'Significant blow to the Exchequer and the motor industry' - more second-hand cars to be imported than sold here this year
MORE second-hand cars will be imported this year than the number of new ones to be sold here.
It will be the first time this has happened.
Sales of both new and second-hand cars are set to decline this year, a move that will hit the Exchequer, according to the Consumer Market Monitor from the Marketing Institute of Ireland and UCD Michael Smurfit Graduate Business School.
The monitor shows that new and second-hand car sales continue to decline from 901,000 in 2016 to 839,000 this year.
Author of the report Prof Mary Lambkin said the fall in car sales is a big blow to the Exchequer and the motor industry, as tax revenues from lower sales and dealer profit margins continue to fall.
There is an average shortfall of €6,000 between taxation on each new car sale, according to the monitor.
The sale of new cars peaked in 2007 at 180,000. That year drivers imported close to €60,000 second-hand cars.
Since 2016 there has been a steady decline of new-car sales.
But second-hand car sales have been rising. Last year there were 99,456 of them imported.
And registrations are up 4.9pc to 25,906 in the first quarter of this year.
Prof Lambkin said: “The latest data represents a significant blow to the Exchequer and the motor industry, as tax revenues from lower sales and dealer profit margins continue to fall.”
She said that for the Exchequer the concern is not where new or second-hand cars are sold, but the value of them.
The Exchequer take in percentage terms is roughly the same, Prof Lambkin noted, but the value of new cars is significantly higher.
Importing a car has become better value due to the fall in the value of sterling.
“Here we see Brexit playing out in full technicolour but nobody seems to be talking about it,” Prof Lambkin said.
She said the Brexit concern has been focused on the food industry. But the car industry has been making the point about the impact on it for some time, she added.
The Society of the Irish Motor Industry also recently complained that no allowance has been made in Ireland for a new Europe-wide emissions testing regime.
Meanwhile, the Consumer Market Monitor also shows that strong, ongoing employment growth and rising disposable income are providing the underlying conditions to support growth in the wider economy.
It predicted that growth in employment and disposable income will be the main economic drivers in the years ahead.
The number of people who are employed is expected to grow by 2.5% in 2019 and 2% in 2020, adding a further 104,000 people to the current workforce of 2.281 million.
Having experienced annual growth of 2.5% in recent years, wages are expected to rise further by 3.6pc this year and 3.7pc next year as labour-market capacity diminishes, it added.
However, consumer confidence weakened in the face of protracted negotiations about Brexit and ongoing anxiety that the repercussions of a hard or no-deal Brexit scenario would damage the Irish economy.
This is reflected in consumer spending, which is forecast to remain sluggish.