Sunday 11 December 2016

2013 will be a hard road for Ireland's motor men

Published 06/12/2012 | 05:00

SINCE the 1980s few motorists or schoolboys could pass through the Y junction at Dublin's Terenure Village without casting an envious eye at the phalanx of shining luxury vehicles arrayed in the landmark 'point' windows of Rathdown Motors.

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The glint of the Porsches, Aston Martins or even the occasional Maserati in the glazed triangle, could stop traffic moving in four directions.

But after 25 years as the preferred port of call for the affluent D6 motorist, Rathdown this month becomes the latest Irish car dealership to go into scrappage.

Today its big windows have been completely papered over and are plastered with flyers announcing the final sell-off of its vehicles at a no reserve "monster" auction to be held on site by Merlin later this month.

As the motor industry awaits the new split-year registration system it long lobbied for to prevent 'unlucky 13' superstitions from adding to its growing list of misfortunes, a number of its long established businesses will not even make it into 2013 – which the SIMI is already predicting will be the worst year for the motor sector since the unprecedented trough of 2009 when sales fell 62pc.

The body expects 2012 to finish with 80,000 car sales and, given the current outlook, for 2013 to end with 75,000. The SIMI says 150,000 is a "sustainable" year.

Also failing to reach 2013 is Appleyard Motors in Sandyford, the big Ford dealership which shut its doors in the summer, and Bill Cullen whose Glencullen Holdings went into receivership in October with showrooms located at Airside in Swords and at the motor mall in Liffey Valley. It follows the summer closures of his outlets in Ennis and Galway.

A spokesman said: "After 55 years in the car sales business, Mr Cullen had come up against an unprecedented decline in consumer confidence, coupled with depreciation of up to 70pc on lavish car showrooms.

He gave it everything and tried all he could to save the business but unfortunately it wasn't to be." Cullen employed 40 in his Dublin showrooms.

With the temporary respite afforded by scrappage in 2010 and 2011 now a distant memory, and the budget once again ratcheting up the cost of motoring with a 15pc increase in road tax – whilst simultaneously paring back the spending powers of the buyer – the sector enters 2013 staring into the 2009 precipice again but without a safety belt.

Since scrappage ended a year and a half ago, the industry body estimates that the sector has lost 4,000 jobs. VRT, introduced in 2008, is still its biggest bugbear – it says less tax would boost government coffers by increasing sales of vehicles.

"The banks haven't been lending so there are fewer new sales since 2009, meaning fewer trade-ins, so it's now much harder to get a good volume of used vehicles," says David Byrne, managing director of Merlin the company which will auction Rathdown's remaining vehicles later this month.

While luxury big engined vehicles of the sort commonly sold by Rathdown have crashed hugely in value, in contrast, the prices of economic smaller engined and tax friendly cars that people do want have now started to increase.

It means the dealers have taken a big hit on the big engined cars they already have but now can't sell, but they can't get enough of the smaller engined vehicles that they can.

"This year is the first time we've noticed the price of some types of used vehicles actually rising," says Mr Byrne of Merlin. "Take the example of an 07 Audi A4 1.9 turbo diesel. We've sold them recently at €10,400 whereas the same car sold for €10,000 a year ago. The difference is even greater when you take expected depreciation into account. But supply of these cars is running low."

SIMI's Suzanne Sheridan adds: "Dealers have been forced to look to the UK to bring in the used cars they need, however there is also a downturn in the market there. As a result there has been an increase in the price and a decrease in the supply of used cars over there also. On top of this, because of the current Euro-Sterling exchange rate, the cars are expensive to import."

Merlin has literally gone to the far side of the world in search of quality small engined used vehicles with low mileage, travelling to Japan last year.

"By the time VRT was added, the big transportation costs taken into account and the unfavourable currency exchange rate was factored in, it just wasn't worth it in the end," Byrne said.

"It's a horrible market at the moment. We've witnessed some really sad stories from vendors too. We recently had a mum and dad with two kids come in to sell both their cars because they are emigrating. We gave one guy a lift to the train station after he came to us to sell his car in order to pay his mortgage.

The one bright spot for the sector at the moment is being provided by the distributors themselves who have done everything possible to keep their Irish networks alive.

New car prices have been slashed to meet new realities. A Cork-based dealer recently pointed out that a Clio that cost €16,000 in 2008 can now be bought for €11,000 and that a BMW that sold for €65,000 now costs €45,000.

'Younger' less established car marques, like Hyundai and Kia, have made things even more competitive with well-priced quality vehicles with lengthy warranties, while better established brands like BMW and Ford have been providing their own finance in link-ups with banks. Without such self generated finance, Merlin's Mr Byrne believes many big dealers in operation today would already have folded.

That said, the sector has lost 20pc of its dealers in 4 years. A recent report by Saleslynx claimed dealers had sold 183 vehicles on average through last year when at least 300 is needed to remain financially sustainable.

The SIMI estimates that a changeover to split registration plates as planned, with registrations taking place in January (131) and then again in June (132), should add 4pc to sales next year. Lets hope the number 13 will prove lucky for some.

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