Revving towards revolution

As has been predicted over the past few months, the motor industry is attempting an eco re-invention in a bid to save itself from oblivion

HOW did the struggling car industry become a platform for eco trade?

The British International Motor Show 2010 has been cancelled due to fears over the state of the industry. The biennial event, which has run since 1903, had only previously been pulled during the two world wars.

The Society of Motor Manufacturers and Traders (SMMT) - the trade body which organises the event - said the economic downturn and the ‘unprecedented challenges facing the industry both in the UK and around the world’ meant exhibitors could not commit. Other car shows are expected to go the same way. But this crisis is about more than fancy stands, free canapés and expensive wine.

The real measure of the industry’s state is the plummeting sales, which continue to fall month on month, while workers around the world face shorter working weeks, the loss of overtime and redundancy.

Ford has just predicted a 20 per cent drop in its European output, but has so far failed to demand government cash or to lay off staff. Industry-wide car sales in Europe fell 22 per cent last month alone.

President Barack Obama is continuing talks with bankers over a €3.3bn rescue plan to save General Motors Europe from bankruptcy. Industry insiders believe vast sums of public cash will fail to save the car giant from the worst crisis in almost 70 years.

US sales fell by 53 per cent in February, while in the UK, 60 per cent fewer cars and vans were built last month compared to February 2008.

A report by the Society for Motor Manufacturers and Traders revealed that commercial vehicle production fell by 70 per cent last month, confirming of course that other industries are facing problems too.

The car industry is responding where it can by reducing workers’ benefits and even wages, rather than shedding jobs. Toyota plans to cut UK salaries by 10%, and has introduced non-production weeks.

Honda’s Swindon plant has halted all production until June.

Both Honda and Toyota are cutting global production. Jaguar Land Rover announced earlier this week that 450 British jobs would go.

Renault, partly owned by the French state, will create 400 jobs at a plant near Paris by moving its Clio production from Slovenia.

Renault and Peugeot accepted billions of Euros in return for keeping French plants open, although Renault has vowed the new jobs will not impact on any losses in Slovenia.

There is some hope that scrappage schemes will come to the rescue. The plan being worked out in several countries involves consumers being paid several thousands pounds to trade in their old cars for new eco vehicles.

The German Association of International Motor Vehicle Manufacturers said 277,700 new vehicles were registered in February, a 21 per cent rise on last year.

The improvement coincided with the German government's eco-rebate, which allows nine year old vehicles to be exchanged for new ones.

The British car industry is anticipating a £2.3bn package of loans to companies that submit projects to develop fuel-efficient technologies. Obama is looking to develop and roll out similar green automobile schemes on a much larger scale over the next year.

Can a vast eco project really save the car industry? As ever, fact is truly stranger than fiction.