Author Topic: You don't pay no road tax  (Read 18155 times)

Kim

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    • Fediverse
Re: You don't pay no road tax
« Reply #75 on: 09 October, 2019, 12:32:33 pm »
And it's only modern day life for those with the privileges that allow for car use in the first place.  Everyone else has to muddle along in a world optimised (I use the term loosely) for private motoring.

Re: You don't pay no road tax
« Reply #76 on: 09 October, 2019, 12:38:16 pm »
The problem with cars is that they bludgeon all other modes off the road. Buses are slow and rubbish because they get stuck in queue of cars; cycling is close to dead in most places because no one dare cycle; kids can’t walk to school because the roads are too dangerous; etc. It only takes a small fraction of people *wanting* to use cars to create a situation where everyone has to either get their own car or stay indoors.

ian

Re: You don't pay no road tax
« Reply #77 on: 09 October, 2019, 12:46:48 pm »
Everything is invested in making cars the 'easiest' option, from broken public transport to the growing road infrastructure, the delegation of public space to parking, etc. Vast amounts of money are spent to making this the case and preserving this status quo.

The alternatives are generally punitive. You want to walk, then good luck. The pavements will be blocked by cars and likely dirty and in poor condition (nor will it be cleared of snow or ice), step into the road and risk a speeding, aggressive motorist (because we have effectively ceased road policing), find a crossing and wait for the motor vehicles to take precedence until you get impatience and risk crossing. Cycle? You have to put up with the same aggressive drivers. Very little money has been spent.

Of course, your local shops have probably gone, killed by the car too. People bleat about the lack of parking which is nonsensical, but once people are in their car, they don't go local, they drive to the usual places.

arabella

  • عربللا
  • onwendeð wyrda gesceaft weoruld under heofonum
Re: You don't pay no road tax
« Reply #78 on: 10 October, 2019, 10:57:40 am »
Agree with Ian's last paragraph, I think the Netherlands-in-Walthamstow underlined this.

All leading to why we need a multi pronged approach.
-VED based on emissions and on axle weight and overall footprint (widest-x-longest-x-highest dimension)
   emissions - how much the air is being wrecked to the detriment of health etc
   axle weight - how often the roads will need mending/how robust they need to be
   overall footprint - how much public space the vehicle consumes when in use
-make walking etc a desirable choice - qv the no-car zones in ?Barcelona, filtered permeability, prioritising non-vehicle flow at junctions/ped crossings etc.
-plan to phase out on-street parking - seeing as it's obvious when a car was produced, can we ban it for all cars produced after <date> except in designated zones (ie move the default to "you can't park here"), then make general after a number of years [this needs a bit more working through, perhaps you can buy permission to park where older cars can etc..  But as with anything need to work to ensure it doesn't disproportionally impact less well off etc] 
Any fool can admire a mountain.  It takes real discernment to appreciate the fens.

Cudzoziemiec

  • Ride adventurously and stop for a brew.
Re: You don't pay no road tax
« Reply #79 on: 10 October, 2019, 11:38:43 am »
Riding a concrete path through the nebulous and chaotic future.

Re: You don't pay no road tax
« Reply #80 on: 10 October, 2019, 12:11:36 pm »
Governments won't do any of this when a large proportion of GDP is based around the vehicle manufacturing industry. Look at when Volkswagen cheated the system, the German government and the EU slapped a few wrists, paid off some senior employees who were probably due for retirement anyway and encouraged a development of an electric range. If they really clamped down hard then VW would have been in dire financial problems but because it's employing thousands of people across Europe and propping up most of the economy as well as strong lobby groups knocking on the doors of their respective parliaments it is considered better if we keep buying shiny new cars and the vast amounts of fuel they need.
Duct tape is magic and should be worshipped

Jaded

  • The Codfather
  • Formerly known as Jaded
Re: You don't pay no road tax
« Reply #81 on: 10 October, 2019, 12:13:36 pm »
It is simpler than it looks.

Cudzoziemiec

  • Ride adventurously and stop for a brew.
Re: You don't pay no road tax
« Reply #82 on: 10 October, 2019, 12:30:22 pm »
Good! But Scotland doesn't have any car manufacturing. Whereas England does and has had similar legislation for years – only implemented in Nottingham, just as only Glasgow and Edinburgh are saying they plan to implement it in Scotland.
Riding a concrete path through the nebulous and chaotic future.

Kim

  • Timelord
    • Fediverse
Re: You don't pay no road tax
« Reply #83 on: 10 October, 2019, 12:32:03 pm »
And I'm not sure how much of Nottingham's modal shift is down to the parking levy, rather than the improved transport options that it's funded.  All those park-and-ride users are still driving, they just cause a bit less congestion.  It's important not to confuse park-and-ride with public transport.

ian

Re: You don't pay no road tax
« Reply #84 on: 10 October, 2019, 12:34:26 pm »
Governments won't do any of this when a large proportion of GDP is based around the vehicle manufacturing industry. Look at when Volkswagen cheated the system, the German government and the EU slapped a few wrists, paid off some senior employees who were probably due for retirement anyway and encouraged a development of an electric range. If they really clamped down hard then VW would have been in dire financial problems but because it's employing thousands of people across Europe and propping up most of the economy as well as strong lobby groups knocking on the doors of their respective parliaments it is considered better if we keep buying shiny new cars and the vast amounts of fuel they need.

Vehicle manufacturing is typically around 3% of the GDP, so while significant it's not huge, and it's employing fewer and fewer as labour has been even more automated or sent somewhere cheaper. They do have an excellent and well-establish lobby though at both national government and EU level. More worrying is fewer and fewer people are buying new cars, instead they're buying financial products that are using debt to effectively buy the cars.

Re: You don't pay no road tax
« Reply #85 on: 10 October, 2019, 12:56:19 pm »
Well that way you guarantee a new car every three years (or sooner) without any further financial outlay and the system self perpetuates.
Duct tape is magic and should be worshipped

rob

Re: You don't pay no road tax
« Reply #86 on: 10 October, 2019, 01:15:28 pm »
Governments won't do any of this when a large proportion of GDP is based around the vehicle manufacturing industry. Look at when Volkswagen cheated the system, the German government and the EU slapped a few wrists, paid off some senior employees who were probably due for retirement anyway and encouraged a development of an electric range. If they really clamped down hard then VW would have been in dire financial problems but because it's employing thousands of people across Europe and propping up most of the economy as well as strong lobby groups knocking on the doors of their respective parliaments it is considered better if we keep buying shiny new cars and the vast amounts of fuel they need.

Vehicle manufacturing is typically around 3% of the GDP, so while significant it's not huge, and it's employing fewer and fewer as labour has been even more automated or sent somewhere cheaper. They do have an excellent and well-establish lobby though at both national government and EU level. More worrying is fewer and fewer people are buying new cars, instead they're buying financial products that are using debt to effectively buy the cars.

It is true that the lessons of 2008 have not be learnt by the consumer or the lender.   The majority of those new cars on the road are not paid for.

I bought a new car almost a year ago.   I knew which model I wanted and we sat with the salesman for an hour while he worked out his best deal.   When we got to how I was going to pay I said a small trade in (old car was 10 years old with 108,000miles) and the rest in cash.   He then started on the hard sell of the financing options.   I happen to be reasonably financially savvy and initially resisted however I was offered a £2,700 discount if I took the car on hire purchase (divide the total by 24, add a bit of interest and pay by direct debit).   Total interest cost - £800.   £1,900 better off and spreading the cost over 2 years.   Who wouldn't do that deal ?

There seems to be a bizarre disconnect in that the dealer is taking on more risk whilst getting paid less for the same item.   I can't understand the business model but then I never was the smartest guy in the room.

Re: You don't pay no road tax
« Reply #87 on: 10 October, 2019, 01:27:09 pm »
Governments won't do any of this when a large proportion of GDP is based around the vehicle manufacturing industry. Look at when Volkswagen cheated the system, the German government and the EU slapped a few wrists, paid off some senior employees who were probably due for retirement anyway and encouraged a development of an electric range. If they really clamped down hard then VW would have been in dire financial problems but because it's employing thousands of people across Europe and propping up most of the economy as well as strong lobby groups knocking on the doors of their respective parliaments it is considered better if we keep buying shiny new cars and the vast amounts of fuel they need.

Vehicle manufacturing is typically around 3% of the GDP, so while significant it's not huge, and it's employing fewer and fewer as labour has been even more automated or sent somewhere cheaper. They do have an excellent and well-establish lobby though at both national government and EU level. More worrying is fewer and fewer people are buying new cars, instead they're buying financial products that are using debt to effectively buy the cars.

It is true that the lessons of 2008 have not be learnt by the consumer or the lender.   The majority of those new cars on the road are not paid for.

I bought a new car almost a year ago.   I knew which model I wanted and we sat with the salesman for an hour while he worked out his best deal.   When we got to how I was going to pay I said a small trade in (old car was 10 years old with 108,000miles) and the rest in cash.   He then started on the hard sell of the financing options.   I happen to be reasonably financially savvy and initially resisted however I was offered a £2,700 discount if I took the car on hire purchase (divide the total by 24, add a bit of interest and pay by direct debit).   Total interest cost - £800.   £1,900 better off and spreading the cost over 2 years.   Who wouldn't do that deal ?

There seems to be a bizarre disconnect in that the dealer is taking on more risk whilst getting paid less for the same item.   I can't understand the business model but then I never was the smartest guy in the room.

You are at least buying the car. If you run it ten years and do 100,000 miles like the last one then you have easily paid of the loan accrued over two years and got yourself a good deal. The lease market doesn't even cover for that, like renting property you pay out but never actually own the thing. If money suddenly becomes tight (redundancy, long term sick etc) you become screwed without even the asset that might get you to your next interview or pay cheque.

As for the risk element that's no longer the dealer's risk. That is passed onto the finance company funding the loan. If you default it is down the them to claim the money, not the dealer. The finance company is already covering the risk in their assessment of the interest they are taking so they won't lose any money. On that particular case it might cost them a bit of profit but in the main the system is set up that the risk is measured in very small percentages. It's like insurance, most people who have insurance don't claim so they fund the ones who do but this has the benefit of being legally allowed to further charge the defaulter and get the losses back. Then in the worst case they claim the car back and take as much money as they can through selling it via auctions.

At least I think that's how it works but I'm not in finance
Duct tape is magic and should be worshipped

Re: You don't pay no road tax
« Reply #88 on: 10 October, 2019, 01:28:40 pm »
I take it there's some clause that means the discount is contingent on you not paying off the car early?

(If it's an HP agreement it legally can't have early repayment penalties.)

Otherwise the obvious thing to do would be to buy it using their finance, getting £2700 off the price of the car, and then paying off the loan ASAP in full.
"Yes please" said Squirrel "biscuits are our favourite things."

rob

Re: You don't pay no road tax
« Reply #89 on: 10 October, 2019, 01:34:10 pm »
I take it there's some clause that means the discount is contingent on you not paying off the car early?

(If it's an HP agreement it legally can't have early repayment penalties.)

Otherwise the obvious thing to do would be to buy it using their finance, getting £2700 off the price of the car, and then paying off the loan ASAP in full.

You can pay it off early at the cost of one month's interest so less than £50.   I haven't bothered yet as I need to keep spare funds available but, yes, that is what I should have done.

Whilst I'm not that old I do recall that you used to get a discount if you paid up front in cash.   Seems the other way round now.

Kim

  • Timelord
    • Fediverse
Re: You don't pay no road tax
« Reply #90 on: 10 October, 2019, 01:34:30 pm »
There seems to be a bizarre disconnect in that the dealer is taking on more risk whilst getting paid less for the same item.   I can't understand the business model but then I never was the smartest guy in the room.

I don't understand it either, but a good first-order approximation is that the cars are coincidental, and the dealer is in the finance package business.  (See also: higher-end consumer electronics and whitegoods.)

Seems to me that wherever Actual Stuff gets sidelined by financial shenanigans, it's a recipe for doom at some point.

Jaded

  • The Codfather
  • Formerly known as Jaded
Re: You don't pay no road tax
« Reply #91 on: 10 October, 2019, 01:40:02 pm »
It is possible that the dealer is 'bonused' on how many financial deals sold.

They certainly used to have bonuses on numbers of cars sold. The end of a financial period was a good time to buy a car.
It is simpler than it looks.

ian

Re: You don't pay no road tax
« Reply #92 on: 10 October, 2019, 01:53:05 pm »
There seems to be a bizarre disconnect in that the dealer is taking on more risk whilst getting paid less for the same item.   I can't understand the business model but then I never was the smartest guy in the room.

I don't understand it either, but a good first-order approximation is that the cars are coincidental, and the dealer is in the finance package business.  (See also: higher-end consumer electronics and whitegoods.)

Seems to me that wherever Actual Stuff gets sidelined by financial shenanigans, it's a recipe for doom at some point.

It's this. Vehicle financing is far more profitable than the vehicle. A financial product costs nothing to manufacture, cars are effectively an expensive, low margin commodity. Dealers are now incentivized to sell finance packages. Credit is cheap (at the moment) and risk is ostensibly mitigated through securitization.

Which works until it doesn't and people lose the ability to make their repayments, for instance, if interest rates rise. In theory, the higher risk loans with be securitized in their own products, and thus the risk recognized by the buyer (more risk, more return obvs), but recent history should remind us that it doesn't happen, repayment risk isn't recognised at the level of person who sells you the car, mortgage etc. and as such it gets blended, so if there's a large default, it hits all the securitized products in the sector, and people panic to cover their position (more complex, there's a second tier of products that effectively insure – or bet on default, depending on your level of cynicism). That's the last financial crisis in a nutshell. Bigger money, certainly, but the same structural problem (it can be applied to all consumer debt – debt is effectively the most traded 'commodity' in the world, not product).

So, if a significant number of people lose the ability to make payments on their shiny new SUV and can't pony up £35k, then they default and lose the cars, the manufacturers lose because they were never actually paid, and a lot of over-priced second-hand cars hit a market that doesn't want and can't afford them.

Re: You don't pay no road tax
« Reply #93 on: 10 October, 2019, 01:58:11 pm »
In rob's case it really doesn't make sense:-

a) Dealer accepts £10 for the item. rob pays cash. There is zero risk for the dealer. Dealer ends up with £10.
b) Dealer offers £1 discount if bought by finance. rob agrees. rob pays finance company £9 with 50p interested added to make £9.50. Dealer receives £8.50. There is no risk for the dealer.

I guess they assume that a percentage of people paying by finance will end up:
a) returning the car part way through (so they pay at least half of the car back and end up with no car). Dealer wins as they get a car back whilst still getting money for it, or they get to buy the car back for cheaper from the financing company (which doesn't want the actual car), etc.
b) having the car repossessed for not keeping up payments on it (dealer wins as above)

For rob's situation maybe they believe that someone willing to pay cash up front is better off being guided towards financing in the hope that they'll end up using their cash for other purposes and then failing to keep up repayments on the car and becoming one of the small percentage of financed lot who they make significant money from.
"Yes please" said Squirrel "biscuits are our favourite things."

TimC

  • Old blerk sometimes onabike.
Re: You don't pay no road tax
« Reply #94 on: 10 October, 2019, 02:00:23 pm »
VED provides an annual shock of the cost of car ownership, and as Cudzo says hits low mileage users of cars too.

Basically, there needs to be behavioural change level charges on private transport.
£30 p.a. for my car. Hardly a significant cost, compared to servicing or insurance. Anyone paying significantly more has chosen to drive an inefficient vehicle.
If it had risen in line with inflation since the year I was old enough to drive, it would be £290 (according to the Bank of England inflation calculator). Why have we let it become so crazily cheap?

VED for my daily driver is £465 - and was £1280 for its first year (it's a 2019 car, so I'm not sure how I got away with £465!). It's not particularly inefficient, but it is a minor-league wankpanzer. My playtime toy is £260 pa, but given that it does fewer miles than I do on my bike (and some of that is on the track), its VED/mile is quite a lot. I pay them in one hit, as I do the insurance, just to remind myself what it costs to retain personal transport. Once I retire, next year, I will reassess what my transport needs and desires are. My WP is used for towing a caravan from time to time, but it may be that a single electric vehicle will replace both cars and I'll swap campsites for BnBs (there being no electric cars yet that can tow a significant weight)!

Wycombewheeler

  • PBP-2019 LEL-2022
Re: You don't pay no road tax
« Reply #95 on: 10 October, 2019, 02:12:26 pm »
Governments won't do any of this when a large proportion of GDP is based around the vehicle manufacturing industry. Look at when Volkswagen cheated the system, the German government and the EU slapped a few wrists, paid off some senior employees who were probably due for retirement anyway and encouraged a development of an electric range. If they really clamped down hard then VW would have been in dire financial problems but because it's employing thousands of people across Europe and propping up most of the economy as well as strong lobby groups knocking on the doors of their respective parliaments it is considered better if we keep buying shiny new cars and the vast amounts of fuel they need.

Vehicle manufacturing is typically around 3% of the GDP, so while significant it's not huge, and it's employing fewer and fewer as labour has been even more automated or sent somewhere cheaper. They do have an excellent and well-establish lobby though at both national government and EU level. More worrying is fewer and fewer people are buying new cars, instead they're buying financial products that are using debt to effectively buy the cars.

It is true that the lessons of 2008 have not be learnt by the consumer or the lender.   The majority of those new cars on the road are not paid for.

I bought a new car almost a year ago.   I knew which model I wanted and we sat with the salesman for an hour while he worked out his best deal.   When we got to how I was going to pay I said a small trade in (old car was 10 years old with 108,000miles) and the rest in cash.   He then started on the hard sell of the financing options.   I happen to be reasonably financially savvy and initially resisted however I was offered a £2,700 discount if I took the car on hire purchase (divide the total by 24, add a bit of interest and pay by direct debit).   Total interest cost - £800.   £1,900 better off and spreading the cost over 2 years.   Who wouldn't do that deal ?

There seems to be a bizarre disconnect in that the dealer is taking on more risk whilst getting paid less for the same item.   I can't understand the business model but then I never was the smartest guy in the room.
What's more you can often pay the loan back early saving a big chunk of that 800.
But finance is subsidised as the makers know people on finance schemes are more likely to buy another car when the term ends, even more so if there is a final payment equal to the value of the car at that time.
You can pay us 6000 and keep the car, of hand it over and take a new one with the same monthly payments you are used to making.

Eddington  127miles, 170km

Re: You don't pay no road tax
« Reply #96 on: 10 October, 2019, 02:33:47 pm »
The overwhelming majority of new cars these days are bought and financed based on the amount of car you will use  over its finance life - what it is worth then compared to what the purchase price is.  thus a £30k car can be yours for £4k/year - finance for £15k value.

This all depends on the second hand value of cars holding up, part of which is the emperor's new clothes effect of _having_ to buy a new car every 3-4 years. If second hand values drop, as I suspect they may well, like a stone, over the next year or so post Brexit, the whole stack of cards tumbles down.

Wycombewheeler

  • PBP-2019 LEL-2022
Re: You don't pay no road tax
« Reply #97 on: 10 October, 2019, 02:56:41 pm »
VED provides an annual shock of the cost of car ownership, and as Cudzo says hits low mileage users of cars too.

Basically, there needs to be behavioural change level charges on private transport.
£30 p.a. for my car. Hardly a significant cost, compared to servicing or insurance. Anyone paying significantly more has chosen to drive an inefficient vehicle.

One take, but tell me, how would your choice fare, driving four people and luggage on holiday? Carrying 700kg of stone? etc etc.

We have two cars, my wife's £25 VED p.a. petrol fuelled is the local runaround, ten years old and averages less than 3000 miles a year. My diesel grandpawagon is as big as it gets for load carrying, relatively tardis like as it is smaller on the outside yet of larger internal capacity than the competition (yeah, I know it is still big). Used overwhelmingly for long trips and load carrying capability, average around 8k miles pa. It is  currently averaging the same sort of consumption as the small petrol and it is capable of genuine mid-to-high 60's mpg consumption on an economy run. So, actually very efficient for its size and reasonably efficient in absolute terms. My VED? Currently £500 pa.
A6 avant. 4 people and luggage, no worries. 700kg of stone seems a lot. Probably needs a crew cab pick up.

Eddington  127miles, 170km

Re: You don't pay no road tax
« Reply #98 on: 10 October, 2019, 03:10:50 pm »
In rob's case it really doesn't make sense:-

a) Dealer accepts £10 for the item. rob pays cash. There is zero risk for the dealer. Dealer ends up with £10.
b) Dealer offers £1 discount if bought by finance. rob agrees. rob pays finance company £9 with 50p interested added to make £9.50. Dealer receives £8.50. There is no risk for the dealer.

Often, dealers make a significant amount of their profit from the bonuses offered by manufacturers and finance houses for volume sales. Margin on cars is fairly tight, but there may be discount schemes that the manufacturer will allow a certain number of per quarter (Nissan used to do this - almost every Leaf seemed to be bought on a "friends and family" discount meaning that you paid a few grand less, Nissan ate the cost, and the dealer got their sale).
The end result of this shenanigans is that the dealer makes no margin on the car, the manufacturer pays the discount, and then the dealer takes the commission on the finance package and the volume bonuses from the manufacturer and the finance house.

I bought my Zoe on HP because there was a big discount (and then paid the outstanding balance a month or so later). They also had a 0% finance package, but you had to pay the full amount, so it was much more expensive.

As for the PCP bubble, the finance houses (and those buying the bonds they issue) are taking a huge risk IMO. It's one thing securitizing the cashflow against a house at a sensible LTV where you can repossess it and cover the total amount outstanding. It's another using a depreciating vehicle with a deposit that doesn't cover the first day depreciation as a security.  A lot of schemes offer a low guaranteed future value as a way of trying to make the customer cover the gap between a fair market value and a distressed sale, but that drives the monthly payments up and if you do it properly you are uncompetitive. I wonder if it only works as it does because the finance houses are rolled into the car manufacturers (at one stage in recent history, GM the car manufacturing business was being propped up by GM the finance company).

ian

Re: You don't pay no road tax
« Reply #99 on: 10 October, 2019, 03:19:22 pm »
Indeed, that's the other major failure point, they're dependent on a second-hand market holding up and the continual purchase of new cars. All it takes is a shift ownership patterns and oopsy. And yes, a rapidly depreciating asset, it's like mortgaging a house that that is likely to fall down in ten years (that's you, Bellway, that is).

If there is a major default, then of course, the second-hand market will be flooded anyway. It's a good job a lot of people aren't completely reliant on their cars.