Motor trade calls on Government to ‘protect Irish jobs’ in no-deal Brexit

The total number of imported cars, largely brought in from the UK, is creeping closer and closer to parity with the number of new cars sold in Ireland. While there is not a direct correlation between the buyers in both, the confluence of these figures is giving the umbrella group that represents car dealers and importers, the jitters.

The Society of the Irish Motor Industry (SIMI) is calling on the Government to step up its preparations for a potential no-deal Brexit.

The 99,004 used cars imported into Ireland so far this year is almost entirely fuelled by Brexit. Ever since the 24th of June, 2016, the value of sterling has been on the slide (occasionally on the plummet) and that is opening up vistas of savings for used car buyers.

With the potential to trim between €5,000 and €10,000 off the price of a used car, it’s no wonder many buyers have decided that the cost of the plane and ferry tickets, and the few weeks of red-tape hassle and wrangling with Revenue over a car’s Open Market Selling Price have proved worth the while.

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New car sales currently total 125,701 (again, that’s thanks to Motorcheck and correct to the 12th of December) with the usual peaks and troughs throughout the year. Used car imports by contrast, remain relatively steady throughout the year - generally averaging just over 8,000 cars per month.

No wonder then that SIMI is worried about: “The potential for a devastating impact post-Brexit, similar in scale to the collapse of 2009 which resulted in the market contracting to less than 50 per cent of its current total.” Basically, if sterling remains weak in relation to the euro, and the market for free trade between us and the UK remains open, then it’s likely that in the next two years imported cars could outweigh new car sales in Ireland.”

Considering that, in the years following the 2008 financial crash, 200 car-related companies ceased trading, resulting in 10,000 job losses and the contraction of state revenue by €1 billion, perhaps those worries are well founded. SIMI is now scared that a potential no-deal Brexit could drive the value of sterling down to parity with the euro, or even below. At which point all import bets are off.

WTO rules

There is a potential saviour for the motor trade in a no-deal Brexit of course, and that could be the erection of trade barriers and tariffs between the EU and the UK in line with World Trade Organization (WTO) rules.

There is also a possibility that either country could establish financial or red-tape barriers to the movement of vehicles. If that were to happen, Irish car dealers could potentially benefit (although given that many of the national distribution operations have strong UK links as subsidiaries or are dependent on UK supply for spare parts, perhaps not).

SIMI says it doesn’t want barriers and tariffs claiming that it while “is not trying to create barriers to trade, it is important to recognise that the level of used imports is unnaturally high and is having an impact on widening the cost to trade-up to new or newer cars.

“This is not just an issue for the motor trade. For the State there is a potential reduction of up to €500 Million in Vehicle Registration Tax and VAT revenues, while there is also the environmental challenge, both in terms of air quality and climate change arising from the Republic opening the door for such a flood of older cars: currently over 75 per cent of used imports are diesel vehicles over half of which are four years of age or older.

Brian Cooke, SIMI's director general designate said: "Over the past two years our industry has faced this huge flood of older UK cars that has been hugely damaging to business and will [A HARD BREXIT]make our environmental challenges even more difficult.

“In the event of a no-deal Brexit all of this changes and the State has a responsibility to protect Irish jobs, businesses, tax revenues and our environment. It is a question of survival for so many businesses in the Sector that the State must be Brexit-ready with required legislative provisions already in place in advance of March 29th in the event that we move immediately into no-deal Brexit.”