6:51 pm, June 22, 2010
IN the run up to the election Labour invested £1.8bn of taxpayers’ money in British industry. The former Business Secretary Lord Mandelson initiated the spending campaign focusing on industrial seats in marginal constituencies.
Lord Mandelson was said to be behaving like ‘a Bourbon monarch going round in his coach throwing out gold coins’ according to The Independent.
Cameron and Clegg may find these commitments cannot be easily reversed. Loan guarantees totalling £650m were made to Ford and Vauxhall to ensure that the American-owned motor giants continued investing in car manufacturing and engine production in the UK.
If for example the government performs a U-turn on a £20m grant to Nissan, the Japanese motor manufacturer may withdraw its plans to build 50,000 electric cars a year at the Sunderland factory.
Dealerships benefited from a government sponsored 11-month scrappage scheme back in May 2009. In the wake of falling sales this incentive scheme did an awful lot to boost the new car market and drive production volume as a result. The fundamental question for dealerships today will be: ‘how will the government tackle the issue of consumer spending?’ After Labour drove our society into a deep recession many businesses now nervously await the solutions for recovery.
In the recent programme for government, David Cameron and Nick Clegg stated that they considered business to be the driver of economic growth and innovation, and that they need to take urgent action to boost enterprise, support green growth and build a new and more responsible economic model.
Peter Vardy, chief executive of the eponymous chain of car dealerships, said: ‘This is undoubtedly a tough economic climate for our industry. Scrappage has certainly helped but going forward it will be challenging for some dealerships – those that can raise the bar will thrive, those which don’t may struggle for survival.’
Vardy said his turnover had grown by 24 per cent in 2009 to £139m, while operating profit rose by 80 per cent to £3.5m. He said getting his buying and online strategy right had contributed to the growth, in an article in The Scotsman. Thankfully many dealerships today have proved 2010 to be a much stronger trading period than anticipated.
Society of Motor Manufacturers and Traders chief executive Paul Everitt said: ‘The level of collaboration between government and industry is set to increase significantly as the Automotive, Supply Chain and Technology Councils work to realise new opportunities from the transition to a low carbon economy.’
In the UK, cars and light vans account for around 16 per cent of CO2 emissions. The government has committed to reducing greenhouse gases by 80 per cent by the year 2050. So far, many car manufacturers have been slow in doing much about developing their electric car product lines.
The future of the British motor industry and renewable energy in the UK is clearly at stake and will require government incentives. Dealerships should be ready to embrace the advances in green automotives.
It is too early to predict how quickly the economy will pick up in 2010 but the signs are promising. The next few months will be crucial for dealerships and only time will tell what impact the ‘new politics’ will have on the seemingly testing future for the dealer market.
by TIM SMITH, GForces, commerical director
