Longford Leader Motoring: Up to 12,000 motor industry jobs at risk

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Motoring

The Society of the Irish Motor Industry (SIMI) have issued their Quarterly Motor Industry Review Q2 of 2019, composed by economist Jim Power.

The report makes for stark reading and despite the economy performing strongly, the environment for new car sales continues to remain very challenging.

External threats such as Brexit uncertainty, greater consumer caution and the ongoing growth of used imports continue to undermine new car sales.
The latest SIMI review has found that new car registrations H1 2019 are down by 7.4% to 80,712, while used car imports H1 2019 have increased by 2.4% to 53,119.

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 WLTP testing regime.

Economist Jim Power warned; “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.

“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,” he continued.

The report listed its 2020 projections for new car sales and states that they could decline by over 9% to 105,000.

Mr. Power said of the outlook: “Based on the information available at the moment and the projections for the economy, the new car market could decline from 125,557 in 2018 to around 115,500 in 2019.

“For 2020, based on a central scenario, new car sales could decline by over 9% to 105,000. Failure to adjust VRT bands, could see the new car market decline to 75,000.

“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. The motor industry is in a high-risk scenario at the moment and policy makers need to be aware of the risks.”

The report also highlights that the surge in used imports is continuing to displace new car sales, and is increasing the market penetration of diesel cars in the fleet while also leading to the importation of older less environmentally friendly cars.