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Are subsidised car sales needed to drive automotive's green future? Opinion

Professor Jim Saker

Professor Jim Saker's latest 'Viewpoint' opinion article for Automotive Management (AM) considers what is needed to shift the automotive balance to EVs in the UK.

Are car buyers really embracing a new era of zero-emissions travel in their masses, or is it simply a finite trend set by early adopters that risks leaving less affluent motorists behind?

One of the big questions coming out of COP26 is how the event has affected customers’ perception of vehicles and the environment.

Questions revolve around not only the type of powertrain to be chosen, but are incentives still needed to encourage people to enter the electric vehicle (EV) market?

Undoubtedly, environmentalists and the conventional ‘early adopters’ are embracing the move towards EVs.

The introduction of new brands competing against legacy manufacturers has also provided a level of interest, if only on the stock markets.

The cost of 'going green'

Research in the mid-2000s by Sturgess Motor Group in Leicester asked customers whether they would be drawn towards a dealership if it were seen as being ‘green’.

Interestingly, the response was ‘yes’, provided it didn’t cost more.

I am not sure if anyone has broken down the income profile of non-business users currently driving EVs, but I would expect the bulk will be middle-class homeowners with more than one car.

The challenge will come when the market develops and electric cars become an option for the general population.

Has COP26 altered the mindset so buying incentives are no longer needed?

In the case of Germany, the country achieved its target of having one million battery electric vehicles (BEVs) or plug-in hybrid vehicles on the road six months after its initial 2020 deadline.

Germany was the largest market for plug-in cars in Europe in 2020, but this has only been achieved with the Government offering a €9,000 (£7,650) subsidy for people to switch to electric and €6,750 (£5,735) to move to a hybrid vehicle.

Recent interviews with German dealers confirm that the split between plug-in hybrid and BEV is about 50/50, with these types of vehicle accounting for 1.2% of cars on German roads.

Others lag behind Germany, suggesting that, although there is an increased awareness of the need to cut C02 emissions, people still mentally counterbalance this against cost and are impacted by subsidies being offered.

UK's EV 'confusion'

In the UK, for many, the choice is still hampered by confusion.

The question is why buy an EV now when the infrastructure is still being developed and when, in a few years, the battery technology will have improved?

It may not be customer perception of COP26 that determines the uptake of EVs but the perception of the UK Government’s commitment to hitting its own targets and the financial support they give to make this happen.

The evidence is that most people do want to be ’green’, but, with the Brexit/COVID impact on the economy, many are wanting it to be a financially beneficial, as well as an ecologically positive decision.

Author: Professor Jim Saker is director of the Centre for Automotive Management at Loughborough University’s Business School, president of the Institute of the Motor Industry (IMI) and an AM Awards judge.

The latest AM industry special issue

The complexity of running a modern dealership can be misunderstood easily by people looking in on our industry.

Any general manager has so many plates to spin, and they must foster a talented team that they can rely on to not just do the basics well, but to sprinkle some magic on top that customers can notice.

If the marketplace in 2023 is steadily returning to relative normality, this normality now includes the drive to find customers for an increasing supply of electric vehicles, and the need to source used cars from all channels and market them carefully. And of course there are the desires to delight consumers with an omnichannel experience and to hold on to decent margins after a couple of years of strong profitability.

The expectations of both the customer and the business’s stakeholder must be achieved to the optimum level.

In this special digital publication, industry experts, prominent suppliers and franchised dealers share their insights on the major aspects required in running a modern dealership well.

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