Peter Cooke fears for
the eco-friendly car in this new ‘Age of
Austerity’.
Will the ‘Age of Austerity’ – 20% VAT, job losses and
government spending cuts – lead to a loss of focus on ‘green
issues’ and the ‘green car’?
Go deeper with GlobalData
Some expect, during
austerity, all but the most important objectives to be dropped in
favour of focusing on survival and recovery. One issue emerging
from the recent BCA Used Car Market Report is that buyers
of used cars have downrated the importance of ‘environmental
issues’ in choosing a car, yet still rate ‘fuel efficiency’ as
important. This seeming inconsistency may signify changes to
come.
The decline of the green
agenda is a concern. The country has targets to meet to satisfy
international treaties and EU directives – or face international
opprobrium and massive fines.
If we stop promoting green
issues, improved CO2 emissions and environmental
protection as key strategic issues, we could create future problems
– yet ‘the green agenda’ can too easily be seen as a ‘luxury too
far’ in harder times. Luckily, green issues come wrapped in a range
of motivations, products, shapes, sizes and costs.
The hybrid car, for example,
is now well established and gaining popularity, even as a taxi. And
electric cars – regarded by many as the ‘ultimate green machine’ –
are being force-fed with unsustainable subsidies. Realistically,
their time hasn’t come yet.
How well do you really know your competitors?
Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.
Thank you!
Your download email will arrive shortly
Not ready to buy yet? Download a free sample
We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form
By GlobalDataOnce the electric car arrives
in real volume, or even beforehand, we will need to find a
substitute for the drop in hydrocarbon taxes – probably through
some form of road use or mileage charging.
Even without hybrids and
electric cars, we might expect a steady reduction in CO2
emissions in the next few years. New car sales are increasingly
polarised between smaller cars and luxurious products, and the mix
is in favour of the smaller cars.
Market forces are moving
towards a ‘greener car parc’ almost as an unintended consequence of
new car downsizing in mainland Europe and the UK. ‘Supporting the
green agenda’ could become an unintended consequence of economic
recession after all.
However, there is a strategic
concern with regard to dealer profits and profitability with such a
migration towards smaller, more fuel-efficient cars.
Even if a dealership can make
the same percentage profit on a smaller car, in absolute terms the
total profit will be lower if the dealership continues to make
sales as at present.
Add longer service intervals,
extended warranties, perhaps longer retention of vehicles, and
growth of the greener agenda may not create the best business
environment.
The challenge is clear. If
cars become smaller and less expensive, we have to sell more. Not
necessarily more units, but more support products for individual
deals – and that could be green.
Why not sell an envelope of
soft and green services? Many might be offered: finance – the
obvious one; extended warranty; a 1-2-3 year service agreement if
it’s not included already; tyre deals – to name a few.
The ‘evaporating luxury’ of
true environmental concern could be rekindled through the judicious
development of an ‘environmental envelope’ for car buyers. Start
with finance so the prospect can at least acquire the car, and then
put together a package of services which would both help protect
the environment – and help contain the cost of motoring.
Essentially I am suggesting a careful review of the
business model to develop a total package for the client which, as
well as offering them a known cost of business or personal
mobility, will also be environmentally friendly.
