AS new car sales drop by more than 7% in Cork and nationwide, the Society of the Irish Motor Industry (SIMI) has warned that jobs will be at risk if the current economic environment were to worsen further.
SIMI’s Quarterly Motor Industry Review found 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 Worldwide Harmonised Light Vehicle Test Procedure (WLTP) testing regime.
The WLTP laboratory test is used to measure fuel consumption and CO2 emissions from passenger cars.
“If the Government does not 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,” Economist Jim Power has warned.
“While the recently published Inter-Departmental Tax Strategy Group (TSG) paper on motor vehicle taxes makes a number of suggestions about taxation, this does not mean that these suggestions will eventually become part of Budget 2020.
“The price increase for the more popular mid-range model could rise by significantly more. In the current environment, such price increases would have a devastating impact on new car sales.”
In the first quarter of 2019, 47,300 workers were employed in the motor trade nationwide but Mr Power warned thousands of these jobs would be at risk if sales continue to decline. “Such a decline would have a devastating impact on many businesses that barely survived the last recession; it would cost thousands of jobs in towns and cities around the country; and would have a very negative impact on the Exchequer revenues,” he said.
“The motor industry is in a high-risk scenario at the moment and policy makers need to be aware of the risks,” he added.
So far this year, more than 12% of national new car registrations have come from Cork. Cork’s market share increased marginally, but overall sales declined. 9999 new cars were registered in the rebel county in the first half of the year, compared to 10753 in the same period last year.
Other counties saw far steeper declines, with new car registrations falling by more than 19% in Leitrim and Offaly and by more than 21% in Carlow.