We're on the road to nowhere!

01-Jul-2019


You might feel that it is just our government that has been working to glacial flow standards, writes Iain Robertson, but our motor industry is also behaving like the proverbial headless chicken, with flailing fingers of blame and poor foresight.

While the SMMT (Society of Motor Manufacturers and Traders), which purports to lead the motor industry, lobbies parliament and grabs members’ subscriptions eagerly, continues to bleat about ‘Brexit’, it has recently signed the Heads of Agreement with CAMA (the Chinese Automobile Manufacturers’ Association), which can be either an enlightening development, or one destined to insert a major nail in the UK motoring scene’s coffin.

Rest assured, with Sino-funding securing PSA Group’s (Peugeot, Citroen and DS) recent total acquisition of Vauxhall/Opel, as well as the Chinese Geely Corporation owning Volvo, Polestar, London Taxi and Lotus, with SAIC owning MG, as well as underpinning other brands, slowly but surely, China has been making clever and sometimes ingenious investments in Western enterprises, with quite a lot taking place under the radar.

When China awoke to the realities of ‘free enterprise’, very little of which exists in its homeland, as so much is controlled by its Communist government, it coincided with an explosion of its automotive business. Dozens of new carmakers were founded. Improved prosperity meant that young Chinese people wanted increased mobility and they got it, in spades. However, as Land Rover discovered recently, having won a landmark plagiarism case against Chinese carmaker Landwind, which created a virtual replica of the Evoque model, the Chinese people are consummate copyists and other cases are pending.


However, when the west started to realise that money could be made in a new market, as far back as the early-1980s, legions of western carmakers sought out eager partners on the Chinese mainland. From BMW to VW, deals were struck, mostly to take advantage of significantly lower costs and faster production turnarounds. Around a decade ago, having learned what they needed to, the Chinese started to send westerners back to their European headquarters. However, Chinese products were crude, lacked vital safety elements and failed to meet the majority of western standards, as was witnessed by NCap crash testing numerous Chinese motor vehicles, all of which failed even the most basic of tests. There were inevitable fears that our market would be flooded with very poor-quality facsimiles.

Yet, the west was still blinded by the vast growth potential in the Chinese market. As we discovered earlier this year, Land Rover was hit particularly hard by a near-50% ‘downturn’ in its Chinese sales, which forced it to beg owner, the Indian Tata Corporation, for desperate rescue funds. The resultant tail-spin led part-French government-owned Renault to make a recent bid for the sometime British brand. It failed but has opened the door to a 50:50 partnership deal with troubled FiatChrysler. In the meantime, PSA Group, supported by its Chinese partner Dongfeng Motor Group, is now making a bid for Jaguar Land Rover. Talk about confusion reigning?

Intriguingly, were Renault to succeed, it would leave the world car pecking order as VW Group in first place (10.83m units sold in 2018), followed by Toyota narrowly in second (10.59m), with Renault/FCA in third spot (8.55m). Still a major player, GM would be fourth (8.4m) and Hyundai/Kia would slot into fifth overall (7.4m).

In case you wondered why the ‘Backbone of Britain’, Ford Motor Company, is missing from this group, it is because it is dealing with major issues of its own. It has now been revealed that it is shedding 12,000 jobs across its European operations, which is not exactly small potatoes. Bear in mind that Ford no longer produces cars at Dagenham, nor vans at Southampton, which means that every Ford sold in the UK is an import. However, as a major engine-building facility, both at the aforementioned Dagenham and also at Bridgend in South Wales, both sites are now under the cosh with talk of closures and more job losses, none of which has anything to do with the UK’s impending departure from the EU…although it can surely not have helped the decisions.

Ford’s future shape will be concentrated on EVs and SUVs, while it is dropping MPVs and some family models completely. Ford is already exploring an alliance with VW for light commercials and it is closing at least six of its 24 European manufacturing and engineering sites. However, PSA is also talking about closing down the Vauxhall Astra production facility at Ellesmere Port, on Merseyside…if a ‘No Deal’ Brexit occurs.
Behind all of this is a rush to produce Electric Vehicles. Yet, sales/leases of EVs remain at a truly low ebb, at less than one per cent of the total 2.3m UK new car market. In fact, that figure is split 60:40 in favour of hybrids, the balance being of EVs. Remove the number of demonstrators and dealer stocks and the figures are negligible. Were the motor industry to turn its back on years of Internal Combustion Engine (ICE) developments, it would soon go bust. Hybrid technology, by which an ICE is mated to an electric motor, or electrically driven axles, using battery storage, is the only short-to-medium term solution. However, with both the Russians and Chinese now controlling the lion’s share of the world’s lithium mines, it does seem as though the east will soon be dictating the west’s actions on that score too. It might be a good idea to start learning how to speak in Chinese.
 
Motor Industry Snippets

Tax clarity called for

A comprehensive lack of governmental clarity in relation to WLTP fuel economy figures, which come into legal effect in April 2020 and replace the former NEDC ratings, is causing a log jam of upwards of 250,000 new cars being registered for UK fleets. Various fleet management organisations, responsible collectively for 1.2m cars in the UK, are warning that motorists may be forced out of their company cars unless action is taken. The company car is regarded as a vital mechanism for driving down CO2 emissions, not least because of its huge tax contribution to the Exchequer. The fact that there are no longer incentives available to encourage the uptake of low-CO2 vehicles is regarded as an additional hindrance.

 
Changing face of motoring

It is commonly regarded that there are four key pillars in the motor industry: connected, shared, autonomous and electrified. While EVs are gaining broader public acceptance, the connected sector, which was kickstarted by offering ‘black boxes’ to high-risk drivers, has produced only minimal feedback (fuel economy, driving during unsociable hours and exceeding annual mileage limits). However, the recovery of data is now regarded as a priority, even though, who owns that data and what value it conveys are yet to be determined. Orwellian fears of data misuse by marketing companies is omnipresent. A pay-as-you-go future, promoted by less emphasis on ownership, is leading to a huge growth in urban vehicle sharing but the city model has zero relevance for countryside dwellers, even though personal leasing is on the increase. Finally, the amount of autonomous developments continues to gather momentum. However, they raise questions about safety and legality of users, let alone age, infirmity and drugs and intoxication dependency levels. While a wider choice is available to consumers, there still remain too many unanswered questions.
 
Diesels dive, while EVs rise (slightly)

According to figures released recently by the SMMT, the UK’s diesel demand slumped from 930,000 to 688,000, a drop of 26% in just a year. On the obverse side of the coin, EVs rose from 13,000 units to 18,500, while petrol-powered cars increased by 10%. Company car drivers have benefited from the removal of the 4% BIK diesel surcharge and cars meeting the new cleaner diesel ratings continue to be acquired by fleets but that is not halting the slide. Sadly, even though the latest diesels create a compelling case, especially for higher mileage users. The real disruptive factor in the market lies with hybrids and EVs are struggling to close that gap.
 
Huge increase in London traffic fines

If a driver commits a moving traffic violation (e.g. using a route restricted to certain type of vehicles, such as a bus lane, performing a prohibited left, or right, turn etc.) and they are captured by a CCTV camera, or CCTV vehicle, doing so, they will then likely be subject to a payable fine. The aim of these fines is to not only make irresponsible drivers accountable for their actions but also improve road safety and reduce congestion levels. There has been a huge increase in the number of penalty charge notices (PCNs) that had been issued by London councils to road users between April 2017 and March 2018. City of London council issued the highest number of moving traffic PCNs in London, at an astounding 192,841, the equivalent of 528 penalties each day. Compared to April 2016 to March 2017 (10,939 penalties), it represents a significant increase of 1,663%. Barnet council handed out 86,578 PCNs within their North London borough (55% rise from the previous year total of 56,026). Overall, a grand total of 1,439,942 penalty charge notices were issued by 29 London councils in 2017/18 for moving traffic contraventions. Put into context, it is the equivalent of 3,945 moving traffic PCNs per day in the capital, an increase of 30% over the previous year.