Dr Tom Haines-Doran
@tomhainesdoran.bsky.social
University researcher specialising in applied political economy.
(Apologies if you've seen a version of this thread before. This is an attempt to establish a little following on Bsky. Only original stuff in the future. My contact details here: business.leeds.ac.uk/departments-...)
Dr Tom Haines-Doran | Departments | University of Leeds
business.leeds.ac.uk
January 6, 2025 at 3:26 PM
(Apologies if you've seen a version of this thread before. This is an attempt to establish a little following on Bsky. Only original stuff in the future. My contact details here: business.leeds.ac.uk/departments-...)
Read it free here doi.org/10.1080/1356...
The financialisation of car consumption
This paper investigates the growth of new forms of personal finance used in purchasing motor vehicles – a development which it characterises as ‘financialisation’. It focusses on the case of the ri...
doi.org
January 6, 2025 at 3:26 PM
Read it free here doi.org/10.1080/1356...
Broader awareness of manufacturers' 'exploitation' of motorists' dependency on their cars for private gain could be an important piece of ammunition to break down the false cultural divides manufactured by the car industry and their servants in government.
January 6, 2025 at 3:26 PM
Broader awareness of manufacturers' 'exploitation' of motorists' dependency on their cars for private gain could be an important piece of ammunition to break down the false cultural divides manufactured by the car industry and their servants in government.
Media commentary on new motor finance is wrong. It is not a response to changing consumer demand, but an opportunistic move based on the inflexibility of car industry itself, which has largely shunned transformational reform to make a positive contribution to saving the planet.
January 6, 2025 at 3:26 PM
Media commentary on new motor finance is wrong. It is not a response to changing consumer demand, but an opportunistic move based on the inflexibility of car industry itself, which has largely shunned transformational reform to make a positive contribution to saving the planet.
They are underpinned by, but also reinforce car dependency, trapping consumers in debt spirals while dazzling them with over-engineered (and increasingly large) vehicles, which are, of course, not used most of the time, and which steal public space and threaten other road users.
January 6, 2025 at 3:26 PM
They are underpinned by, but also reinforce car dependency, trapping consumers in debt spirals while dazzling them with over-engineered (and increasingly large) vehicles, which are, of course, not used most of the time, and which steal public space and threaten other road users.
Massive government bailouts, anyone?
Perhaps most importantly, PCPs threaten efforts to save our planet from total catastrophe.
Perhaps most importantly, PCPs threaten efforts to save our planet from total catastrophe.
January 6, 2025 at 3:26 PM
Massive government bailouts, anyone?
Perhaps most importantly, PCPs threaten efforts to save our planet from total catastrophe.
Perhaps most importantly, PCPs threaten efforts to save our planet from total catastrophe.
That dynamic cannot continue in perpetuity.
Neither can consumers taking on ever increasing amounts of debt.
Neither can consumers taking on ever increasing amounts of debt.
January 6, 2025 at 3:26 PM
That dynamic cannot continue in perpetuity.
Neither can consumers taking on ever increasing amounts of debt.
Neither can consumers taking on ever increasing amounts of debt.
By maintaining new car consumption, they quickly add high quality vehicles to the 2nd hand market, depressing prices there. But lower 2nd hand car values undermine PCPs themselves - their financial integrity rests on the vehicle in question realising its value at contract end.
January 6, 2025 at 3:26 PM
By maintaining new car consumption, they quickly add high quality vehicles to the 2nd hand market, depressing prices there. But lower 2nd hand car values undermine PCPs themselves - their financial integrity rests on the vehicle in question realising its value at contract end.
The rise of PCPs creates considerably increased financial risks for different groups in society, in complex and inter-related ways...
January 6, 2025 at 3:26 PM
The rise of PCPs creates considerably increased financial risks for different groups in society, in complex and inter-related ways...
Car dependency is therefore ‘leveraged’ to increase consumers’ access to credit, to feed the insatiable demand of producers for high spending consumers.
January 6, 2025 at 3:26 PM
Car dependency is therefore ‘leveraged’ to increase consumers’ access to credit, to feed the insatiable demand of producers for high spending consumers.
But such punitive measures are only effective in a car dependent society, where losing access to your car could mean losing access to other important things like work, education, or care.
January 6, 2025 at 3:26 PM
But such punitive measures are only effective in a car dependent society, where losing access to your car could mean losing access to other important things like work, education, or care.
In part, this is achieved by a harsh regime of threatened vehicle repossession, which is reported in detail to financial markets.
January 6, 2025 at 3:26 PM
In part, this is achieved by a harsh regime of threatened vehicle repossession, which is reported in detail to financial markets.
And here’s the rub - real wages have flat-lined in the same period PCPs have come to the fore.
So you need to be very sure that consumers will prioritise car finance repayments above all else.
So you need to be very sure that consumers will prioritise car finance repayments above all else.
January 6, 2025 at 3:26 PM
And here’s the rub - real wages have flat-lined in the same period PCPs have come to the fore.
So you need to be very sure that consumers will prioritise car finance repayments above all else.
So you need to be very sure that consumers will prioritise car finance repayments above all else.
PCPs are deeply imbricated into financial markets, where financial investors bid for PCP ‘receivables’ - bundles of consumer finance repayments.
These investors are highly sensitive to the risk of consumer default.
These investors are highly sensitive to the risk of consumer default.
January 6, 2025 at 3:26 PM
PCPs are deeply imbricated into financial markets, where financial investors bid for PCP ‘receivables’ - bundles of consumer finance repayments.
These investors are highly sensitive to the risk of consumer default.
These investors are highly sensitive to the risk of consumer default.
I found that the rise of PCPs in Britain has been associated with greater borrowing levels and higher value acquisitions, in real terms.
January 6, 2025 at 3:26 PM
I found that the rise of PCPs in Britain has been associated with greater borrowing levels and higher value acquisitions, in real terms.
The ‘lump sum’ value being excluded from the finance deal means that manufacturers are able to lend greater amounts of money to consumers to finance the acquisition of higher value vehicles.
January 6, 2025 at 3:26 PM
The ‘lump sum’ value being excluded from the finance deal means that manufacturers are able to lend greater amounts of money to consumers to finance the acquisition of higher value vehicles.
Whereas under HP motorist retained ownership at the end of the finance deal, with PCPs, consumers are faced with an unaffordable ‘lump sum’ if they want to keep the car. Of course, most swap for a new model.
January 6, 2025 at 3:26 PM
Whereas under HP motorist retained ownership at the end of the finance deal, with PCPs, consumers are faced with an unaffordable ‘lump sum’ if they want to keep the car. Of course, most swap for a new model.
PCPs prop up the car industry by extending greater quantities of credit to consumers than was possible under the previous Higher Purchase (HP) model.
January 6, 2025 at 3:26 PM
PCPs prop up the car industry by extending greater quantities of credit to consumers than was possible under the previous Higher Purchase (HP) model.
In Britain, for example, registrations of new vehicles began to tail off in the early 2000s.
January 6, 2025 at 3:26 PM
In Britain, for example, registrations of new vehicles began to tail off in the early 2000s.
But we have reached ‘market saturation’ in the mature economies of the Global North. Despite increasing demand for cars in emerging economies, most people who might want a car in rich societies already have one - and that's a problem for manufacturers.
January 6, 2025 at 3:26 PM
But we have reached ‘market saturation’ in the mature economies of the Global North. Despite increasing demand for cars in emerging economies, most people who might want a car in rich societies already have one - and that's a problem for manufacturers.
Most importantly, cars are made at a massive scale in massive plants. It is a simple truth of car economics that to remain economically sustainable, cars need to be continually pumped out at a vast scale. Any reduction of demand risks writing-off massive capital investment.
January 6, 2025 at 3:26 PM
Most importantly, cars are made at a massive scale in massive plants. It is a simple truth of car economics that to remain economically sustainable, cars need to be continually pumped out at a vast scale. Any reduction of demand risks writing-off massive capital investment.
As @giuliomattioli.bsky.social, @jksteinberger.bsky.social & Cameron Roberts brilliantly demonstrated - the popularity of cars is not simply driven by a standalone ‘consumer demand’, but is shaped by the economic realities of production, which helps create a certain political culture of consumption.
January 6, 2025 at 3:26 PM
As @giuliomattioli.bsky.social, @jksteinberger.bsky.social & Cameron Roberts brilliantly demonstrated - the popularity of cars is not simply driven by a standalone ‘consumer demand’, but is shaped by the economic realities of production, which helps create a certain political culture of consumption.
But thinking about why consumption happens the way it does without linking consumption to production misses the importance of the economic needs of *producers*.
January 6, 2025 at 3:26 PM
But thinking about why consumption happens the way it does without linking consumption to production misses the importance of the economic needs of *producers*.
PCPs are associated with higher value purchases and more frequent replacement of vehicles by consumers. Commentators generally explain their popularity by referring to changing consumer demand, which wants new things more quickly - eg mobile phone contracts.
a man laying down holding an oppo reno6
ALT: a man laying down holding an oppo reno6
media.tenor.com
January 6, 2025 at 3:26 PM
PCPs are associated with higher value purchases and more frequent replacement of vehicles by consumers. Commentators generally explain their popularity by referring to changing consumer demand, which wants new things more quickly - eg mobile phone contracts.
In recent years the car industry has innovated new forms of car consumption finance to entice consumers to acquire new cars. In many developed markets, this has taken the form of the Personal Contract Purchase (PCP).
January 6, 2025 at 3:26 PM
In recent years the car industry has innovated new forms of car consumption finance to entice consumers to acquire new cars. In many developed markets, this has taken the form of the Personal Contract Purchase (PCP).