THE ECONOMIC AND ENVIRONMENTAL IMPACT OF THE HISTORIC AND CLASSIC MOTOR INDUSTRY IN THE UK

35 Table 10: Economic impact of classic vehicle rental, 2019 Revenue (£m) GVA (£m) Employment (FTEs) COE (£m) Impact of classic vehicle rental 272 171 777 27 Share of total vehicle rental industry 4.7% 4.5% 5.1% 4.9% Source: DVLA, BVRLA, Nedrelid, ONS, Cebr analysis 5.4 Imputed rent Outside of the economic impact of the purchase and rental of classic vehicles, there is a further intrinsic economic value associated with the value of the stock of classic vehicles. There are two ways in which consumer spending on purchasing products can be included in GDP. One way is to measure how much is spent purchasing the products in the relevant period. This works best with consumables like food. The other is to measure what is called the imputed rent which comes from having access to the product during the relevant period. This is conventionally used for owner occupied housing but is generally the best way of measuring access to something of enduring value like a classic car. Cars are generally treated in GDP measures as purchases and consumer spending on new car purchases is simply the amount spent on purchasing new cars each year. But there are two problems with using this approach for classic cars. First, such vehicles are normally kept for quite a long time and so the purchase spend may not be a good measure of the user value. Second, the vehicles are generally sold by other classic car users (even if a dealer or an auction house is an intermediary) and so in theory the sales should be netted off from the incomes. For these reasons we have used the theoretically appropriate method for durables of valuing classic vehicle usage using the imputed rent approach. Imputed rent is value of the service provided to the owner of an asset. It is normally measured by a calculation based on the interest rate typical for borrowing against the asset though using market rental costs is an alternative approach 14 . Imputed rents per vehicle have been calculated separately, for each vehicle type. We have assumed that the imputed rent is distributed evenly throughout the average ownership length, for each vehicle. This allows a calculation of the annual imputed rent per vehicle, which when applied to the total number of vehicles, gives an estimate for the imputed total. These calculations, and the total imputed rents for each vehicle type, can be seen below i n Table 11. 14 For a good description of the imputed rent concept and discussion of measurement issues se e https://www.bea.gov/help/faq/488 from the US Department of Commerce Bureau of Economic Analysis