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Car sales crash 59 per cent but Mandelson says industry can survive
20.03.09
The number of new cars produced last month in the UK crashed 59%, official figures showed today.
With vehicle companies cutting back drastically on production, just 59,777 cars were made in February 2009, representing a huge drop on the February 2008 total, the Society of Motor Manufacturers and Traders (SMMT) said.
Commercial vehicle (CV) production fell even more sharply, going down 71.6% compared with February 2008.
AA president Edmund King said: "These plummeting car production figures show the urgent need for a boost to this vital industry.
"Car scrappage schemes in countries such as Germany are already having a positive effect on sales.
"The Government needs to decide now whether or not they will introduce a financial incentive to buy new cars because uncertainty means some potential buyers are putting off their purchasing decisions.
Despite the latest depressing figures, Business Secretary Lord Mandelson today said car manufacturers could still survive and thrive if they take the right decisions.
These are a combination of cutting back in response to their former over-supply and over-production, in the face of extreme loss of demand, and investment in future markets and future products, he said.
The peer was speaking ahead of a visit today to the Nissan car plant in Sunderland where a new model will be built next year despite job losses.
He told the BBC Breakfast programme: "The car manufacturers, their huge supply chain, are a cornerstone of our manufacturing sector.
"They employ very, very many people, so their survival is important, and they will survive, they will thrive in the future, as long as they make the right decisions now."
He sidestepped a question about the industry's wish for a "scrappage" scheme to be introduced, under which motorists would be paid to trade in their old cars for more eco-friendly models, a policy which has been introduced in a large number of European countries.
Lord Mandelson said last month that ministers were looking at such schemes, but no decision has been announced.
Today he pointed out that the Government had created an assistance package "to make sure that these vital companies do not cut back and harm their capacity, both their plant, their research and their development, as well as their very skilled workforce, in a way that would find it more difficult for them to take advantage of the upturn when it comes."
And he added: "So both through their access to European Investment Bank loans, which the Government here is prepared to guarantee, as well as the loans and guarantees that we are prepared to offer to the industry, domestically, we are going to make sure that where these companies are viable going concerns - and in the overwhelming majority of them that is the case - they do have a future."
Reader views (4)
The automobile industry has known for years that there was to much capacity, yet still refused to do anything about it! Now we have a 'credit crunch' and the last thing on anyones shopping list is a new car. The industry was in a dire situation before, now, it is hopeless, however the problem remains the same, to much capacity! The industry is obviously badly managed, and, not prepared to take corrective action, even when it becomes totally apparent. My question is why should we bail out a badly managed business, which operates in a market with massive overcapacity, with taxpayers money? are we a capitalist country, or, a corporatist country?
- Kevin Sullivan, Roehampton, London.
Any car scrappage plans in the UK , will only put money into the pockets of European or overseas car manufacturers.The money would be better directed to other UK industries.When Renault/Citreon/GM etc. are ready they will pull the plug on the UK.They already have Sales and manufacturing problems in their own countries.
- Mike, France
Indeed, rip-off Britain has been the place for over-priced cars for far too long and its about time we enjoyed the same, cheaper prices available abroad. The industry would be doing itself a favour if it realised this and acted - the tax payer certainly should NOT be bailing them out!
- John, London
The suicidal streak within the car industry continues. Only a few weeks ago General Motors announced price increases on their models. Car prices in the UK have been too high for too long compared with Europe and the USA. Some reajustment is required and it should not be the tax payer who bails them out.
- Paul B, London
