Mark Sinclair's Blog: 4 February 2009 - Not another bail-out
04 February 2009
Mark Sinclair is boss of leasing firm Alphabet
Lord Mandelson was at pains to point out on Tuesday, last week, that his £2.3 billion lifeline for the UK car industry was not a bail-out.
Insofar as the term "bail-out" usually means pouring huge sums of money into black holes opened up by certain businesses (i.e. banks), I have to say that Lord M has at least got his semantics in the right place.
One thing that few people yet realise is that the scale of the banking bail-out will ultimately make it difficult for the UK to raise credit to pay for all the energy supplies it needs to import from overseas. In the meantime, North Sea oil is fast becoming a happy memory.
Behind the oft-repeated rhetoric on climate change, the Government believes that low carbon vehicles are an economic necessity because, frankly, we won't have all the carbon we need in a few years.
That's why Lord Mandelson tied at least half of Tuesday's support package to green vehicle technology. If he's right, and business-as-usual becomes problematic for conventional cars in a few years' time, Britain should be reasonably well-placed in terms of know-how and technological development by then.
For fleets - and I'm, aware that I do bang on about this a lot - the fact that all the Government's support for the car industry is being channelled into the low carbon sector is yet another reason for operators to get serious about developing long term carbon reduction strategies.
I do appreciate that isn't easy at the best of times: few potential solutions have even made it to the drawing board and fossil fuel car technology is all that fleets have got to work with.
Don't forget, though, that the car manufacturers are already designing for a carbon-challenged (and more credit-challenged) future. Leasing companies are able, using dedicated whole life cost (WLC) software, to evaluate the multiple impacts of predicted higher fuel costs, CO2 taxation and shifts in consumer behaviour on residual values. Much of the time, lowering your fleet's carbon consumption and lowering your WLCs go hand-in-hand.
Simply using whole life costs to set vehicle policy going forward will help fleets to minimise many of the current economic difficulties and future energy-related challenges they face.
Lord Mandelson's non-bail-out of the car sector might be summed up in five words: "You'll thank me later".
History will be the judge of that but, in the meantime, if you are a fleet operator, the time-honoured business advice still applies: look where the money's going and follow it.