Wednesday, December 09, 2009

Eddie Hobbs and the car scrappage scheme.

Update:Eddie's reply is at the bottom

Lots of good things in this post but I'm surprised to see positive mention of the car scrappage scheme - "Focus on energy efficiency, green energy and a cash- for- clunkers scheme for low emission cars.". It is neither green nor good for the economy.

We don't have a car industry, we have a car sales force which funnels money straight out of this economy with a small bit staying locally. Stimulate this and you stimulate the Germany and Japanese economies far more than the Irish.

Scrapping cars that have plenty of life left just to have them replaced with something that is maybe 10% less emitting is going to cause a net increase when you factor in the manufacture of the car. Never mind that fact that some will upgrade their cars to bigger, more-polluting models.

Given all that I'm curious why Eddie thinks it's a good idea. he makes a virtue of not being beholden to vested interests so it's unlikely he's saying it for his mates in the motor trade. There are ways to spend the scrappage money that would produce a greater economic stimulus in this country and produce greater environmental impact per euro too.

I sent Eddia a link to this and he replied quite quickly which is very good of him. He said

Yeah, you’re right to pick me up on it. Technically it’s the wrong thing to do since we don’t have a car manufacturing industry but that is softened somewhat by the emphasis on Band A and B. It is, of course, front-end loading cars sales but the x factor is the sight of 2010 new plates on the road, car rooms with consumers in them and a lift in consumer morale. Very hard to measure I know and a subjective call but morale is pretty important to arrest the spending delay factor caused by deflation. Much will depend on the relative allocation to energy, efficiency etc where we’ll get a proper return so let’s see at teatime.
to which I say, hmmm... maybe. One small snag here is that these newly confident consumers just blew all their money on a new car so although they feel good, they're less likely to do anything as a result...

in reference to: Ten things Brian Linehan must get right (view on Google Sidewiki)

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