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| Economist Jim Power |
The Quarterly Motor Industry Review for Q2 of 2019, released by The Society of the Irish Motor Industry (SIMI), warns that 12,000 Motor Industry jobs here are under threat if the Government fails to adjust VRT bands in the October Budget, writes Trish Whelan.
The report, composed by economist Jim Power, makes for stark reading.
Despite the economy performing strongly, the environment for new car sales continues to remain very challenging with new car registrations down 7.4pc (80,712 units) on the back of a rise in used car imports which are up 2.4pc this year (53,119).
Since the announcement of Brexit, both new cars and commercial registrations continue to drop with the exception of electric cars and used car imports.
External threats such as Brexit uncertainty, greater consumer caution and the ongoing growth of used imports continue to undermine new car sales.
Another factor dampening demand was the increase in the VRT on new cars in last year’s Budget arising from the fact that no allowance was made by the Irish authorities for the first step in the move to the new WLTP testing regime.
Jim Power warned that “If the Government doesn’t adjust VRT bands in Budget 2020 to take account of the WLTP changes, the average price of a new car could rise by at least €2,500.” He added that the price for the more popular mid-range model could rise significantly more and such price increases would have a devastating impact on new car sales.”
He believes the new car market could decline from 125,557 in 2018 to around 115,500 for 2019 and that 2020 could see a decline in new car sales of over 9pc to 105,000 units.
Power further warns “Failure to adjust VRT bands could see the new car market decline to 75,000 which would have a devastating impact on many businesses that barely survived the last recession. This would cost thousands of jobs in towns and cities around the country and would have a very negative impact on the Exchequer revenues. The Motor Industry is a high-risk scenario at the moment and policy makers need to be aware of the risks.”
The report highlights that the surge in used imports is continuing to displace new car sales and is increasing the market penetration of diesel cars in the fleet while also leading to the importation of older, less environmentally friendly cars.
