September News

Scrappage Schemes have a global impact

At the end of 2008 with global turmoil in the banking sector particularly the announcements were coming fast regarding reduced shifts, shutdowns and ultimately redundancies.

Whilst governments were busy realising that local manufacturing bases (as well as everything else) were threatened they also were met with calls from automotive manufacturers for help. Throw in two high profile Chapter 11s and global governments’ attention was well and truly captured. To demonstrate the broad spectrum of interested parties even motoring magazines began running Scrappage petitions – not that their circulation figures weren’t being harmed by the downturn... Germany and France were two of the governments first to move followed by the UK, Spain and Italy with Japan and China also active before some late arrivals such as the US. What is interesting is the way in which the terms of the Schemes varied. The German scheme offered €2,500 with all funding coming centrally. Conversely the UK scheme offered £2,000 but 50% of the funding comes from the manufacturers – a move that meant it got off to a poor start from a PR perspective.

The US scheme entitled consumers to between $3,500 and $ 4,500 and even though it went live on July 1 it was out of funds by July 24th. With the first $1 billion gone further funding of $2m has been made available which should last until November 1st. Due to the relative sizes of the vehicle parcs the US scheme would need to have an additional $25 billion to make it as far reaching as the German one – a move that seems rather unlikely.

All governments have ensured that their schemes don’t infringe international trade legislation but this may have influenced local criteria and timings. Was the US scheme late so that GM and Chrysler were able to compete more easily? Was the German scheme more generous as the government recognised they could help themselves out of the recession? This scheme also allowed the funds to go against nearly new cars too. Meanwhile, the US scheme may seem a little odd in European eyes as the rules state that the new car must be capable of (just) 22mpg with the outgoing one delivering under (just) 18 mpg. The UK Government with a relatively small manufacturing base will have invested £1,000 per car and on average seen more than that return to it in VAT.

Results?

The German market is 28% up to the end of August and whilst orders continue to be delivered the market will be positive. In France, Italy and the UK the schemes
have stabalised the markets. In Spain the scheme has not been enough to stop a decline of over 30% whilst other markets without schemes have similarly struggled - Ireland and Finland for example. The results in China are incredible – the market was up 91% in the month of August at over 850k units.

As the schemes have become effective manufacturing plants have come back on stream - in the US GM has set about producing an additional 60k units before the end of the year whilst closer to home Nissan GB have taken back associates they previously laid off.

Winners?

Some manufacturers have been benefiting around the world – Hyundai for example saw UK sales rise 208% in August last month (55% ytd) with similar increases in some European markets. The European market was 8% down to the end of August with those with small fuel efficient cars doing very well  - Fiat were 1% up – an enviable position compared to many others.

Many economies around the globe appear to be pulling out of recession and achieving growth. There is a feeling that the worst is over so may be many global citizens are relative winners.

So, what can we learn?

The Scrappage schemes have helped get manufacturing get moving again as well as safeguarding many service sector jobs in dealer networks.

Their impact in key markets is considerable and it is clear many people who would not have bought a new car – possibly ever – have done so. It is likely the habitual new car purchaser will feel confident enough to return to the market place in 2010 as the economy continues its recovery.

Manufacturers and dealers a like need to take special care of the Scrappage customers as for many the franchised dealer experience will be a new one and it needs to be memorable for all the right reasons. Scrappage research we have undertaken so far indicates that some purchasers are not convinced about having their car serviced where they purchased it from...

More could have been done to drive consumers into more fuel efficient/lower CO2 models, however, rather than straightforward replacement. May be the US might start a real love affair with fuel efficient cars and not need the 70% increase in fuel duty Bill Ford called for some months back.

But should it be required again it should focus more on, environmentally friendly cars - whether petrol, diesel, hybrid, electric or even hydrogen – which doubtlessly the survivors of this recession will be building...

This time around, however, the needs were more pressing for this global sticking plaster and the results are positive.

Claire Louise Earns Senior Account Manager Promotion

Congratulations to Claire Louise Smith who has been promoted to Senior Account Manager on one of aura's Pan European Customer Satisfaction Programmes. She has been with aura for 4 years and has worked on another pan European initiative previously. Claire Louise is delighted to take this step and said ‘I am pleased that my hard work and achievements have been recognised and I greatly appreciate the support I have received'.

ISO Awareness Day

Although aura passed its accreditation in May for both Quality Management and Environment Jennie Smith, Finance Manager, organised an internal presentation as to how all Colleagues could work together to improve performance further.

Colleague Handbook

aura took the step to deliver a new Colleague Handbook that detailed changes in benefits as well as ensuring that recent legislation changes were accommodated. This document will form part of all new Colleagues inductions and re-affirms our Vision, Mission Statement and Values.