Problems run far deeper than one manufacturer

The Unite union spokesman Tony Woodley announcing that an un-named car maker will potentially go under in the next 2-3 days unless they receive immediate financial aid from the government aid package – potentially costing thousands more workers their jobs – is stating what most people involved in the car industry has long suspected. There has been much speculation about who it may be, but whether it is Vauxhall, Nissan, Honda or any other struggling manufacturer it all equals disaster for the industry and its many supply partners. The unions and the SMMT are currently appealing to the government to act swiftly and directly to stave off catastrophe. Commentators are trumpetting the car scrappage schemes being introduced in the EU as a way of breathing life into new car sales and the business as a whole, but although this may help in the short term the problems they are facing run far deeper than encouraging buyers to scrap their existing car for a voucher towards a new car as their priorities will probably be elsewhere at present.

Surely the way forward is to ensure that lenders and finance houses encourage consumers with competitive deals which are available to far more buyers than they are at present after all who started this grotty mess in the first place? It’s ok being a responsible lender and tightening their lending boundaries but in so doing there are potentially thousands of buyers who would have been eminently entitled to finance pre-recession, but as usual in this world we lurch from one extreme to another, and it’s not like customers would need un-secured loans.

The other point to consider is that a lot of the overheating of new car supply is self inflicted, with the car makers almost fanatical race for market share, this scenario could easily be seen as a correction and disastrous pre-registration and guaranteed buy back schemes have cost the industry millions of £s and catastrophic job losses.

New car SALES in future should mean exactly that and not chasing registrations and skewing the figures. The brands that will surely survive this will be the ones which combine sensible planning and supply with competitive pricing, a good model lineup, eco-friendly cars and a strong partnership with their dealer network.

If we actually take a look at the 59% downturn in new car sales from Jan 08 to 09 how many of the cars registered as new car sales last year were actually models sold to customers or businesses and how many were pre-registered? The one small chink of light for our beleaguered car makers at present is that the public transport alternative is showing absolutely no signs of providing travelers with a viable alternative. Prices are the highest in Europe, trains are overcrowded and late and often cancelled so at least car drivers and future buyers will still feel the lure of the open road (however congested) and the desire for the independence of car ownership!

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3 Responses to Problems run far deeper than one manufacturer

  1. patrick lewis February 22, 2009 at 1:12 am #

    I heard that as many as 300,000 people were declined finance last year whn attempting to buy a car.dont know how many were new cars but you can bet at least half must have been and that is an awful lot of lost sales!!!the banks statrted this sh#t and they will keep us in it!!!!!!

  2. Chris February 22, 2009 at 2:03 pm #

    From today’s Mail on Sunday…

    The union boss at the centre of a row with the government over claims a major car plant was on the brink of closure asked MP’s in a private email to help him save LDV vans.
    The firm is part of the business empire of Russian oligarch Oleg Deripaska, a friend of Business Secretary Lord Mandelson. On Friday, Tony Woodley, joint leader of Unite, said:
    “There’s a company in our country that, without direct financial aid, will go down and it will affect 6,000 workers”
    Mr Woodley refused to name the company. This prompted claims from labour that he was scaremongering. Lord Mandelson has warned union bosses against “rumours” that could destabilise a company.
    But two MPs said they were among 12 who on Thursday received Mr Woodley’s email naming LDV. The union boss asked Labour and Liberal Democrat MPs to help him “lobby” labour over the firm.
    Mr Woodley was last night still refusing to name the plant. The LDV factory, in Washwood Heath, Birmingham, which employs 1,000 workers directly and thousands more in supply and component plants, lost £28 million last year. It shed 95 jobs in November.
    LDV was bought in 2006 by a firm owned by Mr deripaska, who was at the centre of a controversy when he entertained Mr Mandelson on his yacht last summer.
    While EU Trade Commissioner, Lord Mandelson authorised trade concessions worth up to £50 million-a-year to one of Mr Deripeaska’s companies. But since then, Mr Deripaska’s fortunes have been severely hit by the credit crunch and last autumn his friend Russian Prime Minister Vladimir Putin, had to refinance £1.7 billion in loans for him.
    Mr Woodley said last night: “i am not naming the plant but I am absolutely sticking by earlier remarks.”
    LDV said: “We cannot deny it is a critical situation but we have nothing to say at present. We are talking to the Government and taking any advice they can give.”

  3. will February 22, 2009 at 3:08 pm #

    The motor industry is suffering because it is driven by manufacturers seeking to maximise production efficiency rather than produce to genuine customer demand. I remember 10 years ago Ford promising a 14 day car from order input at dealer to customer handover. It never materialised.
    That kind of efficient production would help the industry immensely but instead the manufactures wholesale masses of unwanted cars to dealers who then have to distress market and pre-register them.
    The whole model for mass car manufacture needs to be brought up to date. The industry cannot keep on producing cars simply to maximise the efficency of the factories – often built in times of greater consumer consumption.
    Why should the taxpayer have to fund these poorly run behemoths. Wake up, wise up and join us in a leaner 21st century.

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