It’s new car season! Every September and every March, the numbers on the plates update and across the UK a surge of people rush out and buy a brand new motor.
Clearly, the newest number is a real must-have for some buyers, particularly given that had they bought last month they could have obtained a decent discount from dealers desperate to clear space on their forecourts.
You might have seen headlines earlier this month suggesting that new car sales are falling but don’t be fooled – the trend might be downwards but in the UK we are still buying a massive number of brand new vehicles.
Information released by the Society of Motor Manufacturers and Traders (SMMT) show that the number of new cars registered in the UK in August this year was 6.4% lower than in August 2016.
However, a slight drop from a very high figure is still a high figure – so far this year we have bought 1.6m new cars.
Mike Hawes, SMMT chief executive, was upbeat when the latest figures were published earlier this month: “August is typically a quiet month for the new car market as consumers and businesses delay purchases until the arrival of the new number plate in September.
“With the new 67-plate now available and a range of new models in showrooms, we anticipate the continuation of what are historically high levels of demand.”
For me, that historically high level of demand is an issue.
And we buy more new cars in September because of the new number plates. We are being spurred on to make major purchases because we value our cars looking newer. So that’s clearly adding to the problem.
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Why is it a problem?
Vast numbers of new car purchases are being funded with credit.
Data from the Finance and Leasing Association shows that, in 2016, its members provided finance for more than 86% of private new car registrations.
Many commentators have started to express unease about that and I share that unease– not least because new mortgage affordability rules mean that monthly costs like car contracts have to be factored in, meaning car finance can stop people buying homes.
In July the Bank of England warned about a “spiral of complacency” over consumer debt, citing car finance as an example.
Over the previous 12 months household incomes had risen by just 1.5%, however, debts such as credit card balances, personal loans and – yes – car loans, had risen by 10%.
And this month in a blog written by Bank of England staff several bank agents expressed concerns about the wider economic risks of the current model.
“The industry continues to accumulate credit risk, predicated on the belief that used car values will remain robust,” they wrote.
“Although weakening, UK new car sales remain at historically high levels.
“That is partly because car manufacturers and their finance houses are increasingly stimulating private demand by offering cheaper (and new) forms of car finance.
“As amounts of consumer credit increase, so do the risks to the finance providers.
“Most car finance is provided by non-banks, which are not subject to prudential regulation in the way that banks are.
“These developments make the industry increasingly vulnerable to shocks.”
Now that is a blog for Bank of England staff members and not Threadneedle Street’s official position.
However, a lot of people whose job it is to know their stuff are worried.
So… I have an answer.
Scrap dates on number plates
Imagine if every purchase you made had the date you bought it emblazoned across the back.
I tell you now that if jumpers did then I would not wear that pink one I bought in 2007 anymore.
Many people would rather spend a fortune on mobile phones than have an obviously dated handset, it’s one reason manufacturers update the look so regularly – to keep shifting units.
Why would cars be any different?
Adding a clearly identifiable date obviously encourages people who enjoy having the latest, newest, fanciest stuff to upgrade often, even if their vehicle is still in pristine condition.
I think we should come up with a new system for number plates, maybe even simple randomised letters and numbers.
I am sure cleverer people than me can come up with an alternative that works without trumpeting the date.
This will end the ridiculous situation where more cars are bought in September and March, with people potentially rushing to change their vehicles sooner than they otherwise would.
And there is not just the economic question hanging over that one, there’s an environmental question too.
Yes, new cars are often more fuel efficient than older models, but they also take vast quantities of energy to produce.
Materials such as steel, rubber, glass, paints and plastic all go into a brand new vehicle.
A lot of those materials can, fortunately, be recycled. But the mantra is ‘reduce, reuse, recycle’ in that order.
Better to reduce the number of new cars coming to market, reuse more of the old models and then recycle, than to incentivise buyers to take on a newer model.
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Practicalities
Clearly, it is important to be able to check how old a vehicle is when you’re considering buying a pre-owned car.
A national database where you could enter a registration number and check the year of manufacture would be essential.
However, it makes no sense to have that date published on the actual vehicle itself. It merely incentivises people to upgrade.
And cars can last much longer now. The review website Consumer Reports states: “Not long ago, to keep a car running beyond the 200,000-mile mark would have seemed about as likely as driving it to the moon.
“But big improvements in powertrain technology, rust prevention, lubricants, and more have led to game-changing improvements in reliability and durability. Now, almost any car can make it well into six-figure territory with proper care.”
Cars last longer and it would make sense to keep them longer, instead of ditching them after a few short years in order to achieve a newer number plate.
That’s better for the planet, better for the consumer and almost certainly better for the country’s economy in the long run.
What do you think? Are we encouraged to buy newer cars more often by number plates? Is it a problem if we are? Have your say using the comments below.