“The decline in car sales benefits car manufacturers”, according to Aurélien Bigo

Posted on January 16, 2023

A decline in auto sales is not good news for the climate or for individuals. This was explained to Novethic by transport energy transfer researcher, Aurélien Bigo. He defines the strategy of manufacturers: selling cheaper but more expensive large cars and extra equipment, far from the necessary sobriety. According to him, the main victims of this strategy are the “less wealthy individuals”.

As an energy transfer specialist, you make the first observation: the sale of new cars has never been so low since 1975. How do you explain this?

There is actually a decrease in 2022, following very low levels in previous years. From 2020, Covid and the confinements have of course affected the market. Throughout the economic crisis, cars were delivered late. Added to this were the shortages of electronic components that forced manufacturers to prioritize some vehicles at the expense of others. We also think about the obstacles related to the war in Ukraine with inflation in raw materials that could increase the price of cars.

But this decline is not new. Since 1975, we have approximately 2 million sales per year. However, during the decade 2012-2021, we only have three years above 2 million. On average, sales are estimated to be down 10% compared to the previous decade. Assuming this decline is long-term, the change did not occur in 2020 but began earlier.

Logically, we can say that manufacturers are the first victims of this decline. However, you say that this is in fact responding to a strategy on their part?

We don’t know which is the chicken or the egg. Have manufacturers succeeded in adapting as much as possible to economic challenges or have they pushed the market towards declining sales? In any case, financially, they are doing very well because behind this slowdown, their strategy is to turn to more expensive, heavier, better equipped cars, where they will have more margins. Today, vehicles are clearly oversized, both thermal and electric.

So does the decrease in sales lead to an additional cost for consumers?

The users are definitely the first losers. In the new market, the purchase prices are higher. And there are cascading effects! Several private individuals have turned to second-hand cars to renew their cars, which has strained the second-hand market where prices have also risen sharply. The effects of the increase in car prices were felt by most of the population, including those who could not afford to buy in the new market. To fully understand the orders of magnitude, the second-hand market will be 5.2 million sales in 2022. For me, the main victims are the less wealthy individuals.

And from an environmental perspective, the decline in car sales is not good news?

Intuitively one might think, but it is not. One might assume that the decline in sales is evidence of a move towards sustainable mobility. But the user’s skills have not changed. The market has shifted towards heavier, less fuel-efficient vehicles, with a particularly large proportion of SUVs now representing 45% of sales overall. These vehicles are less aerodynamic, more dangerous, with higher energy consumption. Even in terms of space, they take up more space!

From an environmental and social perspective, the trend is not going in the right direction. The State should have regulated the market more tightly to turn to more fuel-efficient vehicles, which it did not. He found himself in an unexpected situation and now the cars offered on the market are not compatible with the real needs of users.

What must be put in place to change the situation?

Even if we imagine that the government and public authorities suddenly face the challenge, there will be a period of inertia before seeing concrete effects in the new home market. We have some developments going in the right direction but the level is not enough. In particular, there are two interesting things. First is the bonus for electric vehicles which is only valid for vehicles under 2.4 tonnes. This is a very high threshold, but this is the first time that there has been such a weight limit.

Then the ecological bonus on electric vehicles only applies to vehicles under 47,000 euros. This effectively excludes all vehicles above 2 tonnes from the prices. It’s a start, but it will take a break from the incentive for new cars so that the heavier ones are doomed. And on the contrary intermediate vehicles between the bike and the car are favored, more sensible and financially accessible.

Because the other issue is not modeling the electric to thermal generation. For this, we must rethink the use of the car. We see this in the low-carbon transition strategy, we focus on the technological aspect without sufficiently activating the sobriety levers (moderation of transport demand, modal shift, improvement in vehicle filling, reduction in vehicle weight, reduction at speed). It is not just a technological transition that is needed.

Interview with Marina Fabre Soundron @fabre_marina

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