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Importing cars from the UK: ‘There are risks. People get greedy’

Second-hand cars imported from the UK offer savings, but buyers must beware

Conor Pope's face
Conor Pope
Sat Jun 1 2019 - 06:00

While the seemingly endless and increasingly convoluted Brexit Dance being done by our closest neighbour continues to create uncertainty here and there, it has at least simplified the decisions being made by tens of thousands of Irish car buyers.

With the potential savings harder to ignore thanks to sterling’s Brexit-fuelled decline, it is easy to see why Irish drivers in the market for motors have had their heads turned and are heading across the Border and over the Irish Sea in record numbers.

This year the number of second-hand cars motorists here will import from there will overtake the number of new cars bought in the Republic for the first time according to a study from UCD’s Michael Smurfit graduate business school and the Marketing Institute of Ireland.

The taxman – and as a result all of us – are paying a price for all the bargain hunters

The study published this week, predicts that imports will climb to 105,000 this year while new car sales falls to 104,000. Just three years ago new car sales were outstripping the sale of imports at a rate of more than two to one. In 2016, 146,545 new cars were sold in the Republic while the number imported was 72,153.

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Although there is money to be saved by importing, there are also mistakes to be made. Many of those who buy in the UK will end up paying dearly for not doing their homework – or for simply being unlucky.

The taxman – and as a result all of us – are paying a price for all the bargain hunters too.

In percentage terms, it doesn’t make much difference to Revenue if Irish motorists import from the UK or buy in the Republic: the tax rate is the same. But in revenue-income terms, it matters quite a lot, because the prices people are paying for cars they import are lower than the price they would otherwise pay for new cars.

According to the Society of the Irish Motor Industry (Simi) the sale of a new car will generate around €10,000 in tax, falling to €5,000 for a second-hand import because of its lower price and the absence of Vat.

“The latest data represents a significant blow to the Exchequer and the motor industry, as tax revenues from lower sales and dealer profit margins continue to fall,” the author of the Consumer Market Monitor, Prof Mary Lambkin, says. “Here we see Brexit playing out in full Technicolour, but nobody seems to be talking about it.”

Some people are talking about it.

“Investments were made and employment decisions were made on the basis of a new car market in excess of 150,000. Now we’ll have the third year in a row where we’re significantly below that, and that will make investment decisions more difficult in the near future,” says Simi director Brian Cooke.

Ger Toher is chief commercial officer with CarsIreland.ie, a site selling cars from thousands of dealers across the State on any given day.

“With Brexit, the exchange rate could scarcely be more favourable for shoppers from the Republic,” he says. “You can get much the same car for a few thousand euro less. But there is also a much bigger choice in the UK, and traditionally cars there are of a higher spec.”

While the bargains are there, so too are the dangers, warns Toher. “If you buy from a franchise car dealer that comes with certain guarantees. But if you buy off a second-hand dealer or if you buy privately you are taking a really big risk particularly if you have not done due diligence before making the purchase.”

He says an over-eagerness to buy fast is how a lot of Irish motorists come undone.

Big savings

“People put themselves under real pressure to buy because they have travelled over specially, and they don’t want to come home empty-handed. That is not a position you want to be in when you’re buying a car,” he says.

“If you have up to €12,000 to spend you might save €500 on the price but you will get a higher-spec car,” he says. “If you are spending between €12,000 and €20,000 then you might save around €1,500 but once you cross the €20,000 price mark, that’s when the big saving starts coming in – and the more you have to spend the more you can save.”

He points at a Lexus hybrid that might have had a ticket price of €120,000 two or three years ago that is selling second-hand in the Republic for €80,000 now, and for a total price including all of the added taxes of around €70,000 in the UK.

Paul Kenny is a fan of the cross-border deal and the Lexus. He recently imported one from the UK.“I got a late 2012 Lexus from a main dealer and saved at least €3,000 over a similar Irish car,” he says. “The other thing I got was a clean car that was like new with every option and a full dealer service history.”

Generally speaking I prefer to buy in Ireland . . . but I have to pick the cheaper option

Alan Murtagh was in the market for a replacement car last year and had his homework done before travelling to the UK. “I reckon I saved €7,000,” he says. “I bought a 151 E-Class Mercedes for €21,000, including the tax. In the Republic it would have cost me €28,000.”

After doing the deal and while driving to Holyhead from the dealership just outside London, a warning light flashed on the dashboard. “I was terrified I’d made a big mistake but I rang the dealer and he told me to bring it in to a Mercedes dealer in Ireland and said if the problem cost less than €1,000 to sort he’d cover it, and if it was more he’d pay to have it returned to the UK where they would address it.”

It turned out to be a minor problem, but Murtagh was glad he had bought from an established dealer. “This was a big company with a show room the size of Dublin airport. It wasn’t some kind of Arthur Daly place.”

Around the same time, Murtagh’s wife needed a car. “We were within 24 hours of travelling to the UK to buy a Honda Jeep when I saw one selling in Portarlington that had much same price so we went with that.

“Generally speaking I prefer to buy in Ireland but given the choice of spending €28,000 or €21,000 I have to pick cheaper option.”

It is not all plain sailing in Murtagh’s experience. Following his recommendation, a relative bought a car in the UK before Christmas. “It was a 171 Renault from a main dealer and cost around €20,000 but he saved around €3,000 on the price even after he paid the €2,500 VRT [vehicle registration tax],” Murtagh says.

The relative was driving it for a few months when he noticed rust on the bolts holding the driver’s seat to the floor. Alarm bells started ringing. The car was riddled with rust. “He contacted the dealer who initially denied there was a problem but then said bring it back and offered a replacement.”

But when he brought the new car home he had to pay VRT a second time and wait for the garage in the UK to re-register the first car before he could claim the tax back on the original purchases, so for several months he was down almost €3,000.

No one wants to talk about how they were taken for a mug

“There would be little point in me denying that there is value in the UK,” says Toher. “But there are also risks and sometimes I think people get greedy.”

He says: “Given the choice of saving €5,000 and having little or no risk, or saving €8,000 and taking on loads of risk, you would be amazed at how many people will take the risk and then pay the price.”

He says that when things go wrong, people often keep it to themselves. “No one wants to talk about how they were taken for a mug or about how they got it all wrong. Sometimes I worry we are only hearing the good news stories.”