efficient in overall energy use. So some people are hugely over taxed to subsidise daft redundant technology that does not even work in Co2 terms (even if you still belief in the climate alarmism religion unlike most rational scientists).

      With current battery technology they are just a very expensive second city car for virtue signalling. The greenest (and usually the cheapest option) is to keep your old car running in general.

      Stamp duty at 15% is moronic taxing landlord on non profits is moronic. May and Hammond were also clearly plotting (and probably still are) to mug the self employed and the gig economy with extra NI (using the moronic report by the socialist dope Taylor as a ruse).

      https://www.gov.uk/government/groups/employment-practices-in-the-modern-economy

      Oh for a Conservative in charge. Stop these hugely damaging, top down, government interventions.

      • fedupsoutherner
        Posted August 12, 2017 at 6:53 pm | Permalink

        LL. Hear, hear. We just seen to have a government in power at the moment that seems intent on destroying the UK.

    • matthu
      Posted August 12, 2017 at 1:06 pm | Permalink

      When Hammond effectively committed the country to not cutting taxes, even before the outcome of any negotiations, he also effectively committed us to continuing the subsidy of green energy madness, continuing to pay for HS2, continuing to support a high taxation, high borrowing economy.

      Effectively he is also writing off any of the potential benefit of leaving the EU, which might have lowered our need for such high level of taxation.

      And how did the rest of our government counter these pronouncements by Hammond?

      Silence.

      No wonder optimism is tanking.

      • Lifelogic
        Posted August 14, 2017 at 5:09 pm | Permalink

        Indeed – the party is stuffed with Libdems and soft Socialists and is led by them.

  2. Nig l
    Posted August 12, 2017 at 6:32 am | Permalink

    Taxing too much and stifling credit. You might like to look at and comment on housing stamp duty which seems to be a catastrophe for the market and working against HMG’s housing policies.

    • Lifelogic
      Posted August 12, 2017 at 10:40 am | Permalink

      Indeed absolutely insane to have a turnover tax at 15%.

  3. Jason Wells
    Posted August 12, 2017 at 6:36 am | Permalink

    It’s hard to know what the point is? One thing for sure is borrowing to live beyond our means is a no brainer so people will have to get used to buying and leasing cars more suited to their circumstances. Likewise taxes will have to be increased on high quality end cars being imported from the continent, we will have to get used to the idea of not seeing so many Mercs and BMWs about- especially after brexit. What it means is that we will all be able to drive the same style smaller electric car when the price becomes more affordable. The government should be working more towards this goal- a peoples cheaper style electric car for all and for the next generation.

    • Lifelogic
      Posted August 12, 2017 at 4:34 pm | Permalink

      Electric cars will be much more expensive (like for like) than petrol and for sometime yet. This as the batteries are such a large cost and do not even last very long or have a decent range. Even with the huge tax breaks (no 80% tax on the fuel, preferential road tax, parking, and a large grant when bought).

      Of course they will have to start taxing them far more when more people are using them anyway. Then they will be really expensive.

    • NickC
      Posted August 13, 2017 at 2:59 pm | Permalink

      Jason said: “What it means is that we will all be able to drive the same style smaller electric car . . . ”

      Only if the output of electricity generation and the Grid capacity is approximately doubled.

      Gove’s little band-wagon jumping is bonkers not just because electric cars can’t hack it at the moment (so 23 years is a gamble), but because the existing road transport energy infrastructure will have to be completely replaced by a large numbers of extra new power stations, on top of the normal re-building cycle, on top of expanding the Grid, all in about 20 years. It is one political cock-up after another.

  4. formula57
    Posted August 12, 2017 at 6:56 am | Permalink

    Beyond and underlying the inept manoeuvres of the UK government we find the malign influence of the Evil Empire. Two examples came to my notice recently: –

    1. Manufacturers typically do not offer 2 litre petrol engines as they seek to avoid or mitigate EU levies upon themselves for producing polluting products. A result is that buyers are often faced with a choice of only diesel.

    2. Air conditioning units must now use a new R1234YF refrigerant that (per the HonestJohn motoring website) “is proving to be prone to leaking, is causing a/c condenser, evaporator and compressor failures, is highly flammable, and costs five times as much”. As HJ says, “It could be that it simply doesn’t work in systems designed for R134a [i][previous refrigerant][/i]. Or it could be that the EC has been ‘lobbied’ into making a big mistake”.

    If only the UK government were free to support the car industry and its customers.

    • Lifelogic
      Posted August 14, 2017 at 5:12 pm | Permalink

      Indeed the regulations make cars more and more complex, far less reliable, expensive to fix, the engines are often too small and they often even lack a spare tyre.

  5. alan jutson
    Posted August 12, 2017 at 7:01 am | Permalink

    I am afraid that as soon as Governments see a successful individual, product, or industry, they simply think of it as another cash cow to milk with tax.

    They will eventually kill all of the geese (if they do not fly somewhere else to breed) if they are not careful.

    Look now at the rate of Stamp duty on houses, Tax on new cars, Tax on Air fares, Tax on insurance policies, the growing scope of VAT on all sorts of goods and services.

    We have yet to see the so called proposed increase or new congestion charges in many more Towns, charges or limited area use for older vehicles with higher emissions etc etc.

    How much tax will be charged on vehicle charging points for electric cars, because it will certainly not be a tax free fuel when they start getting to be more popular.

    Lack of Government joined up thinking again.

  6. agricola
    Posted August 12, 2017 at 7:20 am | Permalink

    While I cannot quantify the effect of the sudden discovery of Satan in the diesel/petrol car, I can say that someone mouthing off in government with half baked, ill considered statements is hardly likely to help the car industry or the economy. Perhaps that was their purpose. I would have thought we had enough fifth columnists among remain. In the Westminster bubble reality is rarely tangible. It out ratnered Ratner in it’s crassness. It was like saying all gold is radio active and then watching it’s price fall.

    • Denis Cooper
      Posted August 12, 2017 at 10:15 am | Permalink

      But we’ve known for a long time that it’s the infernal combustion engine.

      That weak little joke has cost me seventeen Captchas …

      • fedupsoutherner
        Posted August 12, 2017 at 6:55 pm | Permalink

        Denis. I’ve just put in a comment without having to do a Captcha at all!!

        • Denis Cooper
          Posted August 13, 2017 at 11:33 am | Permalink

          How did you manage that?

          • fedupsoutherner
            Posted August 13, 2017 at 1:44 pm | Permalink

            Don’t know but I managed it on 3 comments altogether and then had to do a Captcha.

      • Caterpillar
        Posted August 12, 2017 at 8:51 pm | Permalink

        Denis, soon you will remember the Captchas with cars with nostalgia.

    • Lifelogic
      Posted August 12, 2017 at 10:45 am | Permalink

      “someone mouthing off in government with half baked, ill considered statements is hardly likely to help the car industry or the economy.”

      Indeed, but that is what politician in general do! Hardly anyone with any understanding of physics, engineering, logic or industry in the house. Just loads of lawyers (who want more regulations and laws), daft PPE graduates, green crap pushers and geography dopes. What sort of a fool would have someone like Osborne and Hammond as a chancellor or Carney at the BoE?

      • fedupsoutherner
        Posted August 12, 2017 at 6:55 pm | Permalink

        LL. May and Cameron??

        • Bob
          Posted August 13, 2017 at 6:01 pm | Permalink

          which just proves that the Tories are controlled by lib dems.

  7. Duncan
    Posted August 12, 2017 at 8:11 am | Permalink

    The attack on car ownership goes far, far deeper than the financial health of a particular area of economic activity

    What we are seeing is something much more pernicious and dangerous. An attack on car ownership is an attack on individual freedoms. There are those with a nefarious bent who have populated areas of the State whose intent is to try and force the ‘masses’ over to the use of PUBLIC transport. If they can do that they can CONTROL the flow of peoples with a far higher degree of efficiency and organisation

    Their intentions are concealed behind political rhetoric and vacuous references to ‘protecting the environment’. Indeed State control of many areas of life is on the rise.

    I do not expect a Conservative government to behave in this manner.

    What we are seeing is a clique in the Conservative party that is becoming detached from the party they are meant to serve and detached from the people who support them.

    The Conservative party is morphing into something that is deeply unappealing, unappetising and downright authoritarian That is deeply disturbing

    • Anonymous
      Posted August 12, 2017 at 9:14 am | Permalink

      There should be nothing wrong with car ownership.

      A second hand petrol is greener than a new electric will ever be.

      (Use of an already existing item.)

      • Lifelogic
        Posted August 12, 2017 at 4:42 pm | Permalink

        Indeed. There is nothing green about all electric cars at all, they can use twice the power at the power station than an efficient hybrid does. Generating the electricity, transmitting it, converting voltages, charging and discharging, all waste a lot of energy. Also in winter you have to waste more electricity on heating thus limiting the range even further!

        If you get stuck somewhere on an icy night I think I would want to be in a petrol/diesel car with a decent heater. Rather than an electric one with a flat battery.

    • forthurst
      Posted August 12, 2017 at 11:52 am | Permalink

      “The Conservative party is morphing into something that is deeply unappealing, unappetising and downright authoritarian”

      …either that or the scales have finally fallen from your eyes. The Tories preside over a country where English people have more fear of going to prison for thoughcrime than those that are protected by their laws are in fear of going to prison for raping English children. The Tories took the country to war against Libya and provoked the flood of economic migrants flooding across the Mediterranean; they supported the war in Iraq pretending to believe Bliar’s lies and are still trying to destabilise Syria and hence the flood of migrants poring into Europe from the East; they also helped destabilise Yugoslavia and the creation of the gangster enclave of Kosovo also based on lies most of who are now trying to get into Western Europe. They are a bunch of traitors in the globalists’ pockets.

    • Norman
      Posted August 12, 2017 at 1:51 pm | Permalink

      An interesting point. Having seen the rise of the media attack on livestock farmers recently – which some attribute to vegan pressure groups – one wonders if the whole status quo is being manipulated by ‘Eco-warriors’. Its quite alarming how effective a little disinformation can be, if its on a topic which, for various reasons, people want to believe. And they always choose the worst extremes – as we used to say in the old MAFF days, ‘hard cases make bad law’. We are now living in a world that’s cut adrift, (and,as it says in another place, but is no less true) “tossed to and fro, and carried about with every wind of doctrine, by the sleight of men, and cunning craftiness, whereby they lie in wait to deceive;”.

    • fedupsoutherner
      Posted August 12, 2017 at 6:57 pm | Permalink

      Too damn right Duncan! I and many others are completely disillusioned with this government.

  8. Caterpillar
    Posted August 12, 2017 at 8:20 am | Permalink

    There do appear to be many jerks in car policy. We had a jerk to scrappage destroying already produced capital, jerks in both direction with VED, a jerk to diesel (perhaps an EU/Germany/greenish jerk), the major jerk to electric … fewer jerks please.

    • oldtimer
      Posted August 12, 2017 at 9:06 am | Permalink

      This is par for the course. UK governments have always messed around with the various taxes on vehicles and on petrol and diesel fuel – more often than not to the detriment of the industry. Way back purchase tax was jerked around with very damaging consequences.

      I see that Jaguar Land Rover UK sales are down 11% year on year over the four months to July no doubt because of the tax changes. Then Mr Gove, who was vocal enough about the damage to the fishing industry caused by EU fishing policy, was all too ready to put the boot in to the car industry the other day with his comments on diesel engines. Yet it was only a few years we were being incentivised to buy diesels.

      The recent tax changes were a kick in the teeth to companies like JLR who have been investing heavily and contributing hugely to the regeneration of Midlands industry.

      • Caterpillar
        Posted August 12, 2017 at 8:48 pm | Permalink

        Yes, Oldtimer, another chance to holdback the Midlands will have been enjoyed by the London centric.

      • Stred
        Posted August 13, 2017 at 1:56 pm | Permalink

        My Swedish friend was about to buy a Jag xf. Now he has had to cancel, and as diesel and all I engines are being banned. Electric cars are too expensive and batteries give insufficient range for his use.

  9. Turboterrier.
    Posted August 12, 2017 at 8:40 am | Permalink

    Good entry John highlighting yet again how decision makers do not have a clue and it is all about knee jerk reactions to any given situation bought about by the media and leading Mayors and all the congregation from the Church of Renewable Energy.

    ” ignore the pollution coming out of the bus, train and household boiler.”

    You omitted to highlight all the HGVs, wood burning stoves, bio mass boilers and bio degradable digesters all adding to the pollution levels.

    The politicians have got to get a grip and stop the tail wagging the dog because in this moment of history we have to concentrate on those areas that are critical to driving this country forward to a real not some micky mouse make believe future. To do that we need the right people in the right jobs with the associated qualifications and experience to deliver the best solutions to address the clearly identified problems on time and within budget without bankrupting the country.

    • Anonymous
      Posted August 12, 2017 at 9:18 am | Permalink

      I much prefer to cycle behind a modern bus (slipstream) than any other vehicle. Clean air.

      Trains are given special exemption over emissions because they are a huge capital investment to replace. German MTU diesel train engines are very clean. Replacing dirty engines should be viable.

    • graham1946
      Posted August 12, 2017 at 9:22 am | Permalink

      You forgot airliners. They burn more fuel in one trip across the Atlantic than a family can use in a lifetime in their cars and boilers, but still we are to expand it. Seems some things are o.k., but not the humble car used by ordinary people. There’s the clue ‘ordinary people’ – much loved for the taxes they pay but hated for the fact they can’t be controlled by the people who know best.

      • anon
        Posted August 13, 2017 at 8:57 pm | Permalink

        Nevermind commercial airliners.

        What about the “ego” flights of our “dear leaders”? Who need to pump out all that wasted co2 on the way to a pointless meeting to waste more co2 verbalising a further vocal emissions.

        They should video conference. Hypocrites the lot of them.

  10. libertarian
    Posted August 12, 2017 at 8:44 am | Permalink

    I couldn’t agree more. It is beyond belief that our political “elite” really seem to have no idea about human behaviour or supply/demand economics or incentives to boost markets

    I was thinking about acquiring a new car.

    1) If company car rules weren’t so draconian and expensive I would go that route
    2) If the cost of owning and running a car personally wasn’t so high I would have gone that route
    3) I normally lease on PCH but do you know what I’m so fed up with the increases in tax etc that I’m not going to buy a car now

    Damage to the economy caused by politicians….again

    • alan jutson
      Posted August 12, 2017 at 8:58 pm | Permalink

      Libertarian

      Likewise also looking to purchase a largish new car, have decided that as long as my 17 year old model continues to run and pass the MOT without great expense, and even though its less economic than a newer model in miles per gallon, I shall run it until its uneconomic to repair, simply because I cover far less miles now I am retired.

      Will now probably end up purchasing a 2-3 year old model eventually when best part of depreciation has been lost, but should it be petrol, diesel or hybrid.

      Not a bloody clue, and the Government is just confusing the issue because all electric power will soon be taxed just like petrol, because they simply cannot afford the loss in tax revenue when the petrol and diesel sales start to fall off.

  11. brian
    Posted August 12, 2017 at 8:46 am | Permalink

    Of course we should support our car industry. But it had been reported that some credit suppliers had been making irresponsible loans to people who were unlikely to be able to repay them.

  12. Roy Grainger
    Posted August 12, 2017 at 8:51 am | Permalink

    As I have an old diesel car which is getting increasingly expensive to run I was thinking of buying a new hybrid one. However the news that the government might introduce a diesel scrappage scheme made me wait. Now the news that both petrol and diesel cars might be eventually banned entirely, no doubt with penal taxation to force people to switch to electric well in advance of that day, makes me think I won’t buy another car at all and use shared car rental schemes (there is an electric car one where I live in London already) instead. So, my failure to contribute to industrial activity is entirely the government’s fault (and nothing to do with Brexit).

  13. Epikouros
    Posted August 12, 2017 at 8:51 am | Permalink

    Yellen told us that the US economy was great so therefore by association so are the rest in developed nations. When of course as history has told us when a central bank mandarin makes such a claim then that is double speak for economies are due for a correction. In our modern world that relies so much on politicians, governments and their agencies to plan and control our lives then the fear has to be that it does not take much interference in the market place and poor judgements of those in charge to create serious economic and social problems.

    Ill thought out consequences of implement policies to address perceived wrongs or to encourage desired behaviour tend towards creating greater evils and worse behaviour. The whole machinery of state is designed to fulfil functions that it does not have the knowledge or incentive to fulfil competently. It is motivated to achieve political aims not practical ones and it does not have the framework or real time data on which to base accurate and effective decisions.

    Governments will lead to our downfall not our salvation contrary to most of us believing otherwise. The rest of us that believe differently are very much in the minority so when the inevitable happens we will have to suffer as much as everyone else and saying we told you so will be of little consolation.

  14. Anonymous
    Posted August 12, 2017 at 8:58 am | Permalink

    I remember asking the same before the 2008 crash. “Where is all the money coming from ?”

    The fact is that Leasing prices include the drive-off-forecourt depreciation. Ordinary people – many of them young, who should be thinking about pensions and houses – are signing up to something they would never have done in the past. Taking on a huge depreciation for the sake of a shine and new car smell.

    They are often taking this depreciation every three years when they come to trade in. The manufactures and traders certainly aren’t the ones absorbing it.

    How so ?

    The windscreen price shows most prominently the *easy* monthly repayments – not the true costs.

    Sorry to be boring, but most people driving new cars cannot afford them. They will be coming to the state for help in the end.

    Meanwhile I’ve been driving around in 14-year-old cars with moss growing on them, doing my own repairs and servicing – putting my money in property and pension, sacrificing both ego and pleasure… doubtless I’ll get spanked by the government for my prudence in old age.

    • Anonymous
      Posted August 12, 2017 at 9:29 am | Permalink

      Running an old car is a perfectly viable option.

      One has to balance repair costs with write off costs. If a minor prang will result in the car being written off by insurers then don’t replace the clutch, water pump, alternator… unless they can be sourced at a breakers and you can DIY. Ditch the car at the next MOT failure and buy a younger one.

      Everyone used to live like this in the past. So what’s changed, apart from easy credit terms and slick salesmen ?

  15. Tabulazero
    Posted August 12, 2017 at 9:10 am | Permalink

    I do remember Mark Carney taking a lot of flak from the Leave camp when the BoE chose to cut rates post-Brexit. Mr Rees-Mogg was quite vocal about it: he wanted the BoE to hike by 25bp every quarter.

    Now, you seem to want the BoE to loosen further by lowering underwriting standards which seems odd given the above.

    It strikes me that Mark Carney has an impossible job. Whatever he does, a Brexiter will be unhappy with his decision and hold him responsible

    • libertarian
      Posted August 12, 2017 at 11:36 pm | Permalink

      Tabulazero

      This has absolutely NOTHING nil, zilch zero to do with Brexit.

      Quite simply the politicians via pressure on the BoE have been manipulating the base rate.

      The government is the biggest borrower and therefore payer of interest , the almost zero rate of interest offered by banks is a complete disincentive to save, therefore because money is so cheap people quite rightly and sensibly borrow.

      Base rates will NOT rise no matter what happens , Brexit, no Brexit, Inflation, unemployment it doesn’t matter what, interest rates WILL NOT RISE , the politicians can’t afford it

  16. The PrangWizard
    Posted August 12, 2017 at 9:11 am | Permalink

    I am in favour of success but it is unfortunate that those of us who prefer our industries to be home-owned have had a bit of a side-swipe here.

    All that Mr Redwood says is true except he does not mention that surplus cash-flow, profits and dividends and patents too will be remitted to the country of ownership. And I have no doubt that in any economic downturn the owners of our businesses will look to their own home responsibilities first as well as stifling competition from establishing.

    Perhaps Mr Redwood will explain at some point why he prefers foreign investment to home investment and why he is so keen, along with the spivs in the City, to sell our assets rather than protecting them. And why do other countries protect theirs if his referred system is so good? Is the German method failing – you would expect it to be, would you?

    And why, up until recent decades we were always told that our overseas investments were an asset because we received income from them that reduced our deficits. Now of course we sell everything the spivs can get their grubby hands on and have been selling for so long that we are now, as a nation, working for foreign masters.

    Reply I prefer home investment! In order to cut down foreign inward investment, buying our companies we need to move out of balance of payments deficit. That is why I have been promoting import substitution.

  17. Mark B
    Posted August 12, 2017 at 9:14 am | Permalink

    The latest industrial output figures for the UK are disappointing but not surprising.

    I hate to say; “I told you so !” but I did. And it is not just the car industry, but also the construction and retail industries as well.

    Taxing too much and stifling credit is not such a good approach.

    We are taxing too much because we are spending and borrowing, only then to give away, too much. We are spending on things we do not need to keep large corporate business’s busy. We are sending borrowed money overseas to countries via charities (sic) and NGO’s, money that could be spent or, not borrowed in the first place.

    The credit restrictions are a result of too lower interest rates creating a boom, which seems to be leading to a bust, and QE. All government mandated. And yes, I know the BoE is in charge of interest rates, but no one believes it is actually independent of government.

    What is being brewed up is another perfect storm. And guess what, it is the ‘Little people’ that will get hurt again !

    BIG Government = Bad Government !!!

    • Mark B
      Posted August 12, 2017 at 9:15 am | Permalink

      Sorry.

      Good morning.

  18. MikeP
    Posted August 12, 2017 at 9:18 am | Permalink

    The UK car market is highly competitive and works well for manufacturers, dealers and consumers – or at least it did before Carney’s intervention and the recent Government ban on diesel & electric cars from 2040. How crass was that?! Who on Earth can foretell how battery technology will advance by then? And how and where’s all the electricity going to be generated for this massive switchover? The Scottish Power wind farm scandal (subsidies and compensation for NOT producing electricity!) shows how poorly thought through energy-related legislation can be. And where was the evidence of financing companies going bust over car loan bad debt? Do me a favour, this is the BoE straying into Brexit politics yet again, at a time when we want our strongest industries to be firing on all cylinders (pun intended).

  19. graham1946
    Posted August 12, 2017 at 9:27 am | Permalink

    I can’t see your argument that leasing cars is not dangerous because they can be sold by the owners. Was that not exactly what caused the great crash, but with houses rather than cars?Cars are a decreasing ‘asset’ probably the worst value item you can purchase. In the crash huge numbers of properties came on the US market and values fell through the floor and not enough buyers to take them up. Why are cars so different? A £20 grand car in such circumstances as a crash could be worth only hundreds almost overnight. How is that not a risk?

    • MikeP
      Posted August 12, 2017 at 8:42 pm | Permalink

      The difference is that lenders more or less assume that property values increase over time. However car lenders know that cars depreciate so loans are geared to the expected “residual value” which is much less than the purchase price.

      • graham1946
        Posted August 13, 2017 at 9:38 am | Permalink

        Well they were wrong with property prices in the great crash and I with cars I can see what you say in normal circumstances, but not in a crash where virtually all the equity in cars would be wiped out. Also, the existing second hand car market would be wiped out overnight and the stocks on forecourts are again mostly financed by the banks, not the dealers. A crash would be another calamity, but maybe JR thinks the government will bail the banks out again. They must not.

        Reply I agree we should not bail out the banks. Shareholders and bondholders are there to do that. Cars will not fall to zero value! There would be lots of takers long before we got to zero price.

        • graham1946
          Posted August 13, 2017 at 1:57 pm | Permalink

          Of course they won’t, but neither did houses in the US – it was enough to bust the banks and I think on cars it would be the same because we are not talking a few million but billions. Probably a 60 percent drop would do it as there are no real deposits in these leasing schemes, just a couple of months rental.

  20. Bert Young
    Posted August 12, 2017 at 9:37 am | Permalink

    Each time I go out in my car I am shocked by the volume of traffic . Public transport is a scarce resource and the nearest shops and facilities are well beyond walking distance . Cars are a necessity to me and my family and I certainly do not intend to move to be closer to these support facilities .

    As far as I am aware the car industry is in good shape . It is an important employer and it contributes much to our economy ; I want it to continue to succeed but I want it to adjust to the changes that are required . Cars – particularly those at the top end of the market have always been an important ingredient in my life , they added to the social enviroment I enjoyed and to the business life I had . We have a considerable investment in different forms of talent that support the automotive industry and I want nothing to stop this .

    • fedupsoutherner
      Posted August 12, 2017 at 7:10 pm | Permalink

      Bert. Agree entirely. Why should we feel guilty for wanting a new car? We don’t spend our money on polluting air travel because we like having a new car every 4 years or so. We normally have a loan over 2 years but pay it off early. This time we paid it in 11 months. Any extra cash we earn over and above the normal amount is paid off on the loan. I love my Land Rover and would have a new car any day against a foreign holiday. You pays your money and takes your choice.

  21. mickc
    Posted August 12, 2017 at 9:42 am | Permalink

    The Conservative party is no longer a party supportive of the middle class, but effectively a LibDem lite which supports the elite and exults in bashing its middle class supporters.
    Cameron, Osborne and May are exemplars of this and have no idea of the aspirations of those whose votes they seek.
    If we are to have a form of Socialism, it is best to have it honestly and have Corbyn as Prime Minister of a Labour government. Perhaps that will catalyse the resurgence of a truly Conservative party…but probably not.

  22. rose
    Posted August 12, 2017 at 9:46 am | Permalink

    I fear people may now hang on to their diesels and drive them into the ground as they think they can no longer trade them in for a new car – electric or not. A perverse result as so often with reforms.

  23. ian
    Posted August 12, 2017 at 9:57 am | Permalink

    Nice post john, can’t wait till next budget.

  24. gpmgroup
    Posted August 12, 2017 at 10:04 am | Permalink

    I hope you will publish this comment but I’m not holding my breath…

    The last chancellor had a propensity for raising taxes and those taxes raises are clearly having an impact. If you continue to raise taxes we will be back in recession. Of course people will blame the diesel fiasco or Brexit, but what decision makers need to realise is we already have a very high tax take the highest I believe since Wilson (1969)!

    The tax rises are further compounded by the fact that a whole section of society used to have a small income from savings but those too have had their income obliterated.

    Yet the current administration is unable to grasp this reality and keeps looking to increase the tax take further, so much so, that they are surprised when they include such policies in their manifesto less people vote for them!

  25. Denis Cooper
    Posted August 12, 2017 at 10:41 am | Permalink

    Off-topic, personally I would normally stick with quoting our net contributions to the EU, about £10 billion a year, but having just read this scathing article about Erasmus+:

    http://facts4eu.org/news_aug_2017.shtml#eras

    I have somewhat more sympathy with those who prefer to quote our gross rather than net contributions to the EU, on the plausible grounds that once our money* is handed over to the EU we lose control over how it is spent.

    * That is to say the “Gross payments” listed for successive years in Table 3.A on page 14 in this official Treasury document entitled “European Union Finances 2015”:

    https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/483344/EU_finances_2015_final_web_09122015.pdf

    £18.777 billion outturn in 2014, which works out as £361 million a week.

    Remoaners were told this before the referendum, that the £350 million a week painted on the side of a bus was actually a slight understatement of the official “gross payments”; but that doesn’t stop them boring us all to death by going over the same old false arguments again and again. I suppose mindless repetition is easier for them than thinking.

    • Leslie Singleton
      Posted August 12, 2017 at 2:03 pm | Permalink

      Dear Denis–Absolutely right–Personally, Gross and Net are much the same because “what we (graciously) get back” is (of course) not what we would ourselves choose to spend. The wretched EU using our money for its unwanted ideas on homogenisation in our own country can, and hopefully will, get the Hades out of our lives and the sooner the better.

    • graham1946
      Posted August 13, 2017 at 9:49 am | Permalink

      Plus the 3 billion a year in Customs Duties we pay and hand over without any chance of a rebate. Whys is this never mentioned? It’s money straight down the EU gurgler.

  26. Mel Cornwell
    Posted August 12, 2017 at 11:04 am | Permalink

    Simple: there are those, both IN government and outside it / in the big business ‘Remainer’ chairs, who are DELIBERATELY attempting to pull the wings off every successful aspect of the UK economy post-referendum. It is not helped when two ‘big shots’ in Carney and Hammond are so obviously in that camp. Along with Rudd, they should have been removed from office long since.
    Their usual slow, subtle, stealthy manner of operating has morphed into a full on blatant effort to derail Brexit, no doubt because they can see that there is a limit on the time they have left to ‘mess things up’.
    Conspiracy theory? No. These people and their kind would rather trash the UK and themselves with it, than see it roar out of the EU into a successful future.
    Whatever the future holds, these people have marked their cards with the British public, and patience with them is long since exhausted. Apathy no longer rules. We are noting their every move, and soon enough, their day of reckoning will come…

  27. lojolondon
    Posted August 12, 2017 at 11:45 am | Permalink

    John, due to the short-term, muddle-headed announcements and lack of certainty around government strategy and the punishment taxes involved, you cannot blame people for not wanting to invest thousands of pounds in an object that could be hit with extortionate random charges in the near future, depending on how the wind blows.
    Whenever I despair at the stupidity of recent UK governments random tax attacks, I remind myself that previous UK regimes taxed hats, wallpaper, windows and beards.

  28. Prigger
    Posted August 12, 2017 at 12:20 pm | Permalink

    Sky News has been repeatedly broadcasting all day that Trump’s threat that he has made military preparations in regard to North Korea is false and “there has been no military build-up!” Even North Korea knows Sky News is FAKE NEWS. Trump hasn”t even bothered tweeting a denial of Sky News’ assertions.

    • The Prangwizard
      Posted August 12, 2017 at 2:59 pm | Permalink

      Sky News equates President Trump with Kim Jon Wrongun. They apply moral equivalence to the dispute. They as an organisation and individual reporters hate Mr Trump so deeply they act as fifth columnists.

  29. forthurst
    Posted August 12, 2017 at 12:24 pm | Permalink

    Everything that is now said about diesel was true at the time that diesels in private cars were first aggressively promoted as a means to savetheplanet. Diesel engines are wholly unsuitable for private cars because of the performance characteristics of the diesel engine itself, namely that a diesel engine reaches maximum torque at circa two kilocycles per minute as opposed to the petrol engine whose torque increases to a peak of at least double that. Maximum torque also corresponds to maximum thermal efficiency. In other words diesels work best with large capacity engines with large gear boxes with engines running at low speed.

  30. Denis Cooper
    Posted August 12, 2017 at 1:38 pm | Permalink

    Off-topic, I’m just looking at the ECJ judgment in the 1991 Francovich case:

    http://eur-lex.europa.eu/legal-content/EN/ALL/?uri=CELEX:61990CJ0006

    and I see:

    “30 That issue must be considered in the light of the general system of the Treaty and its fundamental principles …

    31 It should be borne in mind at the outset that the EEC Treaty has created its own legal system, which is integrated into the legal systems of the Member States and which their courts are bound to apply … ”

    Those who are objecting to clause 4:

    “There is no right in domestic law on or after exit day to damages in accordance with the rule in Francovich.”

    in Schedule 1 to the EU withdrawal Bill:

    https://publications.parliament.uk/pa/bills/cbill/2017-2019/0005/18005.pdf

    don’t seem to have fully grasped that the UK will be leaving the EU and so will no longer be subject to the EU treaties and laws, and so of course anything like this Francovich rule should, must, cease to apply.

    But that does not justify a headline like:

    https://behindthepaywallblog.wordpress.com/2017/08/12/brexit-bill-will-remove-right-to-sue-government/

    “Brexit bill will remove right to sue government”

    And nor does it justify Dominic Grieve making this wildly exaggerated claim:

    https://behindthepaywallblog.wordpress.com/2017/08/12/dominic-grieve-eu-repeal-bill-leaves-a-big-hole-in-uk-citizens-rights/

    about a plan “to ban the public from suing the government for damages after Brexit”.

    He should try to get his head round the fact that however deeply he may be committed to the EU we have voted to leave and that is what is going to happen.

    • Leslie Singleton
      Posted August 13, 2017 at 8:41 am | Permalink

      Dear Denis–Yes–I listened to Grieve and cannot grasp why if we lose this right but decide we want it we cannot just ourselves institute one, without reference to what the EU position was or is? Surely the ‘instant transfer’ route isn’t the be all and end all. How can it be? Life will go on.

  31. Lifelogic
    Posted August 12, 2017 at 1:45 pm | Permalink

    Why on earth do taxpayer have to subsidise rich people who want to virtue signal by buying an expensive, impractical, rapidly depreciating and soon to be redundant electric car?

    A battery, in an electric car, is just the equivalent of a £100 fuel tank in a petrol car. But they usually cost about half the value of the car £10,000+, they wastes up to half the energy they hold in the charging and discharging cycle. Their capacity (range) is dreadful, perhaps just 5-10% of a proper car. They take ages to recharge rather than minutes, they are not suitable for towing. The cars are light (apart from the battery) and so you can be rather more vulnerable in them in a crash too.

    They produce far more C02 at the power station and in manufacture and manufacture of the batteries is not remotely environmental.

    So why exactly is the government subsidising them and the BBC pushing them endlessly? If we get some huge technical breakthrough in battery capacity then fine, until then they are absurd for more people.

    If the government want clearly air in cities then sort out the often filthy diesel buses & taxis that are on the road all day first.

    • fedupsoutherner
      Posted August 12, 2017 at 7:15 pm | Permalink

      LL. Why do something simple when you can frustrate and take extra taxes from the public?

  32. Prigger
    Posted August 12, 2017 at 3:06 pm | Permalink

    Al Gore. It says much of him that he was prepared without at any time threatening to tender his resignation to continually serve under the President of the United States from 1993 to 2001 Bill Clinton.
    It literally is a shame he borrows without permission the term “-Denier” taken from “Holocaust Denier” to talk about slush in regard to his personal opinions on Climate Change. Look , the predictions of Climate Change if you read them from years back predicted we would face extinction by now. It is undoubted Al Gore’s opinions suffered the same fate as dinosaurs. …they would just not give up mining coal and burning it on their camp fires cooking other reptiles.
    Seriously the Earth was not hit by a giant piece of rock from Outer Space. The Earth’s orbit, its tilt and speed are not governed by your granny cooking on coal. She never was that powerful except in regard to whether grandfather wore a tie or not and when. The Earth does not care whether the dinosaurs or we humans live or not. It will tilt, rotate and move as it wishes. It is big and does not have a personal preference for Green issues or gender balance.

  33. Peter D Gardner
    Posted August 13, 2017 at 3:59 am | Permalink

    I find it extraordinary that a Conservative MP feels he needs to explain the basic essentials of a how a Government can facilitate rather than hinder an entire industry. The trouble seems to be that the leadership of the Conservative Party believes as much as Jeremy Corbyn does that people go to work primarily in order to raise money for the Government to spend.

  34. miami.mode
    Posted August 13, 2017 at 8:02 am | Permalink

    Always interesting to know how many of the decision makers such as MPs, senior civil servants, quango chiefs etc actually have to rely on cars to undertake their daily lives, or whether living in London with their buses, underground, taxis and bicycles, they have a jaundiced view.

    • Leslie Singleton
      Posted August 13, 2017 at 12:18 pm | Permalink

      Dear miami–Remember Boris on his bike in London with his chauffeur-driven limo following with his stuff in–Did he think nobody would notice? An important question is whether Jacob Rees-Mogg rides a bike. I hope and expect not. That would clinch him for PM for me. He has never yet that I know of said or done anything that I could disagree with.

  35. Peter
    Posted August 13, 2017 at 2:09 pm | Permalink

    We are at ‘peak car’ level in London.

    The roads are slowed by jams even in the suburbs. High Street shopping centres lack parking. It is easier to hop on a Tube or train or bus for many journies. Car sharing clubs are growing in popularity.

    All this will reduce demand for brand new cars.

    Electric cars are no solution to traffic congestion and their current technology and distance range with one charge makes them unappealing. Recharging would then be another issue if their popularity increased.

  36. Ken Moore
    Posted August 16, 2017 at 10:56 am | Permalink

    I hear Vauxhall sales are down 40% from last year putting the livelihoods of thousands of car workers on Merseyside at risk. The Conservatives car tax changes are largely to blame – one badly needed thriving industry and they had to screw it up.

    If interest rates increase or there is a downturn, there could be an avalanche of defaults on car payments as most vehicles are now bought on tick…..Dr Redwood doesn’t seem to grasp the risk of sliding second hand car values and negative equity…

    Reply DR Redwood has recommended policies that would keep the car workers jobs! Banks can judge personal loan risk and have reserves enabling them to finance cars.

    • Ken Moore
      Posted August 16, 2017 at 6:46 pm | Permalink

      Thanks for your reply,

      Well many thought the same about the American Mortgage market..why shouldn’t the poor have access to mortgages..and now cheap car loans..

      80% of car sales are now done via personal contract plans fuelled by cheap credit.

      When interest rates have to inevitably rise, this is going to cause pain.
      Possibly a wave of defaults on cars and repossessions-with so many used cars on the market values will plummet creating a spiral of negative equity creating further damage.

      It is totally untrained car salesman (other than training in how to maximise profits) that are selling these PCP’s often to customers who can ill afford to pay.
      Banks do not judge the loan risk directly – I hope I have persuaded you there is a problem.

      Consumer credit has grown at a rate of nearly 11% in the last 12 months (we haven’t seen double-digit growth rates here for nearly a decade); and household debt to GDP is back up over 140% (it hit 160% at its pre-crisis peak). Those numbers will test the banks reserves when things go bad…

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    John Redwood won a free place at Kent College, Canterbury, He graduated from Magdalen College Oxford, has a DPhil and is a fellow of All Souls College. A businessman by background, he has been a director of NM Rothschild merchant bank and chairman of a quoted industrial PLC.

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