Inside the Industry May  2024

Inside the Industry 

2023/24 Charity Challenge – 3130 Thank Yous! 

Last month I said how shocked and grateful I was that your donations and associated tax credits had reached the staggering total of £2973. Cheekily I asked if you could find another £27 so we hit the magic £3000. Well you did a lot more than that so the appeal has ended at a truly staggering total of 

£3130! 

Only! £953 more than the original target of £2177, which to be honest was set very much tongue in cheek – I never honestly thought we’d make it. So to exceed it by almost £1000 is just fantastic and I can’t thank you all enough for your incredible generosity. I’ve received a wonderful letter of thanks from Eden Valley Hospice who as you know rely entirely on donations to continue with their brilliant work. 

The 2024/25 challenge is not such good news currently, see last paragraph below, but hopefully a blip along the road.

 

Electric Cars at The Crossroads 

I don’t know how long I’ve been writing about electric cars, at least 10 years I’d guess. And THOUSANDS of words. During that time laws have been passed, grants introduced and withdrawn, trillions of manufacturers’ funds invested in research and development. Thousands, maybe millions of cars sold at a loss. Promises covering lots of things, like an adequate and reliable charging networks for instance made and broken. So I really think the time has come to get decisive, is electric the right long term answer or should everyone just give up on it except for niche situations and look for alternatives. There’ll be lots of generalisations because what’s right in Torquay probably isn’t in Timbuktu and so on, but I hope most of the main points will have widespread value. This section will be almost as long as my whole article normally is, so if you have the stamina settle down with a mug or glass to your choice, here goes, in no particular order: 

1.     Customers aren’t generally willing to pay any more for an electric car than for an ICE (Internal Combustion Engine) model. In the UK about 85% on new electrics are sold into company fleets where the company and/or the employee receive generous tax breaks. Not only are retail sales a small proportion, they have stalled. Many observers think the “early adopters”, the people who are first with every new innovation, have bought. Their more cautious fellows haven’t made the change yet. Price is a big barrier, surveys and real life results show that more customers will buy electric when they are the same price as ICE, you don’t have to be a genius to work that out. But except for Chinese manufacturers enjoying heavy subsidies the bald fact is that the electrics cost more to manufacturer. So Governments like ours that are demanding manufacturers achieve a set and increasing proportion of their sales as electric are asking this companies to lose money. Which they are increasingly unwilling to do.

 

2.     The future. Customers are in my opinion rightly concerned about the future costs of operating an electric car. I’ve discussed battery replacement costs before, unless things change in terms of technology this renders the car probably worthless when the time comes. But the bigger worry is the cost of electricity. At the moment in the UK petrol and diesel are charged at about 100%, so if a litre costs £1.50 around 75p is VAT and Fuel Duty. If you use £1.50 of electricity to charge your car the Government gets about 7.5p if you use a home charger or around 25p if you use a public one. Clearly that can’t be allowed to continue. These are big numbers, duty on fuel currently totals about £25 Billion a year, so at some point there must be actions to ensure electric cars pay the same, perhaps by some form of road pricing. But nobody KNOWS, that’s the problem.

 

3.     Politics. Apologies but has to be mentioned. The biggest manufacturer of electric cars by far is China. Because of the subsidies mentioned above their cars can be sold at far below what it costs US and European factories to make them. The US has responded by slapping a 100% tariff on imported electric cars. Otherwise they fear their industry will be wiped out. The European Union is “considering” action. Most people think they will do something similar but perhaps not so severe, and UK will probably follow.  So it will be hard for electric cars to become cheaper. If they don’t industry leaders are warning that Europe, being by far the biggest market outside the US, will be “flooded” with cheap Chinse electric cars. There are 91 companies in China manufacturing electric vehicles. They have between them the capacity to produce 20 million units a year. Last year 7 million new electric vehicles were sold in China. Which leaves 13 million looking for a new home. And if nothing is done the only home for most of them is Europe. And of course if these cars are sold at the prices possible all the cost concerns set out above disappear.

 

4.     Are they really more environmentally friendly? Estimates vary but some say that an electric car is less green until it’s covered as much as 60000 miles. And of course it all depends on how the electricity used to manufacture them and power them in use is generated. In China 75% of electricity is still generated by fossil fuels, 55% of the total still comes from coal fired power plants, the “dirtiest” of all.

 

So in summary I think I’m saying that unless actions are taken to make buying electric cars cheaper, and to avoid fuelling them becoming more expensive then their growth will continue to be limited. The two main ways of making them cheaper to buy are Government subsidies (which we can’t afford) or letting unlimited numbers of Chinese imports in (which will likely destroy the European motor industry). And maintain a tax regime that makes them as cheap to fuel as at present is also unaffordable.

 

Manufacturers are voting with their feet and their wallets. Many have pushed back the dates at which they intend to be fully electric. Mercedes have dramatically cut their planned investment in electric development over the next five years, switching the funds to clean fuels and hydrogen. Stellantis Group Chief Exec Carlos Tavares (arguably the most important motor industry boss in Europe) has attacked the UK Government’s policy of demanding increased minimum sales of electric cars every year from now to 2035 and stated if it is not eased his company will invest less and less in the UK. At the other end of the scale Ineos boss Sir Jim Ratcliffe has made it clear he is no believer in electrics saying:

 

“There is a rather fundamental drawback with the electric car. It simply doesn’t do what you want it to do. It doesn’t get you from A to D reliably if you are on a long journey and have no idea whether you will be able to refuel when you need to. Electric is fine and dandy for the short local journey but no more than that. Hence demand has dried up. Tesla have made 14000 workers redundant, sales in Germany dropped 30% in March when the Government subsidy was cut.”

 

Of course it is always easy to point out all the problems whilst enjoying the luxury of proposing any solutions. So I’ll stick my head above the parapet:

 

1.     Any attempt to deliver a speedy solution is doomed to failure. As Sir Jim said: “Changing transportation from fossil fuels to electric is not like flipping a light switch. There needs to be a transition period during which the required production and delivery of green energy can be created. And time will therefore be allowed to explore and develop additional technologies.”

 

2.     There is no one solution. I certainly believe electric cars have a place in the mix. That place in my view is in city cars covering almost 100% short journeys with a range of say 100 miles or a little more. Obviously much smaller batteries would be required. Batteries are the expensive bit, so the cars would be much cheaper, as would the eventual battery replacement, overcoming the customer cost objections set out above. For longer journeys and commercial vehicles hydrogen looks the best bet either used in hydrogen fuel cells or direct burn hydrogen engines. Different tax rates would see to it that only “green” hydrogen is used. Synthetic fuels also need research and development.

 

3.     In cities investment should go into improving public transport. I’ve only visited a few cities with modern tram systems, Edinburgh, Nice, Strasbourg come to mine. In all three cases an amazing improvement. And car sharing should be encouraged further. Having cars sitting idle 98% of the time when there are alternatives makes no sense at all.

 

4.     Long distance public transportation should also be improved, and made better value for money. Travelling from Cumbria to London I almost always take a train rather than drive. But our trains are unreliable, over crowded and worst of all expensive. It might cost me £100 return with the benefit of my old f***s card when the fuel and other associated car costs (tyres, servicing, depreciation etc) would cost not much more than half that. But then I’d have to add Congestion Zone and goodness knows what for car parking in London. So I’m happy to pay what is only a small extra. But if I was taking a family……………….

 

5.     And I can’t ignore my good friend Kirk Ryland’s view that we change our cars far too often. Altering this would of course be bad for the industry, but the fact remains that the major environmental damage of cars comes from building them rather than using them. Many UK customers are wedded to changing cars every 2 or 3 years, often using finance plans designed to encourage them to do just that. Yet modern cars will remain reliable for easily double those periods. Many come with longer warranties these days, Kia offer seven years, and even where the manufacturer only give three years they also offer the option of extending the warranty for a few more years. Mrs G’s Jag has just entered its fifth year and the warranty has been extended for the second time at a cost of under £1000. So long as it is properly serviced Jag will continue to allow us to extend it until it hits 10 years, which takes away the fear of big unexpected repair bills.

 

And now to some other news:

 

Discount On New Porsche 911s?

 

Of course not! For over 75 years Porsche have not only produced and almost endless series of brilliant 911 models, they have also managed to balance supply and demand so that there is always a waiting list and buyers a happy to pay list price or in many cases significantly more on the black market to avoid the waiting list. This policy has also ensured the cars hold thei value very well indeed so depreciation is relatively very low.

 

However the very rapid change from the short supply of new cars resulting from component shortages to free supply appears to have caught even Porsche on the hop. A friend of mine who owns a 911 received the below last week. His car is over 10 years old and he’s no intention of changing it. However he still has it serviced at his local Porsche Dealer and is therefore on the database. Names blanked to protect the innocent and the guilty: 

 

 

 

It pays to be with us.

Enjoy a £10,000 Loyalty Bonus
when upgrading to a new 911.

Dear Mr. ******
 
As an owner of the iconic Porsche 911, and an extremely valued customer, we think you deserve some very special attention.
 
We are delighted to offer you an exclusive Loyalty Bonus of £10,000 towards any of our new stock Porsche 911 models*, registered and delivered before 30 June 2024.

This offer is only available on a limited number of vehicles in stock across Porsche Retail Group Centres, so please contact us at your earliest convenience to discuss the options available to you.

 To discuss your Loyalty Bonus further, contact us using the details below

Call *** *** **


Email



 

We look forward to helping you continue your Porsche journey.

Yours sincerely,

**** *****
General Sales Manager

 

 

 

 

 


Of course it is very important to point out that this is NOT a discount! It is a LOYALTY BONUS. Yes it reduces the cost of the new car by £10000 but that is most definitely NOT the point! 

Good News From Jaguar Land Rover 

JLR recently announced their financials to the year ended March 31. Revenues hit a record of £29 Billion, 29% up, Profits £2.2 Billion again well up. Major factor was increased volumes of Range Rover and Range Rover Sport, the two most profitable models. One cloud on Range Rovers in the UK has been the difficulty and prohibitive costs of actually insuring the cars. As well as making technical improvements and fitting those to exiting cars free, they are now offering £150 per month insurance contribution to buyers who order between now and end September and who use JLR’s own insurance system.  

What I saw as bad, or at least sad, news from JLR is that they built the very last new F Type last week. So the very last petrol powered Jaguar Sports Car. The last in a line stretching back to the SS models of the 1930s, then through the XKs of the 50s (not forgetting the XKC and XKD Le Mans winners), E Types through the 60s to the early 70s.Then the XKS (sorry about that, not a fan), but business as usual with the XKs from 1995 to 2014 then the F Type. Who wouldn’t want one of these (even better one of each) in the garage? So now that’s it, the end, complet, finito. Very very sad, so glad to have driven many of them (including owning a D if replicas count), and to be lucky enough to have an F Type in the garage which I hope will stay for ever.

 

No More Speeding Fines!     

Sounds good? Well it will soon be much more possible. Although perhaps not in a fun way. From July 6th most new cars sold in Britain will “encourage” the driver to slow down when driving faster than the limit in force on the road they are travelling on at the time. The car will “beep” at you to warn you of the transgression, and if you don’t immediately obey the throttle pedal will push back against your foot. Good news is you can switch it off if you prefer, but you have to do that every time you start the car. The official word is that the system cannot be personally switched off. I’d wager a considerable sum that the useful chap who modifies your ECU to give you more power and better economy will find this a piece of cake! And he’ll be busy doing it. 

SHOCK! Cazoo Enters Administration! 

I must have written more about Cazoo than anything else apart from electric cars over the years. From the super confident predictions when they started that they were going to revolutionise the used car sales industry, through the multi million pound sports sponsorship, the advised entry into Europe when the UK operation was losing millions. Through countless financial restructurings, even more confident statements, then out of Europe, many UK physical sites sold. Finally in March a change from physical sales to becoming an online market place along the lines of AutoTrader. The ink was hardly dry on that when last week Administrators were appointed, 700 staff were made redundant, customers who had paid deposits or bought warranties or service plans wondering where they stood, and the lights eventually turned off. Maybe the old saying “How do you make a small fortune in the Motor Trade? – Start with a large fortune” still has some truth in it. Certainly the business isn’t as easy as Cazoo’s founders thought, and the investors who believed them have sadly lost fortunes.

 

2024/25 Charity Challenge

 

I reported last month that after a good start though March I was a little ahead of target into early April when I was struck by a very painful attack of what was thought to be Sciatica which had literally crippled me. Well the bad news is that 7 weeks later it’s confirmed it’s Sciatica and still here, I’m still crippled, still able to do only a few steps around the house and then with the aid of a walking stick. My GP has been fantastic but has had to explain that the only cure is time. I have a great physio who’s trying very hard for me and at last there are small (very small!) signs of improvement. However enormous sacrifices have had to be made. I missed the bi-annual visit to the Monte Carlo Historique GP (surely the best motoring event in the World) for the first time for many years. And it was supposed to be followed by a week in Italy to add insult to injury! I was to celebrate my birthday last week by watching Brice Springsteen live, surely the best concert going. Sadly he had to carry on without me. I’m sure he managed fine. Etc Etc. Not looking for sympathy I’m well aware that there are many with much more serious medical problems than me, and much more serious consequences. Also I never forget a friend of mine when suffering a very severe bout of man flu. His wife’s response was simple : “If you’re looking for sympathy you’ll find it in the dictionary somewhere between S**t and Syphilis.”    

 

So where does that leave to 2025 Challenge? Well I think the fairest thing to do is stop the clock at April 11 when I’d completed 242.84 miles of the first 1000. This leaves once I’m back in action 140 days to cover the balance of 757.14 miles. Then I’ll start on the second 1000 miles being the route of the tragic 1957 Mille Miglia. Hopefully I’ll be able to tell you next month that the re start has happened. I have important events that require the basic ability to walk on June 5th, 18th, 22nd and 29th    

Paul Gilligan

pg@gilliganvc.co.uk

www.gilliganvc.co.uk

07785 29322