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Sale of 2012 cars in December helps buyers avoid VAT hike

MOTORISTS looking for a new 2012 car were able to avoid paying the 2pc hike in VAT by buying and pre-registering before the end of the year.

The Society of the Irish Motor Industry (SIMI) said people who were willing to pay in full before December 31, instead of choosing a finance option to pay in instalments, could have availed of the old 21pc rate.

The new year got off to its usual hopeful new-car sales start, but the figures for 2011 published last night starkly portray the challenge facing both buyers and sellers over the coming months.

Total new-car registrations for the year came to 89,990, according to the SIMI figures. But those would have been boosted by six months of the scrappage scheme which came to a halt at the end of June. Now it will be interesting to see how the increase in VAT will affect sales.

Before it was announced, SIMI predicted that around 70,000 new cars would be sold. SIMI President Gerry Caffrey said it looked like there was a good start yesterday, but it was far too early to say.

He said business had been hit badly in the final week of December 2010 and into January 2011 because the bad weather kept people out of showrooms, so any early comparisons are redundant.

"Most people are telling me that they're up on last year," Mr Caffrey said. "It doesn't necessarily mean a huge amount at this moment in time because the weather was so bad last year; we had a very small amount of orders in that December."

Mr Caffrey, who owns a Suzuki dealership in Terenure, south Dublin, said they distributed seven new cars to customers yesterday.

"There is a level of confidence that's reasonably good at the moment. The VAT would have brought some people in that were sitting on the fence," he said.

Liam Herlihy, sales director with Cavanaghs Cars in Co Cork, said buyers could have saved €400 on a new Ford Focus and €300 on a Ford Fiesta if they bought before the end of the year.

"The VAT was a factor because they (buyers) wanted to get their cars paid for to qualify for the 21pc VAT. There was a huge drive to get in and get the car paid for," Mr Herlihy said.

He said orders were up 30pc on the same period last year, but also said the weather led to difficult trading conditions. He said the most popular model now was the Ford Focus.

Pat Keane, sales manager with Western Motors, based in Galway and Drogheda, said they have had 70 orders, and he also accepted the VAT hike had an impact. The most popular models were the Volkswagen Golf and Audi A4.

Irish Independent