independent

Friday 18 April 2014

Boost and Bust

Boost: Sales are looking good for 2014 Bust: Some brands headed for 'tragedy'

BUYERS are coming back and order books are swelling – but some brands are playing with fire and will live to regret it, a leading industry figure warns.

Ciaran Allen, sales manager for passenger cars at Mercedes Ireland, was upbeat about new-car sales for 2014.

That's because his own brand has already 'sold' a significant number of new models for next year. Rivals are also claiming a lot of activity on their order books.

But he also warned – in strident fashion – that some brands are building their businesses on a 'house of cards'.

By that he meant the contentious high level of pre-registrations, especially in the last couple of days of each month.

In practice, dealers/distributors register cars to maintain market share. They then sell them at a discount as 'nearly new' or 'newsed' shortly afterwards.

At a briefing this week, Mr Allen was adamant in warning: "The only thing I can tell you is that some day the house of cards will fall."

He insisted there would be a 'tragedy' and claimed that pre-registrations now represent too high a percentage of overall sales.

The practice has been heavily criticised by others too, notably Ford Ireland chief Eddie Murphy.

However, many in the industry see it as a sales strategy and tactic in that the brand/distributor/dealer is effectively subsidising the price.

They argue that, ultimately, consumers do well out of it. Others disagree and say people who buy a car at 'full' price early in the month lose out on the selling price. They also claim that 'early buyers' lose on the reduced residual value of the car which is then set by the lower pre-registered price.

On a far more positive note, Mr Allen said his brand could take an extra 500 cars (A-Class and B-Class especially) to meet demand if they could get them.

His upbeat tone – but not his warnings – is reflective of feedback across the industry, as buyers are either booking new cars for 2014, or showing a lot of interest in doing so.

The latest reports from SIMI and Motorcheck.ie indicate a lot more confidence than this time last year. Sales so far for the year are down by around 6.5pc and will end up close to 75,000 for the full year.

No one is predicting a huge increase for next year but 80,000 is being mentioned in several quarters.

And yes, that does include pre-registrations.

Irish Independent

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