NEW CARS (SALE AND DISTRIBUTION) (Hansard, 3 March 1952)

§ Miss Elaine Burton (Coventry, South)

I hope the House will forgive me if I talk very rapidly, because I want to put three months' work into a very short time and as much as possible on to the record so that these matters can be looked into.

In raising tonight the matter of the sale, distribution and supply of new motor cars, I do so in the hope that the evidence which I shall bring forward will convince the Minister of Supply that it is necessary that an inquiry into these matters should be instituted.

First of all, I should like to make the point, which I think is unnecessary, that this is entirely a non-party matter. To suggest that it was a party one would in the first place, be untrue, and secondly, stupid. The abuses of which I am complaining went on for a very long time under the previous Government, and I maintain that they are still going on. If we had had the good fortune to begin this debate earlier, I am sure that many hon. Members on both sides of the House would have expressed their agreement with at least a part of what I am about to say.

It is in art effort to stamp out abuses which are so irritating to so many people and so completely unfair that I rise tonight. The abuses are such as enable one person to obtain five or six new cars in five or six years while other people get none. I suggest to the House that in view of the limitation of supplies to the home market today it is more than ever important that the system should be as fair as we can make it and, furthermore, that where we can prove unfairness in the system, it should be remedied.

In order that hon. Members may realise that I am not trying to avoid the issue, I should like to say that at the end of my remarks I propose to deal with the statement which has been circulated to us all by the various associations concerned. The whole thing is summed up today in a telegram which I got from a wellwisher—I do not know who it is—from Derby. It says: Good luck in fighting country's biggest racket. 165 The signature is, "Six years and still waiting."

During the Christmas Recess I took the opportunity of discussing this matter with the British Motor Trade Association, the Society of Motor Manufacturers and Traders, the executives of two factories in Coventry, many garage proprietors and at a town forum, to each of which I put forward what I want to say to the House tonight, namely, that a small section of the motor trade is getting the industry a bad name and that certain abuses perpetrated by that section should be investigated.

The matters which should be dealt with are, first, the selling price of secondhand cars; second, the placing of names on several lists by would-be customers; third, the distribution of cars after leaving the manufacturers: and, fourth, the holding of deposits.

What was the reaction of various trade officials? I should like first of all to quote a letter which I received from a small town just outside York. The letter contains the burden of my complaint and the complaints of many of us tonight. It says: Even in this small town where I live (population under 3,000) we have to suffer the indignity of one local family, comprising three middle-aged brothers and their three middle-20's sons, possessing between them seven postwar cars—not only post-war, but proudly boasting that not a single one is older than 1949. In four cases out of six the individuals concerned have had three different postwar models each in under four years. I would merely say in passing that I have the names and the full details for every instance which I quote and I hope it will be my pleasure to submit them to the Committee which I hope the Minister will set up.

What was the reaction of the B.M.T.A. and the S.M.M.T. to this? I wish to be fair. I am told that if one wishes to succeed in politics one has to be quite ruthless, but ruthlessness weakens when one encounters pleasant people. However, my soft heart disappeared when the secretary of the B.M.T.A. told the "Coventry Telegram" that my ideas had whiskers on them. In passing, I suggest to the B.M.T.A. that it is a pity that they were allowed to grow whiskers.

The attitude of these associations was, first, that the problem did not 166 exist; second, that it was too difficult to tackle; and, third, that it was too small to be bothered about. In other words, they were quite inconsistent; but that was the gist of our conversation. The attitude was "anything to avoid trouble or action."

They gave the impression, perfectly naturally, that I really was being rather troublesome, and the best suggestion that they could make was that, if I wanted something to do, I ought to take up the matter of the selling prices of houses. As a matter of fact, that has been the theme song of the associations and the trade Press on this subject.

What is the reaction of the trade Press? I believe that the "Motor Trader" is representative of the motor trader. If it is not, I stand corrected. I have informed the editor of the "Motor Trader" that I shall be quoting from a letter which he has sent to me. The editor wrote to me on 1st February and actually spoke about the distressing pre-occupation of Parliamentarians with an issue which is already being taken care of as well as can be expected by the trade concerned, an issue which could scarcely benefit from Parliamentary interference …. I suggest to the editor of the "Motor Trader" that when there is a social abuse we Members of the House of Commons believe that it is our job to ventilate it.

With the same letter came the issue of the "Motor Trader" dated 30th January, in which the leading article says: As matters now stand, the industry is preparing a large, impressive fire engine with which to attack the blaze if and when it flares up in the House of Commons. I hope that the fire engine is outside. The article goes on to state that the industry was preparing, and would circulate to selected Members of Parliament, material to provide them with the debating points, should the necessity arise. We have all had that. It goes on further—and this I do not like—to say: The subscription income of the four 'protective' trade organisations amounts to nearly £250,000 a year. That should be enough to guarantee that never again does a public attack on the trade have to be faced, as at Coventry, by a handful of motor traders unsupported by official assistance. I would remind the editor of the "Motor Trader" that Members of Parliament are not impressed by threats of financial opposition.

167 What grounds have I for stating that people get five or six cars in five or six years? I have the letter which I have quoted tonight, and many others similar to it. I have also, as other hon. Members have, the evidence of my eyes. I would ask hon. Members to look at the list of cars for sale in any daily paper, reputable or disreputable, and to look at the years of those cars and the mileage. I want to ask this question: Where do those cars come from? Have their owners given up motoring, or have they traded their cars in as part exchange for new models? People who have been on the waiting list since 1946 have little doubt about the answer. They know it, and they believe that is why they are still on the waiting list.

The problem is that it is very difficult to get details. People say, "If I give you details I shall go to the bottom of the list with my dealer," but many people have written these details to me from all over the country and have not only stated them but signed them. We are thus a step further, and these complaints should be investigated.

The first point is as to the selling prices of second-hand cars. Without exception, everybody who has written to me has complained of this racket. The answer of the trade is that it cannot be stopped. Many people who have been on the waiting list for years never move up. Many move down. I wish I had time to show the up-and-down passages of many of these people. Frequently the chance of people on the waiting list is prejudiced because their dealers take cars which are relatively new in part exchange for new models, and they sell the second-hand cars at the greatly inflated prices prevailing today.

The S.M.M.T. state: It is an overriding rule that a customer who has already had a post-war car of any make which is still in good running order or who has disposed of such a car shall not, unless there are exceptionally good reasons, be supplied with another new car. That is all right, and we would like to help the society to see that that is carried out, but the number of new cars and new models advertised for sale in the Press is a proof that fair distribution is a long way off. The question which I wish to address to the B.M.T.A" or to the 168 Minister of Supply, is whether there is any other business where sellers who have control of deliveries of public orders re-purchase and re-sell the same goods at prices above the prices of the new goods?

I have three suggestions to make. I do not believe in complaining unless I have suggestions to offer. They may be good or bad, but at least they are not an acquiescence in sharp practice. In Australia today the selling price of second-hand cars is controlled. They may not be sold at prices above the list of new cars. That is the first suggestion. A second one is, why not increase the covenant from two to five years? The speculators then would not be anxious to invest their money in cars which would be of doubtful value at the end of five years. The third suggestion is why should there not be a rule that all agents selling second-hand cars above current prices plus Purchase Tax should be placed on the stop list for new cars by manufacturers?

This is not my estimate, but traders who have come to see me from all over the country say that today's list of those wanting new cars would be halved if people's names appeared once on a list and not more; that is a trade estimate. How are we to stop that practice? First I suggest a central registry. Here I am quoting, but I have a good memory and think I am quoting accurately. When I discussed the matter with the B.M.T.A. in the Recess, I was informed by the secretary that a central registry was workable and, furthermore, he thought he could operate it with a staff of 200 people. That is the first question, a central registry would clear it up. Alternatively, I suggest that it should be illegal for one to have one's name on more than one list. Thirdly, that the distributors should send lists of people waiting for car orders to manufacturers.

The next point is on distribution after leaving the manufacturer. Everyone knows that if one is on the list of a distributor or main dealer there is a much better chance of getting a car than on the list of the small dealer. The proposed purchaser has no knowledge when the car leaves the works for the motor dealer's premises. Many people want the distributor to send lists to the manufacturer and the manufacturer to notify the customer 169 when his car leaves the factory. The sale would still be effected through the dealer, but the customer would know when it was coming to him. All people waiting since 1946 should be supplied first without waiting longer.

If we take the system of distribution from one company in Coventry we find that the car goes through the manufacturer to the distributor; from the distributor to the customer or main dealer; from the main dealer to the customer, or the appointed dealer; from the appointed dealer to the customer or the trade; from the trade to the customer. The distributor allows a percentage discount of 17½ per cent. to the main dealer and therefore if the distributor sells the car to a customer on his list he would not have to pay the 17½ per cent. If the main dealer sells the car to a customer on his list he saves the 15 per cent. which he would have to pay to the appointed dealer. It is all perfectly legal, but it is obvious that the person at the bottom seldom gets a car. I know it is not the responsibility of the manufacturers to see that cars are distributed fairly down the line, but I should like to ask them to see that this has their attention. In West Hartlepool a local firm of bus proprietors have been obtaining Fords and Rileys and selling them immediately they came off covenant—and they never had a new car until 1946.

On the matter of the deposits, I feel more strongly than on anything else. The protective associations—and the word protective is in quotes in their leaflet—state that deposits should be returned where requested. This afternoon I quoted the name of a firm where that is not done. I have had a good deal of correspondence given to me informing me that in Bournemouth there are several firms which refuse to accept cancellation of orders for cars except on forfeiture of the deposit. I hope Bournemouth will get busy after this. I am also informed that the chairman of a large garage in Bournemouth has said that his firm has 3,000 deposits ranging from £10 to £50. Taking an average of £20, it means that that firm has had £60,000 of customers' money.

I have a letter from a man who made a £40 deposit for a Hillman Minx in 1946, saying that if he had put it in the Post Office it would have brought an 170 interest of £5, and suggesting this must be lucrative to motor dealers. There is the case of a mother who paid a deposit of £40 in 1946 for a car for her son. The car has now become too expensive for the family but the dealer says—and I have his name—that if they cancel the order he will take their deposit. I want to know why such deposits should not be returned. The person penalised is the small person who put down money some time ago. I wish to ask the B.M.T.A. whether they approve that people should forfeit their deposit in any circumstances whatever where a car is not likely to be delivered in the next 12 months.

I suggest that four protective associations are not required for the trade. What is wanted is a protective association for the would-be customer. I am sorry to revert to the "Motor Trader" again, but in its issue of 6th February I saw an interesting statement—many of my friends in the trade say that there has never been such activity in it as there has been since last December—made by Mr. Gresham Cooke, Director of the S.M.M.T. He was speaking at an annual dinner about the statement which has come to all M.P.s; he said he hoped it would put the position in true perspective and might do more than this energetic woman of Coventry has done …. He said there was a hint that Parliamentary legislation might be undertaken. This might even lead to matters being taken out of the hands of the trade. This must be kept in mind; he implored the trade to use its best endeavours to see that new cars went to those who really needed them—those who had not had a new car since the war—and to examine the position of fleet owners very carefully. In many important papers one could see in the advertisement columns at least a dozen cars for sale having done only a small mileage, Mr. Cooke had continued. The report went on: The problem must be treated with proper seriousness. If possible he would like to see the order dates of distributor and dealer marching along together. I have been saying that for a long time.

I come to the statement which was circularised and say definitely that I do not think that the four protective associations have earned their keep here. The last two pages are an apologia for dishonesty 171 and sharp practice. It is a case of doing nothing at all because apparently it is difficult. We have the matter of the covenant, and it is said that we cannot have a longer one than two years. They speak of the directive that no new car may be supplied to anyone who has had one since the war, that we cannot have price control of cars because there will be a black market. I should like to know what there is today.

I come to the question of a deposit. I look to the S.M.M.T. to consider what they will do on this matter. I wonder if the Minister saw yesterday in "Reynolds News" a statement in which he would be interested. It stated that for the 12 months ended September, 1951, there were 114,136 new cars released in Britain and in the same period 141,771 cars were licensed for the first time. That is a difference of 27,635. We should, like to know in due course why there was that difference.

I wish to pay a tribute to members of the trade who have come to me and given me help and advice, in particular the Chippenham and District Motor Traders Association. I ask the Minister to set up a committee of inquiry into these abuses. I do not know what he will answer, but I should like to say that the suggestion that the trade should put its own house in order is not enough. The trade is only going to do something because it is frightened that we shall do it if they do not. These abuses are not unknown to dealers and the B.M.T.A. and the S.M.M.T. I ask the Minister to set up a committee of inquiry where traders and customers and all the protective associations can give evidence and, where a better system is necessary, we can supply that need.

§ The Parliamentary Secretary to the Ministry of Supply (Mr. A. R. W. Low)

I am glad that the hon. Member for Coventry, South (Miss Burton), was successful in raising this matter in the House tonight. We have all seen that she and others have been ventilating their opinions on this very difficult problem, and I agree with her that it is time the House of Commons had a word or two to say about it.

I am sorry that she should have left me such a little time to reply to her formidable statements. I am also sorry that she felt it necessary to go with such vigour into charges against the motor trade in general, when she began her speech by saying—which I believe to be the truth—that it is only a small part of the motor trade which is guilty, if guilty it is, of certain abuses.

I would point out to the House at the outset that the hon. Lady made it clear that there is no real mystery about what is happening. She gave us examples of certain abuses. She gave examples of what we well know, that secondhand car prices are higher, in some cases much higher, than new car prices. We all know that and there really is no mystery about this matter. I hope the House will bear that in mind when they are considering what I have to say against the demand of the hon. Lady for an inquiry.

I am sure we are all aware that the problem of the distribution of cars is caused mainly by the limitation, at the request of the Government, of the number of new cars which can be sold in the home market. To a certain extent the motor car manufacturers are facing difficulties which they are increasing for themselves by their success in the export market, and by their success in adhering to the home quota set by the Government. I agree with the hon. Lady that that is no excuse for standing still and doing nothing. I do not think that over these years the motor trade has stood still and done nothing.

If the hon. Lady will examine some of the points she made, she will see how, progressively, since 1946, the motor traders have tried to make their distribution system fairer and more effective. She spoke of certain people having had many post-war cars. There was first a 173 covenant of six months which was extended to one year, and then at the end of 1950 to two years. In addition, the motor manufacturers made it a rule that, except in exceptional cases, no new car should be sold to anyone who has had a post-war car.

Many of the examples the hon. Lady gave to the House were clearly examples of people who had acquired their second or third post-war car before the end of 1950. To that extent she took no account of the great improvement and tightening up of the system of distribution which took place as a result of the consultations of the former Government with the motor trade at the end of 1950. I am going to tell the House, if I have time, of some of the improvements which the motor trade are about to make as a result of consultations with us. But before I come to that, I must say a few words about the very important matters which the hon. Lady raised.

First of all, on the question of deposits, as my right hon. Friend informed the hon. Lady this afternoon, the manufacturers and associations representing the retail side of the industry are recommending that, for the future, the taking of deposits shall be discouraged, except in the case of highly priced cars and cars with special coachwork, and that deposits paid should be returned at the customer's request, unless delivery is expected in the near future. That was made quite clear this afternoon.

As to secondhand cars, my right hon. Friend also made clear to the hon. Lady, in certain light interludes that took place, that it was impracticable and ineffective to try to control the price of secondhand cars in this country. Let us just compare the number of cars under control in South Africa with the number of cars to be controlled here. There are about 50,000 in the South African scheme, compared with about 2,250,000 cars in this country, and, from those figures, the hon. Lady will see how false it is to draw an analogy from them. Regarding Australia, we have very little information, but the point still applies there.

I have to tell the house that we have been in consultation with the trade with the object of closing the loopholes in the system, and as a result I am able to tell the House of some improvements, though I am afraid I shall have to rush through 174 them. Each customer, whether a private individual, a company, a business or a fleet user will be required to declare his actual transport and need, before a new car is sold to him. This declaration will be made part of the agreement with the B.M.T.A., and, if it is false, it will lead to action, if necessary.

The second improvement relates to the rules operating between the manufacturers and the sellers of the cars. The retailer must see that the declaration is taken in addition to the covenant, and no new car shall be provided to anyone who has had a new post-war car unless exceptional circumstances justify it. I have had talks with them about the exceptional circumstances, and I understand that, in the main, exceptional circumstances would mean either that the customer's post-war car had done such a high mileage that it had become beyond economic repair or had become a total loss in an accident. In any case the customer would have to have an exceptional need for a new car.

Stricter conditions will he applied to the supply of cars to fleet users, firms and businesses, and new cars will only go to such people to replace pre-war vehicles or to replace post-war vehicles which are beyond reasonable economic repair or to add to the fleet if essential need is proved. It is obviously important to see that one person cannot have one new car for himself and one for his business. I have asked the industry to ensure that this loophole is blocked.

There will also be a change in the conditions governing delivery. Delivery will be made in rotation according to the date of order, but certain exceptional cases will be taken out of order. These are firstly, doctors, midwives and veterinary surgeons, who will be given their present degree of preference. Secondly, those who have special business or professional use for a car—but there will be a very strict assessment of these needs—and thirdly, compassionate cases where, on grounds of reliability of transport, a preference ought to be given. Consideration is being given to the advisability of asking the retailer to publish his list or show it to any person included on the list, but that is a matter I must leave to the trade.

I now have a word to say about the system of allocation by the manufacturer 175 to the retailer. It is not clear how far the present system of allocation met the difficulties of the dealers and traders who have orders for cars produced by manufacturers with whom they have no contract. An investigation is therefore being made into orders placed in 1946. Their system of allocation will take into account those orders and seek even distribution to all traders, whether they have contracts or not.

I hope, for these reasons, that the hon. Lady will accept our decision not to have the inquiry she proposed at this stage. I hope she will see from what I have said 176 how this difficult problem is being tackled, and also that, if there is to be a benefit from the alteration of rules, because of the very small number of cars reaching the home market—60,000 this year—few people will benefit from it. Both the Ministry and the industry are anxious to see that distribution is as fair as it possibly can be.