Carmageddon

When Nissan announced it would not, after all, produce its new X-Trail in Sunderland, this was reported as proof of an impending Brexit disaster. A Labour councillor in South Wales even suggested that ‘all those who voted to leave should be laid off first’. But Nissan’s decision has little to do with Brexit, and everything to do with the turmoil of the global car industry.

It is not that overall car sales are plunging — they grew by a modest 0.5 per cent across Europe last year. The problem is that established carmakers have failed to keep up, and their future now looks far more uncertain than it did even just a few years ago.

BMW, Mercedes, Volkswagen, Nissan: for decades, the same names ruled. It was a complacent industry, and progress was incremental. Every five years or so, a new model of car would be brought out that was slightly better, slightly more efficient than the last. The domination of the internal combustion engine meant that this piece of late 19th–century technology set a huge entry barrier to new entrants. You couldn’t set up a car company from scratch and hope to steal a march on the established players.

So they scoffed at suggestions that their world might be upended by electronic cars, ride-sharing apps like Uber — which could mean fewer people owning cars — or various degrees of driverless technology.

But life has come at them hard. Tesla has proved that there is a large market (and long waiting lists) for premium models — and, so far, the company has defied the short-sellers who have bet on its demise. As for self–driving technology, it is Google which has led the way, investing more than a billion dollars. A fatal accident last year hasn’t deterred Uber either. Eager to catch up, Toyota recently invested $500 million in Uber to help develop self-driving technology.