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Cars, Current affairs

That Greenpeace / VW campaign (con’t)

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Green Peace The Dark Side Volkswagen - Buzzmania

I continue to be a bit perplexed when it comes to the anti-VW campaign Greenpeace is mounting (latest here), for a number of reasons.

Greenpeace is upset because…

  1. VW advertises its eco-line, Bluemotion, heavily but…
  2. Only sells about 6% of their cars under this badge…
  3. And charges an ‘unfair’ premium for them
  4. VW is lobbying against EU regulation to enforce CO2 emissions caps

Now… my view is this this is poorly thought through on counts 1-3. Here’s why.

  1. Most people think of eco-cars as under performing, slow, unexciting, and generally less fun than their full-powered alternatives. If you don’t think this is true, have a read of some of the comments on Greenpeace’s own blog! People believe them to be "unsafe" because they believe them to be underpowered. This is not true, I can say with the voice of experience, as our 107g/km Bluemotion Golf is zippy in the extreme despite its 1.6l TDI engine, but it’s not VW’s fault that people don’t know / believe that. That’s now how they advertise their cars, oddly enough.
  2. Because people believe them to be slow and underpowered, they don’t want to buy them. If you’re spending £20kish on a new car, are you going to pick the fun one or the not-so-fun-one, even if it is marginally cheaper to run? I know which one I’d pick, but I would never buy a new car as I have a good understanding of the economics of depreciation. So the heavy advertising of Bluemotion must be helping change people’s minds, or at a least addressing the fundamental issue that people don’t think they want this sort of car, on the whole. Good on them for investing in a market only 6% of their customers currently want.
  3. When I looked into it (when buying our second hand Golf) to get a sense of prices, the premium on a new Bluemotion car that was otherwise pretty much like-for-like identical to the standard car was about £800. On a £22,000 car. Which amounts to about 4%. When I did the maths, for any decent mileage you drove, that premium was paid for within three years (between road tax discounts and improved mileage), and sooner if you live in an area where you get parking or congestion charge discount for driving a low-emissions vehicle, or drove more. So I’d hardly call that an ‘unfair’ premium. It’s true, second hand they command a much heftier premium, but again, that’s a supply/demand issue; most people aren’t buying the car new so there’s lower stock of them second hand. And therefore trying to buy one second hand is more expensive (for those of us that recognise the value of the low-emissions cars). Again, not VW’s fault.
  4. I’m in two minds about the lobbying issue. Whilst I do think that heavier regulation can shift consumer demand, it has implications for the free market model and consumer choice. I tend to think prohibitive National taxation is a more effective tool than EU legislation in this sort of context. After all, in the current economic environment, it would be very, very hard indeed for the automotive lobby to successfully push back a policy which upped tax disc costs by 30% for (new) cars with emissions over 200g/km or 20% for cars over 150g/km (or something like that). Or even more dramatic charges; it reminds me of the episode of Yes Prime Minister where the tobacco and anti-tobacco lobby were both trying to get Jim Hacker to support their cause; the anti-tobacco lobby were suggesting raising taxes on cigarettes to the point where a pack of 20 cost as much as a bottle of whiskey… could be an effective policy for deterring all but the most hardcore of smokers, and the same holds true for people’s choice in a new car!

Finally, for an organisation that’s campaigned against cloud computing, advocating the use of social media for protest as they are here basically adds to the burden of the data centres hosting their George-Lucas-ripping-off content, so they’re actually hurting the environment by their own logic (that’s another poor argument, but I’ll leave it for now)…

Current affairs

Does @UKVolkswagen deserve the Greenpeace Death-Star treatment?

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vwgreenpeace

Scot points me at this very, very polished anti-VW campaign, a car maker whose eco-credentials we’ve been evaluating for a little while whist looking for a replacement for the ageing Skoda (aka Horse).

The essence of the Greenpeace upset is that:

  • VW is lobbying against lower carbon caps for its cars
  • VW doesn’t sell many eco-cars (6% of sales, apparently)
  • VW sells its eco-cars at a premium

Now, my initial reaction is what it was designed to be – shocking, we can’t get one of those. But the more I think about it, the more unreasonable that position seems to be.

VW has been selling its Bluemotion cars for a few years. Its brands pretty much all (with the exception of the high end sports car brands it owns) have Bluemotion variants. It markets those cars and their eco-credentials heavily. Despite the Greenpeace criticism on cost, the Golf we’ve been looking at costs less than £800 more than its non-Bluemotion equivalent (around a 4% premium). The question has to be asked; why are only 6% of the cars VW sells in these product lines?

Clearly, Greenpeace would like the answer to that question to cast responsibility on VW. But I think its our fault- the driving, car-buying public. Eco-efficient, no matter how well spun, sounds boring. If you were going to spend an extra £800 on a car, would you go for metallic paint and body coloured bumpers, or would you go for the eco-efficient version? Not enough of us would choose the latter. Similarly, if you were looking at a second hand car and had the option of different (second-hand) variants with better performance for a lower price – inevitable whilst the technology is new – how many people can afford to pay the extra there? This isn’t VW’s fault, this is a consequence of capitalism – whilst supply is low, costs will be at a premium. You remember what Emily has to say about market forces.

Regulation may need to play a part in addressing these issues, but I’m not sure the regulation is necessarily being applied in the right place. Forcing the manufacturers to lower carbon emissions caps before there is market demand will hurt the manufacturers. Forcing consumers to pay a premium to drive polluting cars – even more than the current tax band system does, perhaps – would be a more sensible approach, to my mind. It tackles the root of the problem – consumers that are largely indifferent to pollution – rather than penalising the organisations that actually are investing in R&D and manufacturing to reduce the CO2 output of their products.

Now I’m not suggesting for a moment that VW is blameless here, or that I have the insight or understanding of its lobbying activities and commercial business beyond the amazingly superficial. However, I can’t help but feel that Greenpeace has perhaps oversimplified here – picking on a more sympathetic target for its audience than its audience itself.

Cars

The ROI on @UKVolkswagen Bluemotion

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Dashboard 08

You’ll know from recent posts that I’ve been obsessing somewhat about the ‘new car’ decision. I thought I’d put the new ‘eco-efficient’ technologies to the financial test, trying to get a sense of how much money they’d save me on an average year.

This spreadsheet lays out the detail; but the essence of it is that I worked out the range of a Bluemotion VW Golf compared with a normal diesel car and divided it by the total estimated distance I anticipate driving per year (4000 miles or so). This gives me a theoretical number of refuels per year, on which basis you can estimate a saving.

Well, the saving, taking a pessimistic perspective on fuel prices and rounding up in a few other places to give Bluemotion the advantage, comes to about £250 a year. The tax-free status of the car saves you another £165 a year or so – for a total annual saving of £415.

Given that Bluemotion cars currently cost about £6,000 more than a slightly older, but not ludicrously less efficient 1.9 litre TDI Golf (30% odd), I’m trying to work out if the investment is justified. It comes to an effective return of 6.9% a year on the additional investment, which is not bad.

The resale value point might swing it though. If you enhance the rate of return with the possibility that Bluemotion cars will be worth more on resale (even if that’s only £100 a year more than the older car)  – on account of the desirability of the tax break and presumably the increasing expectation that a car is eco-efficient – then that 6.9% might be more like 8% or 9%- at which point it’ll be doing as much for me as a reasonable rate of return on a regular investment. And given that tax rates and fuel prices are only likely to go one way – it might make good sense.

Is my maths right? What does anyone think? I obviously haven’t allowed for inflation or modelled for tax / fuel price changes beyond fuel at £1.50 per litre.