Used car imports from UK fuel air pollution worries
Some 24,685 new cars were sold in Ireland in July, down 8pc on the same month of 2018. The first month of 192 plates saw the total number of new registrations since January total 105,441, a drop of 7.57pc on the same seven-month period last year, according to figures from the Society of the Irish Motor Industry (SIMI).
Last week SIMI warned that as many as 12,000 motor industry jobs could be under threat if the Government fails to adjust the VRT bands in Budget 2020 to account for the new Worldwide Harmonised Light Vehicle Test Procedure (WLTP) emissions testing system. The system is designed to provide more realistic emissions and fuel economy figures, compared to the discredited NEDC test that it replaced and will result in higher emissions ratings on all new cars.
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While introduced in September 2018 for all new cars, the WLTP CO2 values are not currently used for VRT or motor tax purposes, but it is expected that they will be from next January. The economist Jim Power predicts that unless the Government amends the current VRT bands, the average price of a new car could rise by €2,500 and car sales could fall to as low as 75,000 next year; levels not seen since 2009. In contrast, the number of used imports continues to rise, with 9,384 arriving in the Republic last month, bringing the total so far this year to 62,505.
The recently published Inter-Departmental Tax Strategy Group (TSG) paper on motor vehicle taxes makes a number of suggestions for possible changes to the motor and VRT tax system in Budget 2020. One such suggestion is that full implementation of WLTP CO2 values should be delayed until July 2020. However, a delay until January 2021 would seem the more prudent course of action given the uncertainty in the market and would allow time to determine the full impact of Brexit.
There is also the issue of used car imports. SIMI is calling on the Government to tackle the issue of older imports and argues that Ireland has become the dumping ground for older cars the UK doesn't want. The surge in used imports means dealers are having to compete with the price of UK imports and new car sales are hit, too, as buyers are lured by 'nearly-new' bargains in the UK.
However, of greater concern, is that more than 45pc of imports are older, more polluting models. The switch from the NEDC to the WLTP emission values creates a number of issues for VRT on imported cars and suggestions have been made that a 21pc increase on VRT on used imports could be applied as imports are subject to the older, discredited emission test.
Regardless of what option is pursued to equate NEDC cars with WLTP emissions standards, or to deal with the surge in used car imports, the Government must reform taxes to support policies to lower both air pollution and CO2 emissions. The problem with the current system is that generally the tax gap between vehicles with widely differing emissions is far too small to make an impact on sales and does not reward those who opt for the newest and cleanest cars.
'SIMI says we have become a dumping ground for older cars that the UK doesn't want...'