Spare a thought for the car dealer waiting for the next customer to wander into a showroom choc-a-bloc with gleaming unsold saloons. Car sales last year were well down on 2017 – falling by almost 7% . Contrary to some of the more lurid headlines, though, this is not an economic cataclysm.
Not so long ago, the 2018 total for new registrations – just shy of 2.4m – would have been a cause for celebration. The number last year was similar to that in 2005 and 2006, the last years of strong economic growth before the financial crash.
There are some pretty obvious reasons for the decline in registrations. Fleet sales have been affected by the cautious approach to investment taken by companies while the outcome of Brexit remains uncertain.
Consumer spending has proved more resilient but has not been immune to Brexit doom and gloom. There has been a reluctance to commit to spending on big-ticket items – a tendency that has also affected the housing market.
But it’s more than politics. The scandal over hushed-up tests for diesel emissions was a bigger factor than Brexit in explaining last year’s sales dip, because it hit demand for new diesel models and made second-hand vehicles harder to shift.
There is a broader point here: consumers are getting more use out of products before changing them. The run-them-until-they-pack-up mentality has always applied to white goods in the kitchen – fridges and washing machines – but has now expanded to mobile phones and laptops, and perhaps cars as well. Motor manufacturers have accelerated this process by reliability and durability upgrades that mean the average car is better than it was two or three decades ago, so reducing the incentive to trade it in.
Make no mistake, this is good news at a time when the world is supposed to be getting more serious about the heightened risks of climate change. If the notion of what constitutes economic good news is that the number of new cars should go up each year, then we should rethink our definitions of success and failure.
In this context, Tuesday sees the launch by Diane Coyle, from the Bennett Institute at the University of Cambridge, of alternative metrics for gauging how well a country is faring, based around long-term sustainability rather than the ups and downs of GDP. To which the only logical response is: not before time.
Swing time
It’s not easy running an international organisation with Mr America First sitting in the White House, but even so the departure of Jim Yong Kim as president of the World Bank came as a shock. Kim is leaving more than three years before the end of his allotted tenure, leading inevitably to rumours of a clash with Donald Trump.
Not so, apparently. Kim has always got on well with Trump, even playing golf with him in the days before he beat Hillary Clinton in the 2016 race. The story is that Kim thought he had done most of what he had set out to do at the Bank when he arrived in 2012 – a big increase in the organisation’s capital, two replenishments of the fund that helps the poorest countries and the launch of new targets for poverty reduction and advances in human capital – and didn’t want to be a president who simply kept things ticking over.
In theory, Kim’s successor will be chosen by the “one, merit-based, transparent” procedure agreed by the Bank’s shareholders in 2012. In reality, Trump will expect to nominate an American for the job because the Europeans have always chosen one of their own to run the International Monetary Fund and the US has picked the president of the Bank.
This cosy arrangement has long been an anachronism. With Trump likely to choose someone for political reasons rather than an expertise or interest in development, it is now positively dangerous.
