Brian Cooke is Director General of the Society of the Irish Motor Industry. Motoring Editor Eddie Cunningham had some questions for him on behalf of those wondering what to do about a new car in 2021.
Eddie: How much, if any, of an increase in car buying are you forecasting for next year?
Brian: We have had a few difficult years for new-car sales and buyers and they have been further hampered by Covid. New-car sales this year are 25pc down on 2019 and 40pc behind 2016.
Looking at estimates for next year, the volatility out there makes it impossible to predict and we have seen a wide variety in forecasting.
It (car buying) should be better than this year, but not at the levels we need and want it to be.
The delivery of Covid vaccines will hopefully allow business to return to normality at some stage next year. There is pent-up demand.
This, this allied to the record level of personal deposits, will see a spending splurge in the Irish economy; Irish car retailers can expect to see some of this.
However, this is unlikely in the first half of next year. We may have to wait for the 212-registration plate (July) or perhaps 2022 to see the full benefit of it. Finance is hugely important for buyers. Interest rates are at historically low levels and they, along with a variety of finance products, makes trading up an affordable proposition for many.
The strengthening of used-car values over the last 12 months should continue – which reduces the cost of changing for motorists. In addition, hopefully the reduced VAT rate in the first two months of 2021 will also encourage buyers.
Eddie: How do you see electric vehicles faring next year?
Brian: The electrification of the car fleet will take a number of years. Electric vehicles (EVs) are starting from a low base. However, it has been an encouraging start.
The increased market-share this year from 2.6pc to 4.3pc is a positive. With several new models coming on stream over the next 12 months market share could double in 2021 but only if current incentives remain.
Plug-in hybrids have also grown market share from 1.14pc to 2.79pc while hybrid went from 8.71pc last year to 11.91pc this year. There is a chance that new EV sales in 2021 could be close to 10,000, with further annual growth in the years to come.
The speed of the transition to EVs will depend on a number of factors, some of which the industry has control over and some of which they won’t. Clearly the industry is going to supply the cars.
There is ongoing significant production and R&D investment on that front. To help this project work, the continuation of Government incentives beyond 2021, until such a time that EVs become the car of choice for the majority of new-car buyers, will be key.
Economics will also be important, as a downturn would inevitably lead to a dampening of demand for all new cars. A customer’s ability to change up to an EV from an internal combustion car will also be a factor.
Investment in EV charging infrastructure, in terms of scale and improving charging technology, is needed to keep pace with growing EV/PHEV numbers. The Government should look at accessing funds the EU is making available to assist in a nationwide state-of-the-art charging infrastructure.
Further Government investment is also required on the extension of the SEAI grants beyond next year to 2025. And there should be an immediate re-instatement of the SEAI grant for electric vehicles for company car/van purchases.
Eddie: How big a role will online selling play ?
Brian: The digitalisation of car purchasing has accelerated in recent years, but in the last 12 months we have seen an even more rapid growth in its use.
Indeed, if there is one positive since the pandemic hit, it has been the increased investment in online by both car manufacturers and retailers.
The big difference between the April and November lockdowns has been increased car sales activity, all because of the increased focus on online selling.
This investment has resulted in terms such as ‘digital dealerships’ becoming mainstream, which along with ‘click and collect’ has become commonplace in the car sales process. We are now at a stage where both retailers and their customers have real confidence in shopping online without having to visit dealerships.
Eddie: On a more hopeful note for jobs, tell us about the skills shortage in the industry? What areas are most in demand? What jobs are there ?
Brian: With the rapid growth in the digitalisation process this year and the use of digital platforms and social media, etc, I would expect to see more job creation in this area.
Advancement in technologies means it is vital the industry obtains and retains specialised staff. Apprenticeship numbers have fallen over the years.
This is an area where there will be great demand especially in the years ahead, as skilled qualified technicians will be required to service a variety of technologies as the market transitions and registrations increase. Upskilling of technicians will be vital as the move to electric gathers pace.