28 November 2009

Nervous Car Makers

Why are they nervous? Well, car makers that make small, fuel efficient ones are anyway. The reason is the 'cash for clunkers' are coming to an end and they were designed to promote environmentally friendly cars. The UK has just extended its scheme, but generally early 2010 will see a slump for makers of fuel efficient vehicles as the offers run out. No one knows by how much, but most pundits agree that the pain of 2009 has simply been moved back a year and there will be a slump. It's like putting off going to the dentist when you have bad tooth ache. Pain killers put off the pain for now, but you can't keep treating that way. You might as well get it over and done with.

Likewise, rather than car makers pleading for extensions of the schemes as they have been, they need to bite the bullet. The sooner they do, then the sooner things will improve. I'm sure some thought that the world economy would pick up by the time the offers ran out, but who really believed that? Wishful thinking me thinks.

So how will car manufacturers deal with it? I imagine some discounting will be used once the schemes are over to entice punters into the showrooms. This will soften the blow for the consumer and car maker alike. It will also reduce cars piling up on disused runways and the like.

The bottom line: 2010 will be tough for small car makers, their nervousness is well justified.

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