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Melanie Johnson MPThe Retail Motor Industry Federation Annual Dinner |
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Mr President, Ladies and Gentlemen I'm delighted to be here this evening. Although I'm a little disappointed that I'm missing Driven on TV tonight. So perhaps some of you could give me your view later on the Jaguar X type and which is best out of the Citroen Xsara Picasso, the Honda Civic or the Peugeot 307. Two of those cars - the Jaguar and the Civic - were named earlier this week in the shortlist for this year's international car of the year award. And they were joined by the new Mini. That's three out of the seven best cars this year made in Britain. Great cars like these are helping to excite British car buyers.To get them into your showrooms. And programmes like Driven and Top Gear are helping to stimulate interest. But it's also down to the efforts of the RMIF and your members - improving the service and choice offered to customers and helping to dispel the stereotype of the car salesman portrayed by Frank Butcher on Eastenders. Together with falling interest rates and falling car prices, this means that you look set to reach an all time record for car sales in the UK. Car registrations in September rose 25.4 per cent and registrations by private buyers soared by 29.4 per cent, the largest rise in 12 consecutive months of growth. These figures, Mr President, represent a clear vote of confidence by consumers in both the economy and strong competition in car showrooms. They also show clearly that car buying decisions do not seem to have been affected by the terrible events of September 11 - or the downturn we've seen in the world economy. These are tough times. It is important that we carry on with confidence in the basic strength of the economy and our way of life, because the fundamentals of the economy have not altered. No country can remain immune from world economic events. But because we have low inflation, low interest rates, and sound public finances, Britain is better placed than before to cope with developments in the world economy. That was confirmed in a report from the Item club yesterday which indicated continued consumer demand and predicted that Britain is likely to have the strongest growth of all the G7 countries this year and next year. Tonight I want to address some of the issues that face you in the industry and us in Government. But I also want to look forward at the other challenges and opportunities in your industry. And how the Government will help you meet those challenges and exploit those opportunities. Government doesn't create wealth. Business does. You certainly do. The automotive retail industry is a major contributor to the economy, with a turnover of £76 billion, a workforce of 600,000 and a 1.8 share of GDP. That's something to be proud of. But the automotive industry is facing challenges. Our task, in Government, is to work with you to help you turn those challenges into opportunities. I want to look at some of those challenges this evening. How we can help the industry build the cars that people want to buy, at prices they want, and with a standard of service which means customers come back for more. AIGT Our aim is a vibrant, successful car market and a successful UK automotive industry. That's why we set up the Automotive Innovation and Growth Team in April of this year under the Chairmanship of Sir Ian Gibson.
The decision to set up an innovation and growth team in the automotive sector was taken against a background of ferocious pace and scale of change in the industry. The role of the team is to step back and look at the key drivers behind this change. To identify and assess the opportunities and threats which face the automotive sector in the UK. Another important aspect of the team's work is to establish an improved dialogue and process for Government to work in partnership with industry. Laying the foundations for this is essential if all parties are to work together to ensure that the right decisions are taken for the industry's future, whether on Block Exemption or any other issue. I must emphasis that we are strongly committed to this new way of Government working with Industry to help shape policy and to review developments in an inclusive fashion. The Innovation and Growth team has already made good progress and will shortly be seeking your views on its initial conclusions and future plans and I would ask you to contribute your views. This is an excellent opportunity for you to influence Government thinking. Government support for automotive industry Of course you in the retail industry depend on manufacturers to build quality cars which people want to buy. This Government has been working hard with the UK automotive industry to help it improve its competitive position in the face of increasing global competition. The automotive industry is an important part of our manufacturing base in the UK. And like the whole of manufacturing it matters to our economy, to the people who work in it, to all of us who enjoy its products. A strong manufacturing sector is the backbone of our economy. It is led by some of our most innovative businesses - including automotive firms - investing heavily in research and development. It harnesses complex processes to make high value added products, which are a source of sustained competitive advantage. The modern car is as much about electronics and textiles as it is mechanical components and the metal shell. It's as much about design and fashion as engineering. There is more computing power in the average family car than was involved in early space flights. And the automotive industry is also part of the financial services market - with credit agreements often forming an intrinsic part of the product. So manufacturing is changing. And there is an important role for Government in helping it adapt to change. For example we are providing over £9.7m of support for the SMMT Industry Forum to support the adoption of best practice and training in the UK vehicle and components industry. Companies participating have seen some huge improvements: right-first-time quality up by two-thirds; productivity doubled; stock turns more than trebled. And on the back of these improvements, the companies have been able both to retain existing business and win new business against tough competition. We are also providing support at a regional level. For example, the Regional Development Agency in the West Midlands has provided support for stronger links between six local colleges and local automotive firms such as Rover, Peugeot and Unipart. As part of this the engineering departments of the colleges are benefiting from the installation of hi-tech automotive equipment usually only found in car production plants. Over £30 million of Government funding has been made available for research partnerships that bring together UK resources and expertise to create components and systems for vehicles of the future. With industrial contributions, this has funded a programme worth over £80 million. These measures have contributed to a dynamic automotive industry in the UK. Too often we talk down the UK car industry. But we build world class, quality, innovative cars. The new Mini. The Rover 75. Aston Martin - making a return to the next James Bond movie. Jaguar - outstanding quality and value. TVR, Lotus and now Noble - some of the most exciting sports cars in the world. And that's just a few of our products. At Nissan in Sunderland we have the most productive car factory in Europe. Since 1997, over £2.6 billion of new investment has been announced in the UK automotive industry - creating 9,600 new jobs. UK car production is the highest since 1972. Car exports from the UK - at 1.1 million - are the highest ever. This is a fivefold increase since 1986. Honda are expanding their plant at Swindon and increasing production. And Nissan's commitment to Sunderland was underlined by their decision to build the Micra and Primera there. This is typical of the confidence that manufacturers based here have in the UK. They can see past the short term and plan for the long-term. This Government is committed to maintaining the UK as a world class base for the automotive industry. And to supporting good practice and technologies of the future which will provide better quality products for you to sell. End of life Vehicle Directive One of the challenges the industry faces is how we can reduce the environmental impact of cars. I know many of you here are concerned about the EU End of life Vehicles Directive. This requires vehicles to be scrapped to tightened environmental standards and makes vehicle producers - subject to some interim provisions - responsible for meeting at least some of the costs. This will have substantial implications for the vehicles industry. That is why we are consulting industry on possible implementation options. We would very much welcome your views on these options and any others you can identify by 2 November, and will consider these very carefully. It is crucial that we work together - with the manufacturing and retailing industry - to identify the best approach to implementation. No decisions have been made yet. We want to hear your views and find a workable solution. We are committed to taking that same approach - working in partnership with you - in three areas which are of immediate concern to you: car prices,block exemption and car servicing. Car prices Let me say straightaway that we in Government are extremely grateful to the Retail Motor industry for your support and co-operation in implementing some of the recommendations made in the Competition Commission report on new cars As you know, the Order made by Stephen Byers to increase competition in the supply and sale of new cars came into force on the 1st of September last year. Enabling you to purchase cars from elsewhere in Europe without affecting your sales targets, to secure volume discounts from suppliers, and to advertise the price which you are prepared to sell, without fear of penalty from suppliers. You called for the Order to be introduced urgently; we did so. The Order provides protection and opportunities for dealers to do business differently in the future. I hope dealers will take advantage of this. Mr President, the RMIF can continue to play a powerful role by helping to make dealers aware of the new situation. And to ensure that the new arrangements are working as they were intended - and to let us know of any problems. I believe that the consumer interest and industry interest are one and the same here. Consumers want to be sure that they are getting a fair deal when they buy a new car. You, as Dealers, want consumers to come back into the showrooms and buy cars. Once consumers are confident they are getting a good deal, they will buy. Indeed, as I have already mentioned, car sales are now rising and, with renewed consumer confidence, removal of market uncertainties and a host of great products and offers, the market remains on course to meet the forecast of 2.3 million by the end of the year. Block Exemption Now I want to turn briefly to a subject which I know exercises you all greatly. The EC motor vehicles block exemption. As you know the current block exemption expires next September. There has been a lot of debate this year about what should replace it. We are now waiting to see how the European Commission propose to amend the regulation. We're expecting their proposals before the end of the year. I think I should make it clear that the Government remains of the view that the current block exemption is not satisfactory. I do not think the system has been wholly bad, but there are some serious problems. Most of you will be aware that the Government has been concerned for some time by the prices of most models of car sold in the UK. One can argue about the exact price levels, whether we are talking about list or transaction prices, what else is thrown into the deal and so on, but the general point is that UK prices have remained uncomfortably high compared with those on the continent. That problem is still there and it needs to be addressed. The New Cars Order is not, and never was intended to be a solution for that problem. The Government believes that persistent high prices in the UK is evidence that the European market is not working as it should. The principle of a single European market means that the consumer should be able to buy where he or she likes, without discrimination. It is not right to have to wait significantly longer or pay more than consumers who live in the dealer's home country. I can also see no reason why the same freedom to buy or sell abroad without penalty should not apply to authorised dealers trading with one another. Some have argued that the current regime provides those freedoms, and that better policing is what is needed. The Government's view is that competition is a better safeguard of the consumer than bureaucratic regulation of a complex regime. If we are to have more competition then we need dynamic and innovative retailers. I want to see a stronger and more independent retail sector. One which gives you more opportunity to show your entrepreneurial flair. We shall have to wait and see what the Commission propose. But I very much hope that this will provide new opportunities for you. OFT Report on Car servicing and repairs Finally, I'd like to say a few words about the OFT report on car servicing and repairs. In response to the OFT report we set up a Task force, which included the RMI. As you will know we have recently published the Task Force's report consultation. I want to hear your views on how we can best take this forward. We need to work with you to identify the best approach. Car drivers need to be re-assured about the quality of service and repairs carried out to their vehicles. Bad practices by some in the industry hit the many honest traders - putting them at a competitive disadvantage and undermining the reputation of the industry as a whole. The action plan proposed by the Task Force is a good start. The minimum standards of customer service drawn up by the Task Force are at the core of the consultation on how we should move forward - not only whether their content is right, but how they could be effectively delivered to ensure better, more consistent service across the country. I will also be very interested in the industry's progress to make the motor code of practice stronger and more effective, which they have undertakento do. We need to work in partnership to find a workable solution which creates consumer trust and a level playing field for all in the business. Conclusion Like all sectors of the economy, the retail motor industry is changing fast. New technology and tougher competition are driving change. You have always been at the forefront of change - introducing new technology, cutting edge marketing, responding to consumer trends. The Government wants to work in partnership with industry and the trade associations to make Britain a modern, competitive and dynamic economy to meet the challenges of the new century. Working with you in the RMIF, I am sure we can achieve this. |
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Other speeches by Melanie Johnson MP
(the following are available from the archive) |
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