Subsidies still needed for alternative fuel cars – SMMT

Government subsidies to support a “nascent” market for alternatively fuelled cars need to be maintained and developed, the head of the UK’s car industry trade association told AirQualityNews today (25 May).

The electric ‘e’ Golf was one of the cars on show to motoring journalists today at the SMMT open day

The call for support came from Mike Hawes, chief executive of the SMMT – the Society of Motor Manufacturers and Traders. He said: “Support in the form of subsidies needs to be continued for the alternative fuels sector. It is a nascent market and we don’t know yet where the tipping point is where we won’t need subsidies.”

And, referring to changes in Vehicle Excise Duty which came into force last month, Mr Hawes noted: “The new VED regime is ok for zero emissions but not of benefit for ultra low emission vehicles under the present system.”

Earlier today the SMMT chief executive had addressed motoring journalists at the annual car testing day held at Millbrook, near Milton Keynes.

Record year

He told the audience that 2016 had been a “record year for the British car industry with almost 2.7 million new cars registered. March alone saw 563,000 cars registered which was the biggest month ever although changes in Vehicle Excise Duties were a factor as there was a pull forward in new car registrations”.

Sales in April had fallen by 18% in contrast but sales figures are expected to level out.

New vehicles, Mr Hawes explained, demonstrated technological development, increasing fuel efficiency, smarter technology and there was also a growth in alternative fuelled vehicles, with a 4.2% market share in January.

Mike Hawes, SMMT chief executive, said a scrappage scheme was not the most cost-effective solution to improving air quality

On the issue of diesel, he confirmed that there are 39 cities “where at least one road is in excess of NOx limits”.

But, he argued that a wide-sweeping charging scheme was not needed and that instead air quality measures should be targeted on these areas, as “it is a local issue.” And, he pointed out that Euro 6 diesel and Euro 5 petrol cars would be exempt from schemes.

Scrappage

Turning to the idea of a scrappage scheme, Mr Hawes said: “If you have read the 500 page technical document that comes with the air quality plan, it [scrappage scheme] comes out to a price tag of £6 billion.  You have to question whether is the most cost-effective way of achieving better air quality – I suspect not.”

Looking ahead, the SMMT chief executive said: “The industry is going to change more substantially in the next 10 years than in the last 50 years.” He pointed to a new range of technologies, including hydrogen, changing patterns of mobility and the shift to autonomous vehicles “which is gaining pace. I would expect to see these on the road in the next 5-6 years.”

The audience was also reminded of the size of the UK’s used car market, with “8.2 million used cars changing hands last year.” And, Mr Hawes said that the UK car manufacturing sector expects to hit record production levels of two million vehicles in the next two years, reaching a similar level to that was last seen in the record production year of 1972.