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| Brian Cooke, Director General of SIMI, with Paddy Magee, Country Operations Manager, Renault Group Ireland. |
These were stark figures today in a market presentation by the Society of the Irish Motor Industry, which warns that ‘the mistakes of 2008 must be avoided’ and says the industry is now at its most vulnerable since the crash of 2008.
Economist Jim Power detailed the national economic background to the Budget submission recently submitted by SIMI on behalf of its members. While there has been generally a strong recovery in the economy, he suggests this has been exaggerated. He pointed to sterling’s weakness since Brexit, a motor market which has declined for the last three years and the 'fragility' of consumer confidence.
A new car market under pressure and a continuing strong growth in used imports are the main concerns. With the potential for serious financial and environmental outcomes.
“We're not looking for handouts in this Budget,” Paddy Magee of Renault Ireland said on behalf of the distributors and dealer networks. “We’re only looking for help in dealing with climate change. On one hand we're doing what we can to sell clean new cars. But on the other, there are no restrictions on used diesel cars, which don't meet current standards, being dumped here from the UK. Whatever we do on the new car side is being undermined by the imports.”
Director General of SIMI Brian Cooke noted that 400,000 used cars had been imported to the Irish market over the past three and a half years. “If a quarter of those had been substituted by new car sales, it would have meant an extra €650m in the state's coffers.”
He criticised the 'open door' policy on used imports, with no regulations in place to refuse registration of an import, which could be a 'write-off' in the UK or be producing emissions no longer acceptable in its home market.
Jim Power noted how the current situation means a big difference for Government revenues, with an average of €10,174 being the tax take on a new car, versus €3,493 for the typical imported used one. “The cost to the Exchequer is €66m for every 10,000 used cars imported that displace new car sales,” he said.
The motor industry wants the state to introduce 'reasonable checks' on imports. They also call for non-recognition of a UK MOT on passenger cars of four years old and over, or one year in the case of commercial vehicles.
The industry wants the diesel CO2 levy introduced last year to be replaced with a charge on nitrogen oxide (NOx) emissions instead. This would address the current anomaly where a new car with relatively very low NOx emissions is taxed more than an equivalent used import with high emissions which cause significant health and environmental issues.
The meeting heard that the annual car market has ‘stabilised’ at around 220,000 over recent years, but the proportion of imports is rising inexorably. From just 47,790 units five years ago, the figures are trending to hit 115,000 in 2020, with new car sales for that year shrinking to 105,000.
In a comment on the growth of electric vehicles in the Irish market 'from an extraordinarily low base', Jim Power said the targets for EVs in the recent Government Climate plan are ‘absolute pie in the sky’, and there is no possibility of achieving the numbers in the forseeable future. “But the objective is a good idea, so we should stick with it,” he added.
Looking at the prospects depending on different kinds of Brexit scenario, Jim Power suggested that a no-deal split could see new car sales going as low as 70,000 next year, if there are also VRT increases in the Budget.
“It's a simple message,” Brian Cooke said bluntly. “It's a stark message. We're struggling. We need fair play.”
