Volvo takes pole position
FOR a generation of British families the Volvo estate symbolised middle class virtue: solid, safe and unflashy, if maybe a little smug. Along with Aga it was one of the two Swedish brands most warmly embraced by the Brits.
Then came the SUV revolution. Volvo lost its way, nearly went bust, and had the indignity of being taken over, by Ford and then by Chinese group Geely.
Now Volvo is back. It has been producing rather good cars for a while but what stands out now is its embracing of electricity, the first major manufacturer to do so.
All its cars will have electric motors, either as hybrids or as pure electrics. Couple this with the first production model of Tesla’s Model 3, scheduled to come off the line this week, and you can see the seismic scale of the shift that is taking place.
There will be a point, perhaps only five years away, when there will be more electric or hybrid cars being built than regular petrol or diesel ones. Three thoughts stem from this. First, while it is certainly true that the Chinese have become the main polluters of the planet, they may also become the main source of solutions to environmental problems. China produces more cars than anyone else, more than 24m last year.
If China goes electric, the world goes electric. While electric cars are not a solution to all the environmental issues that surround the motor trade at least the world’s streets will be cleaner and healthier.
Second, the motor car is the largest single consumer purchase. But it has over the past generation made only incremental advances. Now there is the prospect of radical change. That will stimulate demand, boosting consumption everywhere. It is a shot in the arm for the global economy.
And third, as the electric revolution spreads, we can keep driving cars and not feel guilty about it. Those Volvo virtues will shine again.
As for the reputation of Volvo drivers for not being overly aware of the actions of other drivers around them, well, the company has a target to build cars with electronic controls that will eliminate all accidents. So that solves that one.
Reasons to be cheerful
THE slight decline in the prospects for the UK services sector was met with the usual dismal response: slower growth, consumers hit, dimming prospects for an autumn rate rise and all that.
Actually the figures, the so- called purchasing manager indices, were not bad at all. Companies were asked just after the election whether they expected things to get better or worse in the months ahead.
A majority answered better, just not quite as large a majority as the month before. On hiring expectations they were very strong and you don’t take on new people if you think the economy is going to tank.
Consumers do face a squeeze from higher prices and stagnant pay, but as Antonio Horta- Osorio, chief executive of Lloyds Bank said yesterday, households are holding up well.
The economy was on ‘a healthy trend’. It was true that people had been running down their savings but they had built up a big buffer over the past four years.
Personal debt might look alarming but that included student debt, backed by the Government, and car loans, where the risk was with the dealership.
Lloyds is the biggest home lender in the land, with £300bn on its books. The average loan to value ratio is 47pc, so, as he pointed out, that leaves £300bn of equity to give people confidence for the future.
So why the negative headlines? I think there are two reasons.
One is that there is a genuine squeeze going on, and tax changes have put the brakes on the housing market and car sales. The economy looks as though it grew at an annual rate of 2pc in the second quarter, which is fine, but it is reasonable to be a bit cautious about the autumn.
The other is that a lot of commentators who opposed Brexit rather want things to go badly, and pick on any figures that might be twisted to support their view that Brexit will eventually hit the economy.
They have, with the exception of the impact on the pound, been wrong so far.
Fingers crossed they go on being wrong.