Car dealers optimistic as scrappage scheme starts
CAR dealers throw open their doors in earnest today, hoping that a significant increase in enquiries since the announcement of the scrappage scheme will translate into sales.
The fate of thousands of jobs and dozens of dealerships rests on how buyers react to the incentive to cash in.
The state scrappage deal effectively knocks €1,500 off the price of a new car when a 10-year-old motor is traded against it and scrapped.
Several distributors have knocked at least another €1,500 off their prices in a desperate attempt to get people buying.
Coming after a slew of heavy discounting towards the end of last year, the combined effect has been to push many car prices to their lowest levels for years in a cut-throat, competitive market.
All the major marques are involved in a price war to retain market share and keep as many dealers in business as possible.
However, there is no guarantee that enquiries will necessarily translate into purchases as potential buyers brace for a year of cutbacks, lower salaries and less disposable income.
Nonetheless the industry was highly optimistic last night. Society of the Irish Motor Industry chief Alan Nolan told the Irish Independent there was a "genuine confidence" coming back into dealerships.
"Dealers have been seeing a lot more interest, more people calling in and deals done," he said.
Sales last year fell by two-thirds from 2008, but the scrappage deal boost is expected to add as many as 10,000 to initial 55,000-60,000 projections for this year. Mr Nolan said the industry now expected around 70,000 drivers to buy a new car this year. "At least it means getting the graph climbing back up," he said.
If sales take off as expected, it would dampen the rate at which garages have been closing recently and would protect thousands of jobs, many of which looked doomed before Finance Minister Brian Lenihan announced the scrappage deal in December's Budget.
Similar schemes in Britain and across Europe, especially in Germany, gave a major boost to sales and kept businesses afloat at a time when it appeared that many would go to the wall.
Those thinking of buying over the next few months are being urged to shop around.
Doing so can save potential buyers hundreds if not thousands of euro as dealers will be under intense pressure to sell.
Second-hand car sales are also expected to be lively now that prices have bottomed out after two years of plunging values in the face of the huge numbers of imports from the North and also from Britain.
There has been something of a scarcity of good used cars on the market for some months and trade-in prices for decent quality motors are expected to pick up significantly.
However, the bad weather may impact on numbers visiting showrooms to buy new or used cars over the next few days and it will be a couple of weeks before trends of any definitive nature emerge.