What to make of Peter Mandelson’s latest idea to prop up the car industry, as splashed by today’s Times? Basically, the plan is that the Bank of England will use taxpayers’ cash to back the loans offered by finance companies to potential car buyers. And the hope is that this will free up credit and stimulate demand for all those cars sitting unsold on garage forecourts across the nation. There’s much room for initial mischief from the Opposition – “Gordon Brown: buying someone else’s car with your money,” that kind of thing – but greater damage will come if the plan simply doesn’t work. And there’s certainly potential for that.
To my mind, it all comes down to whether people aren’t buying cars because they can’t get credit, or because they’re tightening their belts as the economy nosedives. If it’s the former – or a mix of the two – then this measure may help a little.
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