Sales of new cars dropped by 8 per cent and light commercial vehicles (LCV’s 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 just 3 per cent, writes Padraic Deane.
For me, 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 shooter too medium economic future and second is the weakened Euro v the British Pound. Uncertainty is the worst state of mind that businesses want potential customers in.
Motorists, businesses, farmers etc. that had plans to buy a new car or other vehicle, that had the finance or the where with all to access finance are also not well please. 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! Sure it is human nature for a motorists to ponder on the decision of buying a new car. It’s sensible to way up the options and make a good calculated choice.
It’s also the considerations in some detail before the judgement call of a business owner or fleet managers re the optimum time to buy a new car for a company representative, a new van or truck for delivering goods and services, or in the case of a farmer – is it the best time to buy that new tractor?
I’ m convinced that the uncertainty related to Brexit is nothing like the uncertainty that 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 have gotten 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 time, provided the Irish Government continue and enhance upon their current efforts, we will come through this hic-up.
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 said: “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 commented “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 3 and 5 years old (49 per cent) reflecting the shortage of second hand cars during the registration period 2009 to 2013 and the over 6 years age group (37 per cent). While the number of imports nearly new are relatively low (9 per cent up to 2 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.”