Monday 21 August 2017

Brexit-fuelled uncertainty is driving new car sales off a cliff across Ireland

Car sales are below those of last year. Stock photo
Car sales are below those of last year. Stock photo
Eddie Cunningham

Eddie Cunningham

Three years ago car dealers and distributors would have cheered the prospect of 132,000 new registrations in a year.

But not this year.

There is, instead, a sense of disappointment over an expected fallback of 10pc-12pc from last year's high of 147,000.

It is a measure of just how much the new car, and wider economic, environment has changed since 2013, that many sales people are looking so glumly at order books for the 172-reg period which started on Saturday.

They've had a whirlwind few years of rising sales and increasing consumer confidence. People caught up on their new-car-buying intervals; Personal Contract Plan (PCP) funded new metal to the tune of hundreds of millions of euro. Getting a new car was never easier.

But now a number of factors - mainly Brexit related - have conspired to take that strong wind out of sales.

Alan Nolan of SIMI
Alan Nolan of SIMI

There was always going to be a tapering off, anyway. Year-on-year increases of up to 30pc were never going to be sustainable. But many thought buying would remain steady, or there would be low, single-digit growth for a year or two more. There probably would have been - only for Brexit.

Some experts say the market needed to settle; others claim the natural level of sustainable new car sales is around 155,000 a year.

But no one factored in the massive uncertainty - for buyers and sellers - generated by Brexit. People hold off on big-spending items in uncertain times. It is the major reason sales have fallen this year - down to around 91,000 for the first six months from 101,327 for the first half of 2016.

SIMI's Alan Nolan reckons Brexit's impact can be traced as far back as last August as most of July's registrations had been booked before the vote.

Alongside all that, there has been a surge in used UK imports following sterling's post-Brexit plunge against the euro: 45,000 this half-year against 32,269 for the first six months of 2016. Buyers claim they are saving a lot of money. Indeed, a minority who would have bought a new car have yielded to the 'bargain' appeal of a fresh, less expensive, import.

But all is not lost. There will still be a high volume of registrations this month, though they will be 10pc-12pc down in line with the market to date.

In the overall context of a four-year, mostly upward, curve that is still a good result in uncertain times.

And there are major upsides for consumers. The fall-off in sales this year has sparked one of the most competitive sales seasons in memory for July.

Makes, marques and dealers are pushing a cornucopia of trade-in deals, 0pc finance plans, PCP offers, special bonuses and 'scrappage' allowances.

These are all designed to win, or hold, market share in a contracting, cut-throat market. They spell good news for the bargain hunters and may even tempt a proportion of 'undecideds' to buy now rather than wait until January.

Since twice-yearly registrations began, July has become the second biggest sales month, after January. It helps shape the year overall.

But this year it is being shaped by wider economic impacts from Brexit - just one of which happens to manifest itself in the reduced number of people prepared to buy a new car at this time.

Irish Independent

Also in Business