Motor trade seeks €2,000 ‘swappage’ tax incentive to boost sales

The motor trade is seeking a new incentive scheme, based on trade-ins rather than scrapped cars, to boost new-car sales next year. Work is under way on a submission to the Government seeking the introduction of a “swappage scheme”, in which motorists who trade in cars more than five years old would receive rebates of the order of €2,000 on the vehicle-registration tax due on the new cars.

The aim, according to Alan Nolan, director general of the Society of the Irish Motor Industry, is to kick-start new-car sales and so increase the Government's tax income.

“The Government’s tax take from the motor sector in 2007 was close to €1.8 billion. This has slipped to about €500 million. Meanwhile, employment in the sector has fallen from 50,000 to roughly 34,000. By boosting the sale of new cars we not only reduce the average age of the fleet but increase the tax take for the Government and secure thousands of jobs,” he says.

The motor trade doesn’t expect 132 registration plates to boost new-car sales significantly this year, with a pick-up next month unlikely to recoup the 14.5 per cent drop in the market so far this year. In the first five months of the year 51,560 vehicles were registered, compared with 60,297 in the same period last year.

“While we are relatively upbeat that the new system will pick up sales, it needs to be seen in the context of what has been a very poor year for the motor trade,” Nolan says.

Under the registration system introduced at the start of this year, an extra digit is added to the year of registration on the number plate, with a 1 showing the car was registered in the first six months and a 2 showing it was registered in the second. The 132 plate will feature on cars registered from next month; the plate will change to 141 next January, 142 next July, and so on.

The aim is to spread new-car sales over the year, doing away with the start-of-year surge that has defined the market in the past. Previously more a third of new-car sales took place in the first three months of the year. Dealers complained that staff were over-run at peak times, and unable to offer customers the quality of service manufacturers want.

Most expect the new system will take time to settle in. Paddy Comyn, spokesman for the Volkswagen group in Ireland, says the dual-registration system presents a lot of uncertainty. "The industry sought it to remove the handicap of front-loading sales in all in the first part of the year but not as a solution to the industry's problems. No one really knows what is going to happen."

According to Eddie Murphy, managing director and chairman of Ford Ireland, the increase in sales this July compared with the same month last year is likely to be about 2,000 new cars, which will not be enough to recoup the downturn in sales so far this year. He also estimates that overall sales in 2013 will be 70,000 new cars, down nearly 12 per cent on last year.

As for the registration change, he says many people misunderstand the new system. “Unfortunately there is a perception that the change is just to combat the ‘13’ phenomenon” – where buyers may be superstitious about the number – “rather than a realisation that the change is permanent.”