The Motoring Industry & The Recession

[pineapple stu]

January 2008 was a record bad month. Half of orders were cancelled due to the VT changes. 2008 in Dublin only got up to 75000 or so, which was well down on previous years (got up to 110000 in 2000, for example).

Another thing to note is that motor dealers get stung twice if they make a loss - once on the loss, and once having to pay the VAT on the loss. Ridiculous system which means the government are fleecing the industry twice.

[Fr Damo]

[quote=pineapple stu;1086229]January 2008 was a record bad month. Half of orders were cancelled due to the VT changes. 2008 in Dublin only got up to 75000 or so, which was well down on previous years (got up to 110000 in 2000, for example).

Not according to the SIMI website who said sales were up month on month by 3.91%

http://www.simi.ie/admin/files/StatsPressRel2008.xls.

Commercial vehicles were down 15% roughly and I remember reporting this to my UK superiors at a meeting in Feb who, instantly replied your in recession so! We know car sales have collapsed for Jan09, I am looking forward to the figueres for light trucks. Councils and Plant hire companies are generally the main takers and they have a pot to p*** in at the moment.

The german's like the brits are throwing good money after bad if you ask me. The Brits are giving a grant to employers who take on staff. Cannot see how this will work. What I will say is at least it is something, our lot are shelving some Dublin bus staff and tip toeing around Junior Ministers.

[pineapple stu]

Interesting. Knew there was a real fall off from Feb to June; didn't realise January was better than 07. Guess it didn't feel that way knowing what was coming!

[Fr Damo]

Look back at the last couple of months of 2008 (all running 50/60% down) and factor in the results already announced of 70% reduction in new registrations. Based on last jan's 45000 cars and if the trend continues means that about 18500 to 19500 new cars will be registered this Jan, and I'd bet we just about scrape 60000 vehicles for the year. I'd imagine this is 1980s stuff?? I'm going for a few this evening!
Major overhaul needed and fast, husband of a friend, Mechanic, given his cards last friday.
Look at bringing Vat back to 12.5% for services, and I know it'll make a pigs ear of current stock but VRT is an illegal tax that should be abolished, especially when VAT is charged on it also. These are the very reasons Mickey Dell and others are pulling out.... Irish wages are high to cover the costs of indirect taxation!

[pineapple stu]

1987 was the first year of the new registrations, and we got to about 87 D 27000 that year. That was up to about 50000 by the early 90s. Also remember that Feb to June last year saw a much sharper tail off than normal; lots of orders got postponed to July 08, then postponed to Jan 09, then postponed altogether, so last year's figures are kind of skewed. I'd say Dublin will get 50000-60000. Still way down on previous years though. Usually hit 10000 in Dublin in January; barely up to 3000 at the moment.

On a new car bought and registered in Ireland, you don't pay VAT on VRT. Don't know about imports.

Irish wages are high because we want lots of money to spend.

[Fr Damo]

I know you are using the D reg as a reference point as it's what you have a feel for but I still think we'll be doing well to pass 60000 cars nationally. Hope I am wrong but...

On the VRT, I understand and will accept correction but isn't VRT is added to the price of the car once landed in the ROI. (Car makers actually sell the car less to the national importer in Ireland than they would say in Engerland. This is to facilitate the addition of VRT.) So a WV GOLF arrives in the port of Cork at say 15k without vat as it is an import. The Importer sells this to a garage and in this transaction VRT is added. Lets say 4k. Then the importer sells to the garage with a margin so say 18k plus VRT of 4K = 22k and then add vat of 21.5% = 26,730.
This means revenue gain 11,730 in the transaction to this point, more vat to be added when sold and then if the guy makes a profit, tax them (albeit at a low rate).
If there was no VRT the vat element would be 21.5% of 18k = 3870

[pineapple stu]

Don't think so. VRT is, as far as I'm aware, paid when the car is registered, not imported necessarily (hence Vehicle Registration Tax). If you as a customer buy a car for, say, E20k basic, VAT is 21½% of the basic, and then VRT is added on next. There may be VRT on the VAT (don't think so, but not 100% sure which way VRT gets calculated), but not the other way around. And again, private imports may be different, and I think there are some circumstances where you pay VAT on the VRT. But in the main, it doesn't happen.

[chopper harris]

Stu is right to a point, VRT is only calculated when the car is sold and registered, but it is the base price plus VRT and then Vat hence when the vat went up 1/2% so did VRT! Brother is Accountant with a main dealer who sells French Cars.

[pete]

Irish cars are obviously expensive due to VRT but IMO Irish dealers still look to make too much profit on used cars.

Looking at one car in particular which costs has list price new about 34k in ROI & 19k sterling in UK. Irish dealers list a one year car at 15% below new price whereas UK dealers list at 30% below new price. This means can buy 1 year old UK car at 50% the price of new ROI car. SIMI can't complain either as loads of their members are importing also. As I mentioned above there is large difference in pre tax prices between ROI & UK.

I think I have now seen three 09 reg.

[pineapple stu]

Very difficult, and in a way unfair, to compare Irish and English used car prices. In England, once a car is sold to a private party, there's never any VAT on the car again. In Ireland, there's VAT charged every time it's traded in and re-sold. So, for example, take a E25k car in Ireland and England. After one year, it's valued at E18k nett of VAT. The Irish dealer has to sell it for E22k to make his E18k, while the English dealer can sell it for E18k and keep all the money.

[KevB76]

Irish wages are high because we want lots of money to spend.

..because everything is so ****ing expensive

Saw another 09 reg today in Montpelier, Co.Clare (formerly famous for its topless barmaid).
Halfway through the month and thats only two 09's I've spotted.

[Fr Damo]

Very difficult, and in a way unfair, to compare Irish and English used car prices. In England, once a car is sold to a private party, there's never any VAT on the car again. In Ireland, there's VAT charged every time it's traded in and re-sold. So, for example, take a E25k car in Ireland and England. After one year, it's valued at E18k nett of VAT. The Irish dealer has to sell it for E22k to make his E18k, while the English dealer can sell it for E18k and keep all the money.

Didn't know that, That would explain a fair portion of the differential alight. 09 Mazda 3 today taking it to 4 for the year I think.
We have 6 marques on sale where I come from, one dealer has the three german makes and normally you'd see cars all over town by this stage.

[Fr Damo]

http://www.rte.ie/business/2009/0120/cars.html

60% down in Novemebr and 49% down in December. Can't wait for Jan 09 Figures.

[pineapple stu]

On the side bar there that October sales were down 50%, while European sales were down only 25%.

[pete]

One BMW dealer in Dublin now importing UK used cars so that should end the complaints about people importing them privately. You can see them advertised with UK plates on their site. I presume they sold their Irish stock if importing more cars.

It should be remembered that Jan 08 sales were the highest for any month on records.

Slightly over 4000 D registrations so far according to here. That would include cars registered but sitting in dealer showrooms but I suppose that is the same every year.

[pineapple stu]

Main dealers in Dublin (one BMW dealer) now importing UK used cars so that should end the complaints about people importing them privately.

Sure I told you that ages ago.

Not sure how one BMW dealer equates to "main dealers" though?

Also, don't forget the 4000 09-Ds includes demos. Presumably, there wouldn't have been a huge drop in the number of demos dealerships have had to register, making the drop in actual sales even larger.

[pete]

Sure I told you that ages ago.

I only listen to what I want

Not sure how one BMW dealer equates to "main dealers" though?

True. edited.

Also, don't forget the 4000 09-Ds includes demos. Presumably, there wouldn't have been a huge drop in the number of demos dealerships have had to register, making the drop in actual sales even larger.

[/QUOTE]

True about demos but I suppose more cars might have pre registered in January as busy time but not sold until February? Either way massive drop on the cards this year.

[Dotsy]

Very difficult, and in a way unfair, to compare Irish and English used car prices. In England, once a car is sold to a private party, there's never any VAT on the car again. In Ireland, there's VAT charged every time it's traded in and re-sold. So, for example, take a E25k car in Ireland and England. After one year, it's valued at E18k nett of VAT. The Irish dealer has to sell it for E22k to make his E18k, while the English dealer can sell it for E18k and keep all the money.

The used car I bought recently in the UK cost me £7,500. The invoice I received from the dealer showed Net Price of £6,500 and then the VAT at 15%.

[chopper harris]

I hear main are dealers are getting very worried. The longer people hang onto cars the less likley they are to go back yo a main dealer for the servicing as they will be out of warrenty. The workshops will therefore not be getting main dealer rates for labour and huge margins on OE parts.
The sole trader or family business selling used cars could be one of the growth ares in this recession. Threats V Opportunities.

[pineapple stu]

The used car I bought recently in the UK cost me £7,500. The invoice I received from the dealer showed Net Price of £6,500 and then the VAT at 15%.

Was it under 12000 miles or six months? They're the only criteria that need to be met, AFAIK, aside from being in personal (as opposed to business) ownership throughout.