Friday 9 December 2016

Why you are more likely to buy a brand new car over next 12/18 months

* Budget plea to Noonan as we already pay vast sums in tax

Published 05/08/2015 | 02:30

Quarterly SIMI review shows car buyers and sellers are more confident
Quarterly SIMI review shows car buyers and sellers are more confident

Motorists are paying a fortune in VAT and VRT - but that won't stop thousands more buying a new or newer car over the next 18 months.

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If the expert prediction of the latest quarterly review for SIMI by economist Jim Power holds true, they will fork out hundreds of millions more in tax by the end of next year.

The Exchequer collected €761m from new and used car sales in the first six months of 2015 - up 21pc on the first half of 2014. VRT is up 17.4pc and VAT 26pc.

Last year local authorities collected €905m in motor tax. And in the first five months of this year, the Exchequer collected €1.37bn in motor fuel taxes.

The report emphasises that one of the few factors that could put a brake on the industry's recovery over the foreseeable future are higher taxes in the Budget.

In a wide-ranging assessment of the broader economy and motor industry, Mr Power focuses on a number of key 'drivers'. He says there will be a strong stimulus package of at least €1.5bn in the Budget.

And as a result of the growing confidence, he says new-car sales should rise 18pc next year (22,000) to 145,000 from this year's projected 123,000. That would generate increased VAT and VRT revenue of €183m and an extra 2,860 jobs.

This year's expected 27pc growth is likely to lead to around 3,400 extra jobs in the industry. It is estimated every extra 1,000 new car sales generates 130 additional jobs.

Other key findings of the SIMI quarterly report include:

* Credit conditions generally and PCPs in particular are having a big impact on buying.

* Business investment is recovering and that's reflected in strong commercial vehicle sales.

* Every county shows an increase in new-car buying. Longford has the biggest percentage rise (38.1pc), Wexford the lowest (3.1pc), with Dublin accounting for 39.1pc of the national market.

* The recovery in car sales is giving a boost to general economic activity around the country.

* Employment in the industry is now 44,700 - up 9,500 since the end of 2009, but 4,800 down on the peak 49,500 in 2007.

* Petrol prices are up 11.8pc since January but down 6.1pc in the year to June. They are now 14.5pc lower than the September 2012 peak. Diesel prices increased 8.6pc since January, but are down 8.9pc in the year to June and are 17pc off the recent peak.

* The average price of a new car fell 2.9pc this year. Last year the average price was 21.3pc lower than in 2007.

* Motor insurance costs have increased by 15.7pc and are up 23.6pc over the past two years.

π Emissions are 1.85pc lower than the corresponding first half of 2014. Average emissions are 28.4pc down on 2008 levels.

* Used imports have fallen off (10.8pc) but there is still a lack of quality second-hand cars on the domestic market.

A survey of SIMI members also found that:

* 57pc of used cars traded against another were 5-7 years old; 58pc were 3-5 years. Last year 75pc of new sales involved a trade-in; it's 71pc so far this year. The average age of car sold last year was 3.8 years; it's 3.9 years in 2015.

* Dealers reckoned the value of cars on a like-for-like basis went up by 10pc in 37pc of cases. The profits in selling used cars were much the same as last year.

* Nearly half (48pc) those surveyed said a dangerous car had been presented for service once/twice a month.

* Dangerous tyres had been presented in 93pc of cases within the previous three months.

* 61pc (up from 56pc) of dealers are 'fairly confident' of things improving.

Indo Motoring

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