Tuesday 18 December 2018

The good, bad and ugly times, and why we must learn from them for EV future

Alan Nolan has been director general of SIMI since 2008 and is retiring next year. Here he looks back on one of the most turbulent times in our motoring history and forward to one of the most exciting

Electric cars
Electric cars
Alan Nolan

When Napoleon was asked what he looked for in a leader, he said it wasn't the bravest or most intelligent but the luckiest general.

I'm just glad he wasn't on the interview panel as I probably would never have been appointed to head up SIMI.

The new-car sales graph for the industry under my predecessor, Cyril McHugh, rose by 190pc from 64,000 in 1993 to 186,000 in 2007 (with a peak of 225,000 in 2000).

For my time in SIMI, the same new-car sales graph would show a 32pc decrease from 2007 to around 126,000 this year (with a near unbelievable low of 57,000 in 2009).

The new-vehicle sales numbers from the first few years of my time in charge of SIMI illustrate a challenging business environment.

While dealerships had been professionalising and growing into future-focused companies, the vast majority were still based around family businesses and in many cases supported by funding borrowed against their owner's home.

Given my previous role as an industrial relations specialist in SIMI, I had made many close friends at ownership, management and shop-floor level in these businesses.

So the huge impact of the recession on companies and people in the industry was way beyond challenging. The reality was personal, close and extremely upsetting.

My appointment coincided with the banking crisis. The collapse of confidence and lack of finance hit our sector like somebody had turned off the oxygen.

That would have been serious enough by itself, but July 2008 also brought the introduction of CO2-based Vehicle Registration Tax (VRT) and road tax.

The total focus on CO2 meant diesel cars were subject to lower VRT and road tax due to their better CO2 emissions. As a result, consumers only wanted to buy a diesel, whether it was the most suitable car for them or not.

Used-car stocks were at capacity in July 2008 with all the trade-ins taken during the strong first-quarter. But these trade-ins were all petrols with much higher road tax, and that made them virtually unsaleable.

That period was terrible. It resulted in more than 200 family businesses closing. More than 10,000 people, about 20pc of the total, lost their jobs in the industry.

They included many good friends and good people. Some lost their jobs. Others lost their business. Some lost their homes as well.

In the face of the double impact of banking crisis and CO2 taxation change, the car market collapsed in 2009 to just 57,000 new registrations - the worst for more than 20 years.

While recovery in the economy was the only real solution, we sought to develop strategies that might help carry businesses through.

While the understandable anger of many in the industry was calling for a noisy confrontational approach, we sought instead to work with the Government to show how, in our view, the State could help redress a difficult situation to which it had contributed, even if unintentionally, and as a result gain through saving jobs and increasing its tax revenues.

While either too little or too late to save the job or the business of those forced to leave at that dark time, the measures put in place helped others to survive and helped carry through to recovery.

We had the introduction of a scrappage scheme (extended for a second period) and the changeover to the EU VAT margin scheme for used cars, which had disadvantages long-term but gave a short-term cash-flow benefit.

The second registration plate came in 2013, aimed at spreading some sales into the second half of the year. Before that, a bad first quarter meant the year was over. While the change in seasonality is still a work in progress, the second half of the year has increased from 18pc of the year's registrations to between 30pc and 35pc.

Despite all this, the switch to CO2-based taxation was a first important step for the environment, a project which we wholeheartedly support.

Some observers may see the motor industry as part of the environmental problem, but the opposite is the case: we are the providers of solutions to our emissions problems.

We strongly support increased investment in public transport and safer cycling, in park and ride facilities, progress on car-sharing options and transition to a zero-carbon future. This makes sense for our industry as well as the environment because without a more sustainable future in transport, there may be no future.

While the Irish industry was some distance from the whole Dieselgate scandal, it was and is damaging to us all.

If our industry is to be a key, trusted partner in helping to find solutions to the environmental challenges, then we in SIMI must ensure we are just that - trusted partners.

Since 2008, to ensure we can learn from the past, we have focused on working more at EU level to anticipate policies before they impact. We try to work with the State and other stakeholders to deliver a future free from unpleasant surprises.

The transition to a fully zero-emissions vehicle fleet will require a shared approach between the State and all key stakeholders.

It cannot be based on short-term, patchwork decisions that take a simplistic view of issues; we saw where that got us in 2008.

We don't need disconnected ambitious targets based on hope but targets based on an understanding of what can be achieved - and how.

We've long said we know where we are today on the environment and we know where we need to get to by 2030 or 2045.

What we need most is a developed realistic roadmap of how we can transition.

During my time as DG, a number of big issues have dominated the agenda. And as I prepare to leave, the big issue has been Brexit.

Notwithstanding it, the future of our industry is exciting. It will be greener with fewer mechanical servicing requirements and perhaps fewer vehicles. But these will be newer, more IT and communications-based so the professional industry, which normally only services the newer cars, is likely to have an increase rather than a decrease in overall business.

This will be different business, with cars requiring regular systems/programming updates, and the latest apps may be become deciding factors in the choice of model or in the time to update to a newer system.

Given the complete changeover of the car fleet to new higher-technology, zero-emissions vehicles between now and 2045, this will be a hugely exciting time.

Our challenge will be to attract enough IT and technology-focused young people with the potential for a rewarding career in this new industry.

I have no fears for this; with professional outlets in more than 400 towns and villages across the country, these opportunities will be available close to where people live, whether that is in a city, suburb or a rural village.

Although I am not gone quite yet, to all of my colleagues and friends in the industry and those other agencies I have dealt with, I'd like to say thank you for all your help and support.

Indo Motoring

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