Lord won’t you buy me, a Mercedes Benz
by Benjamin on April 22, 2009
The U.S. and UK always seem a bit desperate to save their flailing car industry one way or the other and build some demand for new cars, but why? Why not take a page out of the Danish book and keep the old car but get better servicing and fuel efficiency. That would also require a lot more mechanics…
The U.S. $14bn car bail-out failed in Senate a couple of weeks ago, but the government did find $300m to buy some energy efficient cars for themselves as part of the recovery spending (which can be tracked on the great and official recovery.gov). The UK today announced its ‘grand’ plan for the recovery and after blowing hundreds of billions to save a handful of banks,which have just started paying themselves bonuses again, one might have expected a little more. The government plans to cut spending. Yes… Cut spending. Go figure.
However, they have found a £2,000 ($2,900) discount for every person in the country who trades in a ten year old car which they have owned for more than 12 months for a new one… More demand for cars – but why?
Yes the auto industry employs a lot of people, but isn’t it time we start thinking a little about what could be done? Denmark might have an option which could be useful. They have no auto manufacturing industry, so are free of lobbies in this industry and charge a rather monstrous 180% tax on the sales price of any new car (this is included in the sales price so you just notice that cars are really really expensive).
Seriously cheap in the US: $2.10 per gallon in NYC, compared to $4.92 in UK, $5.90 in Denmark, and $3.14 in India!
Then the gas/petrol is taxed heavily, making sure people try and avoid Humvees as much as they can, which is similar to the UK approach. Petrol is just $2.10 around New York City, but a hefty $4.92 per gallon in the UK, and $5.90 per gallon in Denmark. Note that even India charges more for the petrol ($3.14 per gallon) than New York City, so it is seriously cheap in the U.S. Finally Denmark has a green tax on cars – there’s no road tax or anything else any more, it’s just based on emissions etc. Everyone in Denmark has a car though, and everyone drives, so maybe such strict laws are not that detrimental.
So what can be done, first off, it probably won’t kill the U.S. auto industry to stop subsidising petrol prices and start taxing them, it would however shift the incentives away from ‘gas-guzzlers’ toward more efficient cars – which again would re-focus the car manufacturers towards cars that are internationally competitive. Then how about a big tax on selling a new car, and a simple green tax? In Denmark this has meant that new cars are bought very infrequently (never every second year as is usual in the UK), and the ones that are owned are serviced very regularly. Would this cut back on demand in the US and UK, possibly (although, it is hard to cut demand much further by now I suspect), but it would also create demand for a lot more car industry people, in terms of mechanics and repairmen, a vocationpeople from the auto industry already possess – so why not?
Tags: car, Denmark, gas, petrol, recovery, Stimulus, tax, UK, USA
