Cars: Electric dreams, clunky reality

Editorial
The Guardian, Thursday 16 April 2009

The car was the 20th century's symbol of prosperity. When the Germans wanted a catch-all term for America's roaring 20s, they often plumped for Fordismus. America's most recent bubble even had its own dedicated auto, the sports utility vehicle. Even now, the surest sign that a developing country has started making money is the length of its traffic jams. The flip side is that when the good times end, the car industry hits the buffers. That was true in the 70s and it certainly holds now. America's General Motors is reportedly laying the groundwork for bankruptcy within weeks, while Britain's auto industry is lobbying the government for financial support. And Alistair Darling is likely to oblige in next Wednesday's budget, by offering motorists financial incentives to trade in their old cars for new.
Cash for clunkers, it is called, and it is a plausible scheme - but a dreadful idea. The argument goes that the car industry is suffering a slump in sales (down 30% this March from a year ago) and needs support to get through this recession. Unless it gets that support, a highly skilled part of the UK's manufacturing base will go to the wall, and with it will go the much-needed rebalancing of the economy away from finance to real production. The car industry wants the government to give customers £2,000 cash for swapping cars that are at least nine years old for newer models. It argues that the rest of Europe already has such schemes and they are yielding tremendous results. When the German government introduced a trade-in deal, half a million people signed up in a week.
Peter Mandelson, the business secretary, is said to be a fan of the proposal, and one can see why. It sounds workable, and it will probably be very popular - cash handouts often are. For a government counting down to a general election and open to charges that it has thrown money at bankers and denied them to everyone else, it ticks numerous boxes. The problem is, it provides dubious economic benefit, probable environmental harm and, crucially, will only heighten Britons' dependence on cars when we ought to be weaning ourselves off them. The economics are simple: all taxpayers - princes and paupers alike - will be paying for a few lucky souls to treat themselves to a new car. This scheme will pay for part of its own way, but it is likely to cost more than the loan guarantees that Jaguar-Land Rover asked for last autumn. It will be of little direct benefit to the UK auto industry, since around 85% of the new cars bought here are imports and a similar proportion of those made here are sold abroad. Yes, British firms provide engines and components for those new motors, but still the best stimulus for our car industry comes from those foreign government schemes. Finally, the scheme may boost demand now, but when it is withdrawn in 18 months the auto industry will face a doubly tough market.
The environmental point is also a simple one: any green benefits are strictly fringe. Yes, there will be newer, more efficient motors on the road - but what about the environmental costs of their manufacture? To this end, the government's announcements today on cash incentives for electric cars are more positive. But again, those cars will still need to be manufactured - and they obviously require power. Green cars are not so green if their electricity comes from a Kingsnorth, or some other smoke-belching power station.
Caught between a recession and the threat of climate change, a cash-strapped government is grasping for plausible off-the-peg solutions. In doing so it is ducking harder questions. We should be thinking about electric buses and more trains rather than cars, and emphasising public rather than private transport, especially in urban conurbations. Over the past century, the car has gone from rare luxury to commonplace utility. Over this century, it will need to reverse that journey.