UK buyers will spend an estimated £80 billion on new cars this year
What if we didn’t buy any new cars for a year? That’s a thought experiment suggested by Andrew Oswald, professor of economics and behavioural science at the University of Warwick, writing to the Financial Times recently.
Oswald used data from the RAC Foundation and Autocar to estimate that UK buyers will spend £80 billion on new cars this year. Which is, technically speaking, a shedload of money.
Relatively, we won’t spend vastly greater sums on public services like education (£110bn) or health and social care (£190bn) – both public expenditures that the government may be looking to trim.
Will we really spend that much on cars? Possibly. We’d need to buy two million at £40k a pop to total £80bn. We bought (or registered) 1.9 million last year. But for the purposes of the experiment, it doesn’t really matter if it’s a bit over or under: it’s still a ton of money.
What would happen, wondered Oswald, if we reviewed our private spending as we do public spending, so thoroughly in fact that we bought no new cars at all this year? “How much harm would that do to our citizens?” he asked.
I suppose the first thing to consider would be the practical harm. It would put thousands of people out of jobs, and a significant part of that £80bn will be tax, with VAT into double-digit billions and another chunk again from first registration fees (which vary dependent on CO2 emissions), plus the Expensive Car Supplement for cars costing over £40k.
The Treasury could lose £15bn or more before one even considers a drop in corporation and income taxes and an additional spend on benefits. I suspect Rachel Reeves would prefer this thought experiment to remain exactly that.
But the esteemed prof is, I think, more curious about what it would do to our overall happiness. “Humans are dragged into harmful ‘keeping-up-with-the-Joneses’ status races,” he wrote. The implication is that we might feel better if we gave up those and looked after one another more.
Enthusiasts don’t buy cars as status symbols, but I don’t think it’s controversial to accept that people do. I’ve had friends and acquaintances ask what car they should buy next while in the same breath telling me how much they like the car they own now. So maybe keep that?
Still, I think it’s curious how often cars are the obvious target when people look at status-driven buying behaviours. I understand that cars are expensive, but we don’t have the same discussions about conservatories, cockapoos or chips, and you can’t even use those to get to work or visit your gran.
What’s also striking is that how many cars we buy seems inextricably linked to the country’s prosperity. A large new car market is perceived as a marker of a healthy economy, in a way that isn’t true of, say, toasters.
Those we buy when we need them. Cars, meanwhile, we buy because the finance term is coming to an end and the cambelt will soon need changing, or the company decides it’s time you deserved something shinier to keep you working there, so off it goes to be replaced by something a bit better than the neighbours have.
But, as Oswald noted, “modern cars have an enormously long life and are relatively inexpensive to maintain”, so even if we paused buying, we would still be able to get places. And his point about longevity is true.
At least it is for now. But, I wonder, in times of £1800 headlight clusters, multiple electronic control units to let cars meet emissions and safety rules at a cost of thousands a time and what often just generally feels like an inbuilt obsolescence, for how long cars will remain cheap to maintain into their later life.
We buy enough cars when they’re affordable to fix; how many will we get through when driving into a pheasant writes off an older one?
I don’t think the optimum number of cars for us to buy is none, and this is something that will stay only a thought. But if we didn’t buy quite so many and more were simpler and designed to stay affordable, I don’t think that would be a bad thing.
Source: Autocar
