Error parsing XSLT file: \xslt\FacebookOpenGraph.xslt Mike Waters' Blog: 3 February 2009 - Green light
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Mike Waters' Blog: 3 February 2009 - Green light

Date: 03 February 2009

Mike Waters is head of market analysis at Arval

While there's a widespread feeling of doom and gloom surrounding the automotive industry at the moment I want to focus on a positive and the likelihood that manufacturers will come out the other end of recession more focused on providing a better choice of greener, smaller and more fuel efficient cars than ever before.

Across the globe government 'bail outs' for the automotive sector have been well publicised, not least Lord Mandelson's recent measures in the UK. His guarantees to unlock loans of up to £1.3bn from the European Investment Bank, as well as a further £1bn in UK government loans to fund investment in greener vehicles run along the same lines as similar packages from governments around the world.

While these plans are primarily designed to bolster the car industry at a time of economic crisis they have also become a powerful influence in directing carmakers towards producing more environmentally-friendly vehicles more quickly.

Cheap car loans and "scrappage" schemes, are being introduced to stimulate demand but it is crucial to recognise in the UK market that a majority of new vehicles are bought with company money so stimulating the second hand market for 3-4 year old clean vehicles could speed the flow of lower CO2 cars into the second hand market more effectively than a simple cash incentive.

Even in the US, a country renowned for its love of gas guzzlers, things are changing during this recession. In late December, the Bush administration approved 17 billion US dollars in short-term loans for General Motors and Chrysler. Despite GM having it as tough as anyone at the moment they have announced plans to build a 40-mile-per-gallon mini-car for the US market as well as plans for an electric-powered Cadillac concept car.

Ford has also committed that by 2011, it will sell an electric car that can go up to 100 miles on a single charge. This is recognition from the car manufacturing giants that in today's world they need to offer efficiencies and alternatives, initially through a larger range of hybrids and then alternative fuels further down the line, led it seems by electric.

I don't want to underplay the fact that carmakers are suffering from a slump in demand for their products because of the global financial crisis, or to deny that things will remain tough in the short term. But with government support the major players should come out of the other side - and with any complacency eroded and a financially driven focus on developing more sustainable vehicles, technology should progress faster than ever before and the consumer is likely to reap the benefits.



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