BY Padraic Deane.
Sales of new cars dropped by eight per cent and light commercial vehicles (LCVs or vans ) were down by 11 per cent in the first quarter of 2017 despite the Irish economic prospects looking better than at the beginning of the year. In the same period, sales of new HGVs or trucks fell by three per cent.
This reflects two related factors that have introduced ‘uncertainty’ in to the new car market in particular. The first is the major shadow that Brexit casts over our short to medium economic future and second is the weakened euro v the British pound. Uncertainty is the worst state of mind for potential customers.
Motorists, businesses, farmers, etc, who had plans to buy new vehicles with finance or the where-with-all to access finance, are also not well pleased. Again, through no fault of their own, they are unwillingly being reunited with ‘uncertainty’ about their short and medium-term futures. With the worst recession in living memory behind them, and the total uncertainty that clouded all our lives for few years, is it a case of here we go again?
No, it is not. It is human nature for a motorists to ponder on the decision of buying a new car. It is sensible to weigh up the options and make a good calculated choice.
I am convinced the uncertainty related to Brexit is nothing like the uncertainty we faced at the start of and during the recession. While we cannot negotiate directly with Britain, re Brexit, as an EU member we can and will influence the negotiations to achieving a satisfactory outcome for the island of Ireland. We never had such an opportunity when we (the Irish people ) were held responsible for the reckless lending of German banks to publicly quoted retail banks here in Ireland, and we all suffered in the recession and since for that.
This time around, it is a much more controlled scenario and our special circumstance will get us the desired result. In the meantime, uncertainty is something we are used to having around.
As new sales have fallen off since last summer, used car imports increased in the first quarter of this year by 56 per cent while LCV/van imports were up 53 per cent compared to the first quarter of 2016. This has as much to do with currency exchange as Bexit. Just like the euro v the pound is always up or down and influencing our buying habits, Brexit is just another factor that will be resolved.
In two years, provided our government continues and enhances current efforts, we will come through this hiccup.
Jim Power, economist and author of a review published by the Society of the Irish Motor Industry (SIMI ), has some more expansive ideas for the slowdown. He says consumer behaviour remains relatively cautious.
“Personal expenditure on big ticket items such as cars is being undermined by the ongoing upward pressure on the price of necessities such as motor and home insurance, private rents, private health insurance and housing. Based on sales so far in 2017, it is possible that registrations for the full year could be 10 per cent down on 2016. This would imply a total of around 132,000, but it has to be stressed that the market is not very predictable at the moment.”
Alan Nolan from SIMI says Brexit continues to play a role in uncertainty.
“The decline in new car sales has been a nationwide trend in the first quarter of 2017. Used car imports increased by 56 per cent while LCV imports were up 53 per cent on the first quarter of 2016. Used car imports are primarily between three and five years old (49 per cent ) reflecting the shortage of second hand cars during the registration period 2009 to 2013 and the over six years age group (37 per cent ).
“While the number of imports nearly new are relatively low (nine per cent up to two years old ), overall the volume of imports is impacting even if indirectly on the new car market. 2017 is still shaping up to be a good year, even if down on last year’s strong Q1 performance and while the market is difficult to predict this year, the second quarter of 2017 will hopefully give us a clearer picture.”
