Lance's plan

Lance's plan
The backgroundThe automotive industry crisis is one of the results of the global economic crisis. Most parts of the automotive manufacturer particularly those in the U.S.A and Europe are suffering from this crisis.This automotive industry can be linked to the 2003-2008 energy crisis, in which the fuels price increased. The consumption of vehicles with poor fuel economy shuch as sports cars, sport utility vehcles(SUVs) and pickup trucks, whick are also the primary products of the American” Big Three” automakers, General Motors, Ford and Chrysler, as a result of their popularity and high profits. In other words, the sales of the Big Three have begun to slide as their offered products are few fuel-efficient.In the UK.................Bangers for cashIt seems that the auto motive industry has heen seriously impacted by the global financial crisis since last year, some of them even have declared bankruptcy. The situation will be worse if it is not resolved with supports from government, as a result of that, the British government has adopted a new policy called “bangers for cash” which is expected to revive the troubled industry by encouraging consumption. The government promisses to patronize £2,000 to consumers who trade in their at least 10 years old vehicles for a brand new one. According to research by the AA, younger and lower-income drivers are more likely to take up the offer, pumping a potential £2 billion into Britain’s ailing car sector. The motor industry needs the money: new car sales have fallen for 11 months, manufacturers have been forced to scale back production and many people have lost their jobs. It all seems to be a fantasy and is considered to be the savior of automobiles, obviously, not only customers , but also the morale of automotive manufacturers will be inspired as it appears, in the other hand, this piece of policy still has been doubted as its effects and value for futher development.Similar programs in other countrys.....The StruggleThe Government is putting £300 million into the scheme with the expectation that the carmakers will provide the same amount. However it is critical that the government only offer half of the cash, the remaining £1,000 will come from car companies themselves. There is also a separate dispute over how VAT should be calculated in scrappage transactions. Most other European countries offer higher scrappage incentives funded entirely by their Government, nevertheless Britain is insisting that the manufacturers have to pay the £1,000. As a result of that, some manufacturers refused to take part.The ResultPublicity surrounding the scheme was expected to ensure that it is able to have a prompt star because traditionally the sales of motor industry reach the peak during summer months especially in September, when the number plate changes for the second time in the year, before tailing off in the run up to Christmas. However, the success of the scheme has triggered fears that the government’s £300 million could run out early. It is expected that “bangers for cash”, intended to revive the troubled industry on which 800.000 jobs depend, would operate until the end of February. Nevertheless with £35 million of the cash likely to be swallowed up in the first month, it appears a slim chance that this program could run its full term. Moreover it is said, according to the Government’s Department of Business Enterprise and Regulatory Reform, the scheme is unlikely to be extended, even if the cash does run out.ConclusionThe result of this scheme is obvious, a lot of people are willing to purchase a new vehicle. It seems that the consumption of automobiles has been encouraged. According to a poll of 15,000 AA members, scrappage is likely to appeal to younger drivers, with one in five 18- to 24-year-olds saying they were likely to take up the offer. The survey showed that the scheme also appealed to 11 per cent of drivers as a whole, with women more interested than men. It is no doubt that small cars are the biggest winners due to their cheaper price and flexibility. Meanwhile, old bangers are replaced by more fuel-efficient and more environmental-friendly cars, which is not only welcomed by new generations, but also brings benefits to our mother earth.However, there is something which needs to be worried about, very few of the new cars which have been sold under this scheme are manufactured in Britain. What is more significant, is that none of the manufacturers are the U.K-owned companies. It is obvious that even the “bangers for cash” scheme has benefical effects on UK parts suppliers, retailers and the trade sector, most of incentive money from the government is indirectly going to overseas carmakers. This explained the reason why the government only has only invested £300 million in this scheme as a judicious decision.