The outlook for 2019 remains cautious however the general economic environment remains positive and a number of positive macroeconomic factors will be supportive to the Motor Sector
For more information on the new and used car sales, read our latest Motor Newsletter here.
In the event of a no-Deal outcome from Brexit, a hard Brexit is likely to substantially reduce used car imports due to a WTO tariff of 10%, non-tariff border delays, plus 23% VAT on imports to EU which would offset any weakening in sterling. In addition new passenger car sales are expected to weaken further.
In the event of a Deal, the value of sterling is likely to strengthen. This would reduce the inflow of used imports from the UK market where the average saving from 2015 to 2018 was ca. €3,5501. These savings explain the near twofold increase of imports in the same period. In the event of used car supply tightening, this could have a positive knock on effect for the new car market.
Diesel continues to be the most popular choice with Irish consumers in 2019, declining from a peak of 76.3% in 2014 and now representing 48.3% of all new cars sold, followed by petrol at 40.8%, Hybrid at 8.7% and Electric at 2.2%.
Franchised dealers can and, in many cases, already have refocused business opportunities on Used Cars and Workshop Departments to counter the lost contribution from new vehicle sales.
Demand for SUV style vehicles has increased 2.5x since 2013. This trend is expected to continue as manufacturers release new SUV models in response to changing consumer demand. Demand for SUV vehicles in Ireland whether small, medium or large now stands at approximately 46% of overall new car demand in 2019.
New vehicle sales are forecasted to decline by ca. 10% in 2019. Looking forward to 2020, the sector is expected to benefit from the ‘new decade effect’ by having a ’20’ number plate.
In September 2017: A revised vehicle consumption and C02 emissions test, the Worldwide Harmonised Light Vehicles Test Procedure (WLTP) commenced for newly launched vehicles. WLTP values at this point were temporary with a calculation translating back to previous values for the purpose of tax calculation.
September 2018: Real Driving Emissions (RDE) Step 1 and WLTP testing became compulsory for all vehicle manufacturers in the EU During RDE tests, emissions, such as NOx, are measured by testing vehicles directly on the road.
By September 2019, all new vehicles sold will have to be tested under RDE Step 2 – a more stringent test.
By January 2020 Full WLTP will be in place in Ireland and manufacturers must communicate WLTP values for all new vehicles sold. C02 values are expected to increase and be more realistic than New European Driving Cycle (NEDC) values and this will impact retail prices (and road tax) without the intervention of the Irish Government.
SIMI is currently lobbying Revenue and the Department of Finance to adjust C02 tax bands to avoid significant price increases for Irish consumers when full WLTP is implemented in January 2020. In the interim, retesting of vehicles may affect stock availability and sales as distributor’s ramp up stock for the ‘192’ selling season.
Growth forecasts will be dependent on the outcome of WLTP and its impact to VRT and vehicle retail prices.
Sources: Vehicle stats – Society of the Irish Motor Industry, SIMI, WLTP/RDE – European Automobile Manufacturers’ Association, ACEA and www.wltpfacts.eu