The chancellor stated in his budget that we’re well prepared for economic slowdown. Well, one of the industries already dawdling along in neutral, occupying the slow lane, is Big Motor - and it will not have heard Darling out with much pleasure. There is huge global over-supply at the moment and the pain, especially in the States, is already acute as Motown downsizes.
Darling looks as if he’s going to clobber big, new cars hard by having a special high road tax rate for year one – that amounts to an extra sales tax on powerful new gas-guzzlers, and could amount to almost £1000 for the worst offenders.
The point is that the cars that produce the most carbon dioxide are almost always the larger-engined vehicles. And it is those very vehicles on which car manufacturers make the highest margins and enable them to churn out small, fuel-thrifty vehicles further down the range, often with very little profit to be had from them at all. The Germans will be especially fed up with this as it will hit BMW, Audi and Mercedes where it hurts. Porsche is already expressing its annoyance with UK lawmakers by attempting to sue Ken Livingstone over his increased level of Congestion Charge in London for high-emitting vehicles.
The most fashionable drive around town at the moment may well be the new Fiat 500 – a friend has just ordered one but it can’t be delivered until September - but Fiat’s profit from that virtuous midget of a car is meagre indeed. And they’ve stripped out just about as much cost as they can without the things being made from plastic and paper. In the days of post-war austerity the original models did have their fair share of cardboard in them, after all...
