The Beginning of a New Upsurge
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Export Prospects Brighter : Markets Still Untapped : Purchase Tax Hinders Horne Sales : Significant Trends in Vehicle Design—Bigger Unit Loads and Larger Engines
By Philip W. Copelin,
Chairman and Managing Director, Vauxhall Motors, Ltd.
. NE inevitably looks at 1959 over the shoulder of 1958
t_)and the other years just behind us. Will this year be a better one for the companies that make com
mercial vehicles? Will the conditions that determined sales-volume in 1958 still prevail over the next 12 months?
Given the need for commercial vehicles—and all the evidence points to the fact that all over the world the need is growing—there are two main factors that determine how many will be bought. The first is the availability of money. The second is the potential customer's degree of confidence: the extent of his belief that he is likely to get a good financial return on an investment in a new vehicle.
Both these essentials were lacking to some extent in 1958. Commodity prices, in general, have been depressed, so that the cash received for the goods many countries sold abroad was less than before. In some countries the limitations imposed on purchasing power were severe, and the urge to establish or reduce import quotas was intensified. In other countries, less directly affected, the result was still ‘ a reduction. in confidence and a postponement of vehicle
replacement programmes.. ..
So in attempting to assess the commercial vehicle industry's prospects for the coming year one must try to predict 'whether cash ancf.confidence are likely to be more or less plentiful than in the past. That will give some idea of the numberof units likely to be bought. Then, as we are concerned with the prospects &ifthe British industry, there is another question to be answered. What proportion of that •total -number will be bought from British
manufacturers?
From this point onward, in art appraisal of this kind, it becomes necessary to consider the subject under more than one heading—the home market, the export market, the light van and heavy truck fields, and so on.
Encouraging Prospects '
At the time of the Commercial Motor Show last year, I went on record as saying that there were some encouraging signs of an improvement in world trade conditions, which could indicate the start of a rising demand for commercial vehicles. 1 also said that this country, as the principal European producer, was well placed to supply the demand. Now, three months later, those signs are still there. There is a slight but definite improvement in the price of at least six ,of the basic commodities produced by countries to which Britain wants to sell vehicles. If this upward movement continues, 1959 may see more money available for those countries to spend on imports.
Looking at the Commonwealth markets first, as they have . always accounted for the major part of our commercial vehicles sales overseas. I think we can expect to sell more 88 units to Australia and South Africa in 1959 than we did last year. There has recently been a general improvement in South Africa's economy which should be reflected in her overseas purchases; and even though the price of wool remains low, I think Australia will have to ease her import quota somewhat so far as commercial vehiclesare concerned, for her growing industry continues to need more transport to move its products. In New Zealand I think there is less likelihood of an increase in imports. Indeed, the recent reduction in imperial preference is likely to operate against this country, although I do not expect its effect to be noticeable in 1959.
Expansion in Europe
Next, the markets in Europe. At present Britain's transport business with that continent is slowly expanding, and I think it will continue to do so in 1959. The six European countries in which Britain sold most commercial vehicles last year spent L1.1m. more with us in the first nine months of 1958 than in the corresponding period of the previous year. This is the market which is growing fastest. My belief, therefore, is that if we do our utmost to offer competitive value, we shall again increase our business with Europe in 1959.
Exports to Scandinavia are buoyant, and Finland, now free for commercial-vehicle imports, will probably continue as an expanding market for British models. I think, too, we can expect better things from Holland, which is now recovering from the effects of the industrial recession it suffered last year
The coming into being of the Common Market is not likely to have much effect on British vehicle sales during the coming year, so for the purposes of this review I need not dwell on it. But as it has now begun to operate, and as the Free Trade. Area still seems to be some distance away, we must be prepared for even more competitive conditions in those countries before long.
There are two other areas of the world where the demand for goods transport is still largely untapped, and where the potential is enormous—South America and the Far East. The volume of British sales in those areas, however, depends largely on the availability of cash and the credit facilities that are offered. It may be that we shall see some progress under both these headings in 1959, but I think it will be more than a year hence before we can expect spectacular developments.
What of the home market? As an industry we startethe year with a major handicap—purchase tax on the tools we produce for industry.
There is something incongruous about a tax, which was imposed at a time when it was essential to restrict demand, being continued many years later on goods which are basic in our economy. If our products were non-essential articles I could accept the fact that the revenue cannot now be spared. But in this industry we make tools, As such their cost is reflected in the cost of almost everything else the country produces—both for home and export. Make them cheaper to buy and the whole economy benefits.
Among my hopes for 1959, therefore, is the abolition of this strange tax. I find it hard to believe that the Government will continue to regard it as either desirable or necessary in an era when exports are more than ever vital.
Despite the problems that confront the industry in the home market, I am not despondent about the prospects for the coming year. Aand B-licence holders may tend to Sit on the fence, but C-licensees will not necessarily adopt the same tactics. I think we may even see a slight improvement in the total domestic business, and the increase in the country's number of light vans, in particular, shows no signs of abating.
Real Progress
I am full of confidence in the competitive position of the British industry. The Commercial Show made it clear that progress in design has been real and continuous, and in their combination of value and modern design British vehicles are well to the fore.
The Show emphasized two or three significant trends in design that seem likely to develop in the year ahead. First is the fact that unit loads are tending to become larger. The average capacity of the typical C-licence vehicle in this country is already much greater than it was only two or three years ago, and from overseas the demand is also for larger load-carriers. Accompanying this development there is 'a call for more powerful engines—a movement that is likely to gather strength with the construction of new roads where speeds are not restricted.
Oil engines are likely to become even more widely used. Already dominating the heavy and medium fields, they are continuing to make headway among the smaller vehicles. Abroad, too, the swing is to the oil engine. Many overseas markets that have been faithful to the petrol engine for years are now ordering diesel power. In its latest form the British four-stroke oil engine is unsurpassed by any other country. Its reliability, economy and long life are now really making their mark in world-markets, and I foresee a rapidly growing demand for diesels in transport vehicles.
Improved Transmissions
The New Year is also likely to reflect in increased sales the great attention that has been paid to transmission developments. Automatic or assisted gear-changes on heavy vehicles continue to make progress. And on both heavyand medium-weight types much hard work has been put into the tasks of lightening the driver's job and saving the operators' money. Five-speed gearboxes, with fifth ratio either as a low first gear or an overdrive, are becoming more popular; and I think we shall see a widening of the use of the two-speed axle.
Since we at Vauxhall went into production with our own Bedford two-speed unit a year ago the demand has been most encouraging. Here, again, the influence of the new road programme is likely to be noticeable, for the dualspeed axle makes the right gear ratio available for continuous high-speed running or, for stop-start conditions.
Great strides have been made in recent years in the improvement of conditions for the driver. On heavy and light vehicles alike the driver's need for real comfort, easy access and the best possible visibility is at last being recognized, and clearly this is a trend which must continue. We must be prepared to pay more attention to the requirements of individual markets. On vehicles for tropical con
ditions we must ensure that cab ventilation is realty effective ----and provision for the fitting of a built-in heater for colder climates is only common sense. Why not radio, too?
Air suspension has arrived on the "heavies." That its use will extend in 1959 I have no doubt, for it has the advantage of providing good riding conditions whether a vehicle is loaded or empty. But I think its universal adoption on commercial vehicles is still some years away. Disc brakes, too, will be more widely used. It remains to be seen, however, whether the buyers of competitively priced medium-weight vehicles will be prepared to pay the extra cost for some of these things.
The only other development in design on which I have room to comment is small but significant—the development of the small public-service vehicle, resulting from the new regulations that came into force last year. The New Year will see the effect of this change. With falling passenger receipts, operators will not be slow to explore the possibilities of this new class of vehicle, and I foresee a growing, if limited, market for the 12-seater in this country.
Summing-up the industry's prospects for 1959 I am reasonably confident. It will certainly not be a record year for production—but neither will it be our worst. The motor industry has now become the most important-contributor to the country's economic well-being. There are signs that official circles are at last beginning to recognize this fact. It is for this reason that, following the relaxation in hirepurchase terms last autumn, lam hopeful that the Government will soon take the next logical step and do away with purchase tax on goods-vehicle chassis.
Quality, suitability, the flexibility to supply unusual demand, good after-sales service—these are what have enabled our industry to compete successfully in world markets. Given also freedom from restrictions in home trade in 1959 I believe the year will mark the beginning of a new and heartening upsurge in commercial-vehicle business.