Industry analysis: What's next after lockdown?

A scrappage scheme, transport rethink and urban road closures are all in the offing

As the UK emerges slowly from the coronavirus lockdown, there have been car industry calls for a new scrappage scheme to boost sales and production.

The government is considering such a scheme, although initial ideas are reportedly being reconsidered. Still, any initiatives to boost new car sales will be tied to pushing electrified cars, which could limit the benefits for car firms. It’s also one example of how the pandemic is set to impact on wider long-term moves to make cars less polluting – and limit their use in certain areas.

*Why the scrappage scheme will be used to push electrification *

The 2010 scrappage scheme was launched to help the economy recover from the financial crisis, offering buyers £2000 for trading in old cars when buying new ones. The new version will offer incentives of up to £6000 to those who trade in older petrol or diesel cars for new low-carbon models.

The heavy emphasis on EVs is tied to government plans to dramatically cut the UK’s carbon emissions and ban the sale of combustion-engined cars by 2032 at the latest. That EV focus follows the lead of France and Germany, which both centred automotive elements of their economic stimulus packages around encouraging EV take-up.

At one level, this will aid the industry, with manufacturers needing to sell electrified cars to reduce fleet emissions to meet tough European Union CO2 targets. Potential discounts of up to £6000 will help to offset the cost difference between combustion-engined cars and EVs.

But the industry concern is that tying the scheme closely to EVs could limit its effectiveness in providing an economic boost due to the relatively small market share of EVs. Alternatively fuelled vehicles, comprising all electrified powertrains, accounted for 20.6% of the UK market last year – with battery-electric vehicles just 1.6%.

Although that figure is growing quickly, the small scale limits the financial and industrial boost of EV-biased schemes – especially for firms that don’t yet have EVs to offer buyers. Meanwhile, demand already outstrips supply for most EVs on sale, so the manufacturers offering them have limited need for help.

Daksh Gupta, the boss of major dealership chain Marshall, told Autocar he thought there was “no question” that some form of stimulus package was needed to boost cars sales, but he questioned the effectiveness of a scheme focused purely on EVs, adding that any initiative should benefit all manufacturers.

He said: “Many manufacturers are selling EVs at a loss because of the cost of production, so we are trying to educate [the government] about the benefit of going with hybrid and EVs or even Euro 6.”

*How lockdown will impact the emissions debate *

While there has already been an increasing push towards cutting carbon emissions, the dramatic reduction in traffic due to the lockdown has given scientists a wealth of data. According to government figures, car usage fell to 35-45% of its usual level, which AA president Edmund King said was “akin to those in the early 1970s”.

A scientific study in Nature magazine found that global CO2 emissions fell by 17% in early April, with surface transport accounting for 43% of that decline.

The authors of the study wrote that the data shows “how responsive the surface transportation sector’s emissions can be to policy changes and economic shifts”, noting that policies to push ‘active travel’ (walking and cycling) “could help to cut back CO2 emissions and air pollution as confinement is eased.”

Several other studies have shown the impact of reduced vehicle traffic on emissions. Using data from a monitor on London’s BT Tower, the UK Centre for Ecology and Hydrology found emissions fell by an average of 58% between 8am and 8pm during the lockdown. Meanwhile, Transport for London data suggests nitrogen dioxide emissions fell by 27% in the capital during the lockdown.

Gary Fuller, a senior lecturer in Air Pollution Measurement at King’s College London said: “We need to remember these lessons going forward. These successes show that our city’s air pollution is not an intractable problem and that actions can bring results.”

*How roads will change for motorists *

With social distancing limiting capacity on public transport and fears over the health risks of using it, there is a belief that car usage will rise as the lockdown eases. For instance, surveys in China have shown increasing sales of cars are directly linked to a reluctance to use shared transport. To combat this, the government is keen to encourage ‘active travel’ – and, in turn, discourage car usage.

The Department for Transport introduced a number of initiatives that make it easier to temporarily close roads to cars to create extra pavements and bike lanes. It has also reduced the approval process for those moves to be made permanent, which could lead to significant changes in where cars can be used in future.

London mayor Sadiq Khan has already unveiled a major ‘Streetspace’ programme to “rapidly repurpose” the city’s streets to meet the “unprecedented demand for walking and cycling”. That will include the creation of a large network of cycle lanes and establishing “one of the largest car-free zones” in any city.

Although these are temporary, local authorities are likely to push for them to be made permanent – and that could have a major impact on motoring in the future.

*READ MORE*

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