Recession - Stimulating the car industry

Generali

ninky wrote: »

why do laissez-faire economists start baying for state intervention when their customer base disappears?

This one doesn't.

State intervention is usually either a mistake or an expensive disaster.

kabayiri

I think these so-called 'car clubs' should receive significant tax breaks.

People who don't need cars during the week (city commuters possibly) could then benefit from a pool of cars.

This would drive demand for cars and change the ownership profile.

ninky_2

Generali wrote: »

This one doesn't.

State intervention is usually either a mistake or an expensive disaster.

so do you agree that we shouldn't have bailed out the banks OR the car industry?

JayScottGreenspan

graking100 wrote: »

Notwithstanding the ecological benefits of allowing the motor industry to fade into oblivion, it is not in the UK's economic interest to allow the UK "branches" to fall by the wayside. So rather than pump billions into these factories for dubious green development, how about the following for stimulating demand:

For 2 years only

1. Withdraw all vat from personal car leasing schemes. As sales are now so low, this will cost the Govt very little.

2. Allow up to 50% of the annual cost to be offset against personal income tax liability. Grade tax relief according to engine size eg 50% if low emission levels and 30% if highest.

3. Government gives a financial contribution of say 10% of lease deposit - payable to the leasing company.

All three points are equivalent to the government dipping into its (our!) pockets and handing a big wodge of cash to some random punter who buys a new car.

The benefit to those employed by the industry would be small. The cost would be huge.

mvengemvenge

As someone else said on another thread, one of the big issues is that prices are still not in the real world.

Everyone else is having to drop prices left, right and centre. Why can't car manufacturers do the same? It's mostly because car assembly workers demand unrealistic wages, which bumps up the overall cost. I know of people who were cleaners at Rover who were getting £10 per hour ten years ago. This is what needs to change. Instead of expecting subsidies and special credit for customers, manufacturers and workers neeed to face the real world.

Less over-manning, realistic wages (for what is, at the end of the day, just an assembly worker), and lower, affordable prices. I understand Generali's point about security, but it's less of a risk to take on if it's half the price.

kennyboy66_2

piggeh wrote: »

It might boost it by 200-300k units a year, but are you not simply creating an artificial level of demand? How have these companies proven that they can survive on sustained levels of demand 20-30% lower than they were before the credit crunch kicked in? Most have laid off staff to reduce costs, it's not really a sustainable way to operate in the long term. They need to give solid proposals how they expect to make a profit on 'normal' levels, not levels inflated by government subsidies.

JD Power forecast that there will be "well below 1.7million" cars sold in the UK in 2009 - that will be less than 25 years ago.

Even if you think that the boom added UK sales the actual data would suggest that this is not much more than 10%

Cars sold year by year in the UK

1980 1,513,761
1981 1,484,622
1982 1,555,027
1983 1,791,699
1984 1,749,650
1985 1,832,408
1986 1,882,474
1987 2,013,693
1988 2,215,574
1989 2,300,944
1990 2,008,934
1991 1,592,326
1992 1,593,601
1993 1,778,426
1994 1,910,933
1995 1,945,365
1996 2,025,450
1997 2,170,725
1998 2,247,403
1999 2,197,615
2000 2,221,647
2001 2,458,769
2002 2,563,631
2003 2,579,050
2004 2,567,269
2005 2,439,717
2006 2,344,864
2007 2,366,000
2008 2,150,000

kennyboy66_2

mvengemvenge wrote: »

As someone else said on another thread, one of the big issues is that prices are still not in the real world.

Everyone else is having to drop prices left, right and centre. Why can't car manufacturers do the same? It's mostly because car assembly workers demand unrealistic wages, which bumps up the overall cost. I know of people who were cleaners at Rover who were getting £10 per hour ten years ago. This is what needs to change. Instead of expecting subsidies and special credit for customers, manufacturers and workers neeed to face the real world.

Less over-manning, realistic wages (for what is, at the end of the day, just an assembly worker), and lower, affordable prices. I understand Generali's point about security, but it's less of a risk to take on if it's half the price.

Birmingham University did a study on the effects of Rover closing

"The average yearly salary of the ex-workers interviewed at MG Rover was £27,624 or a weekly salary of £514, as compared with £404 for a full time worker (£444 for a man) in the West Midlands in 2005"

This figure included shift premiums, overtime etc.

The idea that cleaners were getting £10 per hour in 1999 appears a little fanciful doesn't it ?

The UK car industrys problems are not much to do with over manning or unit labour costs.

mvengemvenge

kennyboy66 wrote: »

Birmingham University did a study on the effects of Rover closing

"The average yearly salary of the ex-workers interviewed at MG Rover was £27,624 or a weekly salary of £514, as compared with £404 for a full time worker (£444 for a man) in the West Midlands in 2005"

This figure included shift premiums, overtime etc.

The idea that cleaners were getting £10 per hour in 1999 appears a little fanciful doesn't it ?

The UK car industrys problems are not much to do with over manning or unit labour costs.

Well, I worked on the New Claims section of a Midlands Jobcentre, and we had to photocopy wage slips. I know what I saw on people's wage slips, believe me. You are wrong. Although the current malaise in the car industry were not 'caused' by staff costs, they have exasperated the situation, as the cars cost so much to produce that manufacturers can't drop prices enough.

I would like to see exactly how much the actual materials for a car cost before it is assembled.

Graham_Devon

handful wrote: »

Surely better to adopt the policy that other countries are, pay people say £1000 or £2000 to scrap old or environmentally unfriendly cars to put towards the cost of a new car?

That has absolutely nothing to do with environmental policies. That's just a nice cover up. it's far more damaging crushing perfectly servicable cars and buying a new one.

Graham_Devon

mvengemvenge wrote: »

Everyone else is having to drop prices left, right and centre. Why can't car manufacturers do the same? It's mostly because car assembly workers demand unrealistic wages, which bumps up the overall cost. I know of people who were cleaners at Rover who were getting £10 per hour ten years ago. This is what needs to change. Instead of expecting subsidies and special credit for customers, manufacturers and workers neeed to face the real world.

Would you pay your income tax if the government said you didn't have to?

Would you pay for your shopping each week if the government said, don't worry, we will pay for you?

Why would car manufacturers drop prices when they keep getting taxpayers cash anyway, and just keep producing. There really is no need for them to drop prices at all while the governments prop them up.

Just like banks, they have the blackmail opportunity of saying "look, all these people will be effected if you do not hand over cash".

There really is no need for them to reduce their prices.Ford put them up in Jabuary (so did Vauxhall) and I heard ford plans to put the price up another £500 per fiesta end of this month. If we get that scrap scheme, they will put them up again.

The banks didnt lower our loans etc when they got taxpayer money. They didnt make it easier to get a mortgage. Oh no, they just put the rates up to favour them. Same with cars. Same with any industry that gets bailouts and incentives.

Edit: As for the £10 per hour thing. Our cleaner gets nearly £20 per hour. But then shes only in a couple of hours a morning. She does another job, but an hour between this job and the other is lost. So they may get more, but may work less?