The Hindu Business Line : Global warming: Speed the car's exit

It is a hard message and an unpopular one for carmakers. But we have to make these changes and I want to be a small force for making others understand what we need to do and what we can realistically achieve. — MR GRAEME MAXTON, AUTO SPECIALIST, ECONOMIST, AND AUTHOR

Few people risk unpopularity when commenting on something as iconic to economic prosperity as the car. Precisely why, when one of the best-known consultants and writers on the automobile industry seeks to " finish off the car," you have to sit up and take notice.

Graeme Maxton is an unorthodox mix of roles — economist, industry consultant, author, freelance writer, event moderator; that mix likely contributing to the quality of his thoughts on the automobile industry. His has written regularly for The Economist, authored and co-authored books on the global automobile industry (among them, Driving over a Cliff and Time for a Model Change) and conducted assignments for companies such as Nissan, Renault, Visteon, and Tata. He is co-founder of the UK-based consultancy, Autopolis. Recently, he declared war on the car, by his own admission a " massive" contributor to sales and profit in the industry he is associated with — the global automobile industry. Why would he do that?

Major Polluter

"The car is responsible for much of the pollution that is a cause of global warming. We therefore need to reduce our dependence on the automobile — as well as two/three-wheelers, buses and trucks — to address the world's environmental problems. Even if it takes 20 or 30 years for us to reduce our dependence on these products to minimal levels, we need to start thinking about how we approach that now. We can take some steps quickly. Others will involve redesigning our cities or changing how we travel, communicate and manufacture goods. Changing our dependence on the car requires creativity, thought and careful planning. We need to start that process now," Maxton said explaining his argument to finish off the car, the subject of a planned new book.

No stranger to calling a spade a spade, Maxton, with co-author John Wormald, had devoted a whole chapter to the social cost of the automobile industry in Time for a Model Change. Simply put, these are liabilities imposed by the industry through such factors as environmental pollution, traffic congestion and traffic accidents, which when aggregated for economic cost showed the industry in the negative in several markets.

Broadly speaking, an extension of the social cost principle can also expose the vulnerability of cars because vehicles used for personal transport have less rationale for existence under pressure, as compared to commercial vehicles. "I think cars and two/three-wheelers are certainly more vulnerable than trucks. We need goods and they need to be transported. So, we need trucks and trains and ships. But we can also try and use more of what we have at home. Being able to buy potatoes from New Zealand in Britain makes no sense. We can cut our use of cars and personal vehicles more easily though not completely," he said.

But how justified is he in pronouncing a harsh verdict on the car, when companies such as Toyota and Honda are selling vehicles sporting alternative propulsion systems? Has not the industry responded to global warming? "I am barely aware of any response. There are now hybrid-cars and more are coming. There are attempts by carmakers to say that they are responding to higher fuel prices. But the most popular hybrid cars around today have been planned for many years and long before we were aware of the seriousness of global warming. Other responses are so small as to be barely worth doing," Maxton said. According to him, the real challenge is with vehicles already sold and plying. "Making clean cars is a hurdle but one that will be overcome. However, we have 800 million vehicles on the world's roads today which use 40 per cent of the world's oil and produce much of the carbon-dioxide and other pollutants. Changing what we do with these vehicles is the hardest challenge." And though the new markets lay in Asia, this battle would have to commence in Europe, the US and Japan as that is where over 75 per cent of the world's vehicles are. "Let's target them first; reduce their use and emissions before thinking about developing markets," he said.

Big disruption

From a financial perspective, the decline of the car could spell disruption for the global automobile industry. "We have to make the changes carefully. The auto sector is 10 per cent of the developed world's economy. There are millions of jobs at stake and most of that industry is dedicated to car production,'' Maxton said, adding, "the car industry will follow the slide-rule manufacturing industry into oblivion eventually; but perhaps not for another 50 years." Interestingly, he does not see all this as a catalyst for industry consolidation following the classic pattern of lowering product cost and need for greater scale. "I see more fragmentation not consolidation in the industry as new companies from China and India take to the world stage and new producers of vehicles using entirely different technologies become available or, producers of technologies that can remove the need for us to travel or use cars at all."

So, if the luxury of personal transport becomes harder to justify in environmentally accountable times, wouldn't it be commercially wise for automobile manufacturers to keep a toehold in mass transport systems? "I would urge them to do so. But I don't hold out much hope that they will do this. I know that Toyota is thinking about this and it may succeed. Others are too embroiled in their traditional business models. If you think about it, the people who kept horses did not develop the car; those who made slide-rules did not invent calculators. It is very unusual for the people in one industry to develop its replacement. They have a vested interest in the status quo," Maxton said. Further, he feels that where change or investment was needed, carmakers have usually stuck their heads in the sand. "The industry is not visionary, contrary to what many people probably believe. It is mostly run by conservative people who are so afraid of the financial implications of taking any risk that they avoid risk at all cost," he said of the industry' pace of response to environmental pollution.

Maxton's views are clear but would be difficult for many to accept. An overdose of stock analysis and product worship has weaned us away from the broader sweep of economics and history. And history is resonant in Maxton's attributing a product life-cycle to the car and it being "perfectly normal" for us to witness "the beginning of its end-of-life problems."

Hard Message

Still, for an industry consultant from the thick of the automobile jungle, what does it mean to move from writing on the industry to seeking an end to the car? "I have often wondered where all my knowledge leads me personally. I know about this industry, I write a great deal and I give a lot of talks. But now I can see a purpose. There are very few people with the knowledge of the industry, the ability to stand back and see the longer-term picture and the experience to communicate that knowledge globally.

"I think it is my responsibility to use what I know to help address one of the biggest problems facing the world today — global warming. It is a hard message and an unpopular one for carmakers. But we have to make these changes and I want to use what I know to be some sort of evangelist for change, some small force for making others understand what we need to do and what we can realistically achieve. I feel a responsibility,'' Maxton said.

(The author is a freelance writer based in Mumbai. He can be reached at shyamgopan@rediffmail.com)