Examination of Witnesses (Question Numbers
280-291)
MR SIMON
BARNES, MR
GREG ARCHER
AND MR
JONATHAN MURRAY
9 JANUARY 2008
Q280 Joan Walley: Are there issues
arising in respect of the Transport Bill, which I believe is going
through the House at the moment, in terms of fleet purchasing
because presumably there is a lot of new work being done there
in terms of, for example, vehicles for disabled drivers and so
on and so forth. Is that encompassed within the work that you
do to promote this awareness?
Mr Archer: No.
Q281 Jo Swinson: Before I just come
on to a couple of different questions I wanted to just ask on
the trading standards point, when your surveys show that particular
dealerships are not just not displaying the voluntary label, but
are in fact breaking the regulations on the European data that
they should be providing, do you inform trading standards so that
that can then be enforced?
Mr Barnes: We do not ourselves,
no, because that is a relationship between the dealer and trading
standards, and the ownership of the dealer is not necessarily
the ownership of the brand of the car manufacturer. Technically,
that is a dispute between the dealer ownership and trading standards,
not between, say, Ford and trading standards, it may be a dealer
group—Pendragon for example—and trading standards.
Mr Murray: It would be more appropriate
here for the Retail Motor Industry Federation to get involved
as they represent the dealerships as opposed to the car manufacturers
themselves and so I think that is an issue that we have been looking
to take forward with the Retail Motor Industry Federation. There
are a number of fronts on which we are engaging with them at the
moment; it has been delayed slightly in the last year because
they have had a restructure and a change of senior management
but it is one of the outstanding issues that we have with them.
Q282 Jo Swinson: At the moment it
seems that fewer than a third of all cars that are sold have this
labelling on them; 14% of the new car dealerships are not participating
and even of the ones that are, only 60% are displaying it properly,
so it seems that at the moment it is quite patchy. What is really
being done to drive forward the use of this so that it can actually
be meaningful for consumers? It would strike me that actually
enforcing that regulation would seem to be a starting point, but
that obviously is not being driven forward from your end.
Mr Archer: With something like
86% of showrooms now displaying the label, about three-quarters
of vehicles in showrooms are labelled.
Q283 Joan Walley: But 14% are not.
Mr Archer: 14% are not, absolutely,
but given that it is a voluntary scheme and it has been operating
for a couple of years the level of uptake is good, it is improving
and we are working to improve it year on year. The purpose of
the survey is for us to find out the extent to which the label
is being displayed and used, the knowledge of dealers on climate
issues and the way in which they make use of the label in the
sale. We are not a regulatory organisation, we are a membership
organisation and it really is not our role to inform trading standards
of where their work should be. We have worked with trading standards
to make them aware of the label, but clearly local trading standards
departments will make their own decisions about which issues they
prioritise.
Q284 Jo Swinson: It just struck me
that if you know which ones are definitely breaking the regulation
it might make it worth trading standards while actually taking
up the issue, which might then actually encourage people to comply
with the EU regulations and that would drive forward the usage
of the scheme. On that issue of the survey findings about the
staff input on this, I think it was 28 per cent of staff mentioned
it but that was only for customers who had already expressed an
interest in fuel economy. How can that figure be increased, because
surely a key aspect of the success of the label is actually going
to be if the sales staff are in that ideal position to explain
it to consumers and are more proactive in doing so?
Mr Archer: 28% made extensive
use of the label in their explanation. One of the things that
we have found is that the number of dealers that are unable to
answer any questions about the label at all has fallen very significantly
in the last couple of years. Dealer training is one of the key
issues; climate concerns are clearly rising across the population
and it is something that car dealerships are being trained more
widely in now and it is something that I know the SMMT have been
keen to encourage. Simon might be able to add a bit more, but
what we have seen actually over the last year is a big improvement
in the level of knowledge in dealerships; that is not to say that
it is good enough but it is to say that it is moving in the right
direction. We have to recognise that for the vast majority of
car buyers environmental issues are still a very low priority.
Mr Murray: Just on that point
of sales staff who had no knowledge of the label, in 2006 22%
of the staff that we interviewed had no knowledge of the label,
that fell last year to 9%.
Q285 Jo Swinson: Which is good progress.
Can I just clarify something, I think you mentioned that three-quarters
of the cars in the 86% on average display the label; is that the
cars across the whole dealership or the cars in the showroom,
because I am just thinking that when I have gone to look at cars
you have obviously got an indoor showroom and then loads of cars
outside.
Mr Barnes: It is the new cars,
the unregistered ones, so it is the one without the number plate
on because that is the legal definition of a new car, unregistered
and less than 300 delivery miles. In the majority of cases, therefore,
it will be the ones in the showroom, that is the explanation.
Q286 Jo Swinson: Just turning to
the issue of the comparative versus absolute labelling, obviously
there is a lot of information provided on the absolute label but
most people go into a car showroom with a particular class or
a couple of classes in mind, you know, they are wanting a particular
family car or whatever. Is there not scope for helping those consumers
to choose more effectively between the different cars in a particular
class where they might all actually be the same letter rating
and then it is difficult actually for consumers to make informed
decisions?
Mr Archer: It certainly is, and
that information is now being provided. The Department for Transport
have developed their Act on CO2 website which has rankings of
the top ten vehicles in different segments of the market, the
What Car? guide now includes rankings based upon CO2 and
colour codes according to the VED band, so that type of comparative
information that you are describing is available in a whole range
of electronic and hard copy forms; it is not available in showrooms
other than in the form of the VCA's guide which includes this
information, but that is very large tables of information that
very few consumers will go through.
Q287 Jo Swinson: Do you think there
is scope for developing the point of sale information to include
some of the information which may be available on-line but which
a lot of people will not even know is available on-line so it
will never come across their radar?
Mr Barnes: We had a big discussion
in the partnership of relative and absolute labels, and the general
feeling was if you moved towards a relative label there may be
some categories of class and car, for example a sports car, that
could be classified as being green or low carbon, and was that
really appropriate to have a low carbon sports car? The partnership
came to the agreement that, no, it was not, and therefore we should
concentrate on an absolute label in terms of the upfront appearance
of the label and that enabled us to link it directly to vehicle
excise duty as well, so there are two benefits of doing that.
We believe that consumers do an awful lot of research before they
go to the dealership. The dealership is hugely important in making
that final choice, but they do research before they go there,
so if we can provide information through that on CO2 and we can
encourage manufacturers to put the CO2 information in a visual
form on their own website—and companies like Honda and Toyota
are doing that actively now—that is the best approach. Then
if the consumer wants to say how is this Renault against this
Mazda, the dealership is put under pressure and he has to answer
that question.
Mr Archer: People actually enter
a dealership at a very late point in the car buying process. A
lot of that comparative decision-making is being made much earlier
in the decision process and therefore we need to find the media
that people are using to make those decisions and get it into
those media, rather than necessarily into the showrooms, because
by the time people get into the showroom they are generally choosing
between a couple of different models in that showroom or engine
ranges. It is about targeting that comparative information in
the right media so that it reaches people at the right time in
their decision-making.
Q288 Jo Swinson: A lot of those arguments,
particularly linking it to the VED, are very strong, but is there
not a danger that manufacturers will be particularly incentivised
to focus on the more efficient models but less incentivised to
make a greener sports car perhaps?
Mr Barnes: There is a debate about
that. We have an issue and I think the LowCVP do with the concept
of banding where you have a particularly large band from 120 to
150 but there is no incentive to move from 150 to 120 because
you pay the same vehicle excise duty. That is where the fuel cost
needs to come in because if you are driving a car at 150 rather
than 120 you will have a different fuel cost, so that helps support
that argument that goes beyond maybe the label.
Q289 Jo Swinson: I wanted to press
you a little bit, but it was mentioned earlier about the BMW showroom
where all the cars were a band G and, frankly, if you are able
to buy that kind of car you have probably got the money to pay
the VED or whatever else. Is there any research done on what the
levels of VED would need to be to make consumers switch down bands,
is it enough at the moment with a £400 differential or does
there need to be a much bigger gap?
Mr Archer: The evidence shows
that in order to encourage consumers to downsize, either to a
smaller engine or a smaller vehicle, you need about £1500
incentive; the VED differential from next year will be £400.
Q290 Jo Swinson: What is the view
of your organisations on that and what the Chancellor should do?
Mr Barnes: We have not seen a
Government review of vehicle excise duty and its impact; that
has been in since 2001 and maybe that is something that we would
look to see. We acknowledge that the fiscal system and the link
to the car choice is a positive one and one that will inevitably
become stronger over a period of time, but what we do not want
to see necessarily is an all star change in that from the current
level to a future level. The Government recently announced the
structure of the future of VED for three years and we think that
that trend will inevitably continue. If we look at landfill tax,
for example, there was a progressive increase in landfill tax
over a period of time; it started off relatively low but everyone
knew where it was going to end up. That gives manufacturers sufficient
time to adapt and change their model range and to change the technology.
We will have a regulation from Europe that will come in in 2012
and manufacturers will be able to do two things to achieve that
regulation: apply technology or change their sales mix, so again
this will be another instrument for them, another important factor
in this process.
Chairman: Very quickly, Joan, do you
have a follow-up on that?
Q291 Joan Walley: It was just a thought
really arising out of that last exchange. I cannot even remember
which inquiry it was, but it was in relation to the Stern Report
and the general view of our witnesses was that the Stern Report
had actually flagged up these issues in a way at board level amongst
all components and companies in a way that previously was not
the case. I just thought that around that and our discussions
now, particularly for the Society of Motor Manufacturers and Traders,
what impact has the Stern Report had, are your members
now from the boardroom down much more interested in and much more
concerned about these issues?
Mr Barnes: Climate change is the
number one focus for car manufacturers at the moment. Safety,
air quality and noise are all subsidiary to climate change, I
think it is fair to say, and that was evidenced by the new technology
being demonstrated at Frankfurt; hopefully when we have the Motor
Show here in 2008 we will see the new technology. They are not
all approaching it from the same angle, I must say, there is no
commonality of technology, but they all have their technologies
that they hope will deliver significant carbon reductions in future
years. Stern and all of that has raised the profile. We wait to
see what Julia King brings out as a result of her review; we have
spoken to her and Greg and the partnership have spoken to her
and she is obviously very informed on this particular debate.
Chairman: I think all eyes are on what
is happening in California and the case that is going before the
Supreme Court on vehicle emissions and all that sort of thing,
but I think that is a little bit beyond the territory of this
inquiry. Thank you very much for coming in this afternoon; it
has been very interesting.
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