Government revenue on new-car sales collapses as dealerships close and buyers opt for smaller, cleaner cars, writes Michael McAleerMotoring Editor
GOVERNMENT revenue from Vehicle Registration Tax (VRT) fell to just €30 million last month, down from €213.5 million in January 2008, according to the Department of Finance.
It represents a substantial portion of the fall in overall tax revenue so far this year. Tax receipts worth €3.7 billion were collected in January 2009, down €900 million on the €4.6 billion collected in the same month in 2008. A spokeswoman for the Department of Finance said that despite the fall in VRT revenue, there are no plans at present to change the current tax rates or bands introduced last July.
Meanwhile, Chapmans, a well-known Land Rover and Volvo retailer in Kildare, became the latest car dealership to go into receivership. It is the third major motor dealership to close in as many weeks.
New registrations dropped by 66.5 per cent in January, while new figures show that buyers are opting for environmentally cleaner, smaller cars. There has been a marked rise in the sale of small-engined cars that qualify for the lowest rate of VRT.
Registrations of cars that emit less than 121g/km of CO2 – which qualify for a rate of 14 per cent VRT and annual motor tax of €104 – rose by 114 per cent last month compared to January 2008. Cars that qualify for Band B were down just 13 per cent. In contrast, sales of cars in all the higher emissions bands were down by between 70 per cent and 93.4 per cent.
While the change in the type of new cars sold can be partly attributed to buyers seeking to spend less due to the recession, there is also a belief within the industry that the move to a seven-band emissions-based tax system last July has had a significant impact on buyer behaviour.
Alan Nolan, director general for the Society of the Irish Motor Industry (SIMI), said: “It has been obvious since last July that if you actually give consumers an incentive to be more environmentally friendly rather than threaten them with punishment, they will make sound environmental choices.
“Our concern would be that in the current economic climate fewer people are changing their older cars for new, cleaner vehicles and some of the benefits from the new tax system will be lost if the turnover of older cars to new isn’t continued.”
With a fall in tourist numbers expected this year, the number of cars being registered by hire companies has also fallen. Hire-drive registrations are down 74.5 per cent so far this year, with just 416 new cars entering that market. Fiat tops the list of rental registrations with 114 cars, or 43 per cent of its overall registrations this year, followed by Hyundai, Opel and Alfa Romeo.
The best-selling car on the market last month was Ford’s new Fiesta, with 1,041 registrations. It was followed by the Ford Focus (956), Nissan Qashqai (879), and Toyota’s Avensis (744) and Corolla (534).
At the premium end of the market, sales of luxury cars have been badly hit. Just five Mercedes S-Class vehicles were registered in January compared to 106 for the same month last year, 11 Range Rovers compared to 273 in January 2008, and nine Audi Q7 SUVs compared with 94 in the same period last year.
The Irish motor industry has called for a new scrappage scheme for cars of 10 years or older as part of a rescue plan in the midst of falling sales and the threat of further job losses and dealer closures.