Car chiefs call for government action

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The Independent Online
THE Government was yesterday assailed with demands from motor industry chiefs to re-assert its economic and political grip to help to revive the flagging car market.

As the International Motor Show opened in Birmingham, the heads of Britain's car companies lined up to attack ministers for their lack of a consistent policy. Car manufacturers fear that unless the Government can restore consumer confidence by taking a hold on interest and exchange rates and intervening to halt the deluge of redundancies then economic upturn could be delayed for a further year.

Ford, Britain's biggest car seller, yesterday announced its third price cut in 12 months in a desperate attempt to stimulate a market that is set to decline for the third year running. The reductions cover 70 per cent of its model range and will cut up to pounds 520 off most Escorts and Orions and pounds 955 off the price of a Fiesta 1.1i LX.

Ian McAllister, chairman of Ford, warned: 'There is still no sign of any significant upturn in demand and I do not believe we can expect any real growth before the second half of 1994 unless the Government takes some action.' Top of his priorities were a boost to the economy through increased public spending and the scrapping of special car tax.

His concern was echoed by George Simpson, chairman of Rover, who said: 'I do not see a lot of light at the end of the tunnel. We need stability in economic and political policy but at the moment we have neither.'

Michael Heseltine, President of the Board of Trade, had been expected to receive a rough ride when he visited the show yesterday but he pulled out at the last minute to deal with the pit crisis.

Mr Simpson said: 'Mr Heseltine has got to understand the importance of consumer confidence and sentiment. Somehow he has got to address these problems.' There is concern that the Government's decision to axe thousands of miners' jobs alone will dent confidence sufficiently to prevent an upturn for the next three months.

The anger at the Government's apparent drift was being voiced throughout the industry. David Gent, director general of the Retail Motor Industry Federation, said: 'The Government has got to convince people that it has a coherent industrial and economic policy. Its obsession with going for zero inflation has not helped, indeed it has positively damaged the economy.'

Even manufacturers such as Nissan, which has been insulated from the sharp downturn in the UK market by buoyant export sales, were critical of ministers. Ian Gibson, managing director of the Japanese car company's Sunderland plant, said: 'We need certainty and a properly articulated policy. The way to deal with that is to achieve stability and predictability in exchange, interest and inflation rates.'

Nissan has put on ice plans to raise production at Sunderland by 10 per cent to 300,000 next year because of the uncertainty in UK and Continental markets.

Ford also announced price increases of about 2 per cent for its Sierra, Granada and Scorpio models, which are all manufactured on the Continent, reflecting a significant increase in costs since the pound was forced out of the exchange rate mechanism. Renault also announced rises of 2 per cent across the board, while Mercedes and Isuzu are expected to follow suit to cope with the pound's devaluation.

(Photograph omitted)