Thursday 20 June 2019

Banning used vehicle imports will not solve emissions issue

Older used cars are only part of the problem, writes contributing editor Geraldine Herbert

PRICE POINT: Irish buyers are flocking to the UK for better value on used cars
PRICE POINT: Irish buyers are flocking to the UK for better value on used cars

The Government is examining the possibility of banning used car imports of a certain age as part of a major review of motor taxation policy. Ireland's car market reported record numbers of used car imports in 2018 as a combination of Brexit uncertainty and the decline of sterling reduced new car sales.

Used car imports jumped to 101,542, the highest ever, and of these 75,055 are diesel - up 3.7pc on 2017. According to figures from Motorcheck.ie, the majority of vehicles are between three and five years of age but there has also been a slight increase in the number of one-year-old used imports registered here last year.

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The fall in the value of sterling against the euro has widely been cited by many as a reason for increased demand abroad, and car distributors argue that cheaper used imports are impacting on second-hand values and the cost of change or the difference between the value of a trade-in and the cost of a new car is widening. Brexit uncertainty has also made car buyers nervous about when to buy a new car, leaving sales flagging.

Urging the government to take action on imports is James McCarthy, CEO of Nissan. He has called on the government to ban used car imports from the UK where registration pre-dates 2014 as the solution to tackling Ireland's rising carbon emissions problem.

"The Government is compounding the problem by allowing UK cars flood into the country - most of these cars are nowhere near latest emission standards and should not be allowed to be dumped into Ireland, where we will have the long-term problem of dealing with them. We should be cleaning up the national car fleet, not making it worse," said Mr McCarthy.

In the event of a no-deal Brexit, imports from the UK would no longer have an automatic 'right of entry' under EU single market rules, so Ireland could, in theory, require the fitting of metric speedometers or enforce safety and environmental checks. If a hard Brexit were to occur, the Government would be free to legislate against allowing the importation of older, more polluting vehicles.

However, not everyone agrees. Michael Rochford,  managing director of Motorcheck.ie, argues that banning imports is not a viable option.

"The used car market far exceeds the new car market in terms of volumes of transactions by a factor of about 6:1. Used imports also currently account for about 13-15pc of the total used car market and many of these imports are brought into Ireland by the motor trade and retailed from local forecourts," said Rochford.

"If imports were banned completely, the choice and availability of used stock would be reduced significantly and there would be an inflationary effect on used pricing. Imported used stock is an important resource for the motor trade and consumers in Ireland."

Removing barriers to trade is a fundamental pillar of the EU and the modern global economy, so Irish buyers are free to seek the best deal wherever they can.

For the buyer, the savings to be made on a used car import are significant due to currency differences but are also largely due to the high taxation paid on new cars. Vehicle Registration Tax is a significant revenue generator for government and can add up to 30pc of the price of a new car.

But why, despite the growing evidence about the health damage from diesel pollution, are we still buying diesel?

It's not so long ago that diesel was the green fuel promoted and incentivised by governments as a way to save the planet. European governments viewed diesel cars as a fast and effective means to hit their CO2 reduction targets and spent billions boosting diesel by making it cheaper to buy at the pumps than petrol and taxing new diesel registrations at lower rates than petrol cars. In Ireland, the Fianna Fáil-Green Party coalition changed the VRT and motor tax system in 2008, from one based on engine capacity to the current one based on CO2 emissions.

Today the government continues to incentivise diesel by making it cheaper to buy at the pumps and cheaper to tax. In addition, businesses can claim a rebate on diesel but not on petrol. Rather than discourage new diesel sales, the 1pc surcharge on diesel cars introduced in the Budget last October is likely to simply encourage those who may want a diesel car to opt for an older, imported used diesel.

With greenhouse gases on the rise, Ireland is still a long way from meeting its 2020 climate change targets, which potentially may result in substantial EU fines for the State. More significantly, in addition to climate change mitigation, a low carbon economy would improve air quality and public health.

Part of the solution lies in reducing substantially the number of old diesels on our roads and moving new car buyers toward more sustainable options.

However, could the Government realistically ban pre-2014 cars coming into the country from abroad without banning their sale within the state? What would the ramifications be for cars currently on our road that are 2014 or older? Would their values plummet? And how would such a ban be enforced?

The average age of cars on our roads is nine years old, which would suggest that most people are not in a financial position to change their cars. Many may aspire to drive new hybrids and electric vehicles, but their car-buying budget dictates otherwise.

Meanwhile, the Government is planning to increase carbon tax over the next few years as part of a push to encourage people to make more environmentally sustainable decisions. However, decisions imply choices and those choices need to be affordable and achievable for as many people as possible. Until people are given more alternative transport options in the form of significantly improved public transport, electric car charging and cycling infrastructure, getting people to support an increased levy on the energy sources that heat their homes and power their cars is no easy task.

Meeting climate change targets requires people to change their behaviour. The government must lead by example and put the infrastructure in place to enable businesses and individuals make the change towards more environmental options by providing incentives to reward sustainable businesses, behaviours and lifestyles and not by punishing them or squeezing them for more tax revenue.

Sunday Independent

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