MICHAEL McALEERanswers all your motoring queries
From L O’Donnell: The Government must carry the can for the collapse in the car market. The changes it made to VRT mean that my car has lost nearly €5,000 according to my dealer. It’s madness. Hard-earned money down the drain.
Many motorists will share your pain. So will many dealers. However, there are several reasons for the collapse in car sales and the demise of dealerships, not least the general economic collapse, so to scapegoat the changes in Vehicle Registration Tax (VRT) back in July last year is a little too simplistic.
It’s true that for lower emission cars, the changes meant a significant drop in many new car prices, with a consequent fall in used prices of these cars. It has meant a €5,000 drop in value for you, but in some instances that fall was as much as €20,000 on the new car price: great news for cash buyers, but not so good for those seeking a trade-in.
Certainly the fall-off in values has upset many customers. They have witnessed a rapid depreciation in their motoring assets. If you are being offered €10,000 less for your used car than you were expecting, you will not be too eager to do a deal.
This is compounded by a natural fall in used values due to a fall-off in sales as people fearful over their jobs hold off making any big purchasing decisions.
Everyone needs to remember the car-buying mantra: cost of change is what’s important. The new car you are hoping to buy should have recorded a similar fall in price so the cost of change should be the same as before the introduction of emissions-based tax. It’s the net difference between the price of the new car and the trade-in.
As for dealers, it was not as if the tax changes came as a great surprise. The Government announced its intention to change the tax system on December 6th, 2006 and invited submissions from interested parties.
It was clear that the system would lower prices of low-emission cars and penalise higher CO2 variants. When the bands were announced on December 5th, 2007, the introduction was further delayed until July 2008 to give dealers the opportunity to adjust stock levels so they were not caught with large numbers of used cars that would be too highly priced against new models.
It might not seem like a big window of opportunity, but January to July is the busiest time of the car-buying year. Certainly from January 2008, dealers were reducing trade-in values given on lower-emission used cars on the basis that they might not be sold prior to the price drop in their new car equivalents.
You can argue that the changes were futile in terms of saving the planet.
You could also argue that VRT at its core is inherently wrong, although its removal would result in an even more devastating impact on used car prices, so you will not see too many industry figures calling for VRT to be scrapped entirely.
From N Kelly: I am working in Beijing but returning to Dublin in autumn. I was hoping to purchase an electric Vespa scooter here and import it to Ireland but I cannot find out whether VRT will be charged. As the scooter only costs €350, I don’t know if it’s worthwhile. Can you help?
There is no VRT charge on electric motorcycles so you will not have any charge in this respect.
In fact, under the change of residency rules, if someone is resident outside the state for 12 months or more and has purchased a vehicle six months before returning, there is no duties or taxes to be paid upon importation. There is one restriction on this: you can’t sell on the vehicle for 12 months after your return to Ireland.
However, as you are buying it just before return, the duties and VAT will be due.
You will have to pay a VAT charge of 12.5 per cent on the bike, along with an import duty of six per cent because it’s coming from outside the EU.
There is another factor you need to consider: these charges are made on the total cost of the bike AND the transport costs back home. So if it costs you €1,000 to bring it home then the VAT and duty charges will be made on €1,350 and not simply the cost of the bike.
Even so, provided the transport costs are relatively low, it still might be a bargain.