Business Irish

Thursday 2 October 2014

Motor industry needs more stimulus to get through tough year

Published 11/01/2013 | 05:00

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DID you buy a new car in 2012? Are you planning to buy one in 2013? For most of us, the answer to those questions will be "no".

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This week's figures from the Central Statistics Office offered little in the way of optimism for the sector. While new car registrations rose by more than one-third in December compared with November, the annual figures remained on a downward trend.

In 2012, just over 76,000 new cars were registered for the first time in the Republic, down 12pc on 2011.

To say the market is not functioning would be an under-statement. Most experts agree that annual sales of about 120,000 would be "normal" for a country our size. In 1997, for example, 125,839 cars were registered for the first time.

Compare that to the boom and bust years. In 2007, a whopping 180,754 new cars were bought here, but by 2009 that had collapsed to a mere 54,432.

Those figures have led to mass closures among dealers here. The fall of Bill Cullen's motor business was probably the most high profile but there have been numerous other firms that have either gone out of business altogether or been reduced to selling low-margin, second-hand vehicles.

Effort

In an effort to stimulate the market, the Government has introduced a second registration period in July. While that is welcome, people in the sector say more needs to be done.

"The new registration period is a huge help but there is so much more required," says Audi Ireland boss Andrew Doyle.

"The recently increased VRT rates are way too high and are counter-productive to both government revenue creation and robust sales and business performance for the automotive industry.

"You would think this introduction of a second car registration period has to help but it is very early to predict by how much – certainly, we expect that July sales will be up year-on-year.

"The previous system whereby over 50pc of sales were done in the first quarter of the year was not healthy.

Pressure

"It put huge pressure on the dealerships from a cash-flow perspective in a difficult market but also on manufacturers from a supply perspective," he adds.

Cian O'Brien, who heads Seat here, takes a similar view.

He believes the industry will have to "roll up its sleeves" to get through this year.

"The second registration period can only help.

"Traditionally, it has been very difficult to launch a new product after April in Ireland because the car sales year was so 'front-loaded'.

"The change will take a couple of years to feed through, though," he adds.

Both men are agreed that the second reg plate on its own, though, was nowhere near enough for the industry.

For them, it is clear that a scrappage scheme or something similar is badly needed.

Irish Independent

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