Motor Dealers prepare for ramp up of 2019 pre orders
The outlook for 2019 remains cautious following a 4.5% decline in new car sales in 2018, however demand for light commercial vehicles increased by 6% as economic indicators remain positive
Latest Motor Sector Updates
The new car market in Ireland enjoyed exceptional growth from 2013 to 2016, coming from a very low base, and nearly doubled in size in that period due to pent up demand.
The market has, however, been in decline since 2017 as the industry has felt the impact of Brexit weakening by -10.3% in 2017 and again -4.5% by October 2018 YTD. Used car imports from the UK market have surged and this has impacted new car sales. Another factor in this decline is consumer’s uncertainty and confusion concerning which engine type to choose in their next new vehicle. This is following considerable EU-wide media reporting on Electric Vehicles and the future of the petrol and diesel engine. On a positive note, the trend in the recent decline in new car sales has slowed in 2018 and economic indicators remain robust in the short term.
Reflecting strong levels of confidence and growth in Irish business, the Light Commercial Vehicle (LCV) market and Heavy Commercial vehicle market (HCV) have seen year-on-year growth of 6% and 3% respectively. Experiencing similar levels of growth to the new car market, the LCV market has grown from ca. 11,000 units in 2013 to ca. 24,800 units by October 2018 YTD. The HGV market has grown from ca. 1,600 units in 2013 to ca. 2,500 units by October 2018 YTD.
Used Car Imports
Annual volumes of used vehicle imports from the UK market have almost doubled since the Brexit referendum. Imports increased by +51% 2016, +30% 2017, and +9% October 2018 YTD respectively. This has had a knock on impact to used vehicle residual values – particularly to 1-2 year old vehicles – and has affected sales in the new car market as consumers postpone their decision to buy new vehicles.
There has been a significant increase in the share of new petrol vehicle registrations from 22% in 2014 to 39% October 2018 YTD. Used imported vehicles, however, remain predominately diesel (ca. 75%). The UK new car market is experiencing a similar uptake in petrol vehicles and, as residual values of diesel vehicles have fallen in the UK, these vehicles are seen as a value proposition and are being imported to Ireland.
In a continually evolving market, demand for SUV style vehicles has been steadily increasing in recent years. Manufacturers have reacted to this demand by developing, adding and expanding new SUV models to their range. Demand for SUV vehicles in Ireland whether small, medium or large now stands at ca. 41% of overall new car demand.
Looking ahead to 2019, with the backdrop of continuing Brexit negotiations, the outlook for new car sales remains cautious. The most optimistic view from industry is for flat growth in new cars sales. The Society of the Irish Motor Industry (SIMI) has compiled forecasts from Irish distributors of new vehicles and expects the market next year to decline to ca. 118,000 units. Used vehicle imports, however, from the UK market are expected to increase to ca. 105,000 units and is a key source of used car stock for Irish motor retailers.
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