As the country braces itself for a harsh winter, the motor industry is slashing prices like crazy, writes PADDY COMYN
THE STICKER price on Irish cars has never been so attractive yet so grossly out of reach to most buyers.
The cold winter wind is biting hard in the car market in Ireland, with the drop in new car sales devastating the motor industry. Like building and banking, the car industry believed the good times would never end. And who could have blamed them? They had enjoyed steady growth in Ireland from the late 1990s, with spectacularly good years in 2000 and 2007.
The situation in which the car market now finds itself is not surprising given the nature of the industry and the swiftness with which the house of cards came crashing down. The casualties have been severe. The Tom Hogan Group, Belgard Motors, Drive in Cork and the collapse of Gallic Distributors are just some of the larger casualties that added up to big job losses.
In 2007 buyers went into showrooms with wild abandon. Many paid list price just to have a car quickly and some, if we believe the rumours, spent a little over the list price just to make sure their space in the golf club car park was occupied by the latest Range Rover or Mercedes-Benz.
Now, at the end of 2009, all bets are off. We are in full-scale survival mode and the Irish motor industry has had to respond. The result is the pre-January sales.
In the past number of weeks there have been announcements from virtually all the major manufacturers of further price drops to their already bargain basement models. The price list for new cars today looks remarkably different to one from pre-July 2008. With the change to the VRT and road tax system, cars naturally became cheaper, with up to €10,000 off the price of some models as we moved from a tax based on engine size to one based on CO2 emissions. But a year and a half later these cars are being reduced even further.
Toyota has just announced price reductions of €2,170 to its Corolla petrol models. Back in July 2008 the price of the Corolla petrol went up by €545 so this is a significant cut.
In July 2008 the Avensis petrol models went up by €1,085, while the diesel models dropped by €3,525; the new Avensis has seen a price decrease of over €1,300 for both petrol and diesel engines.
Toyota’s reductions in price in relation to the Corolla petrol could be described as tactical stock clearing, offering big incentives on what is proving to be a pretty unwanted model. Lexus announced price reductions to its model range too, with discounts of €2,185 to €25,760 on models including the IS220d, GS450H and LS600H.
Lexus has been hit badly this year, with sales of just 212 units up to the end of October. This compared to 1,585 units in the same period in 2007. Lexus now has a market share of just 0.37 per cent.
This reduction in Lexus pricing follows significant cuts from marques like BMW and Audi in recent weeks. BMW slashed its pricing on new models such as the X1 and 5-Series GT. Combined with the dramatic cuts applied to most of the BMW range in July 2008 and the drastic change in the prices of Mercedes-Benz models, Irish prices are starting to resemble Germany when it comes to the executive car segment.
It is ironic that mid-sized executive cars now cost as much we used to spend on small SUVs. Price reductions to brands such as Land Rover are unlikely to attract buyers to a virtually dead and, by now irrelevant, large-SUV segment.
Volkswagen last Friday announced details of its 6.75 per cent finance offer from Volkswagen Bank but also announced price and specification changes too. For example, the prices of Golf models have been reduced by 10 per cent and ESP (stability control) has been added across the range.
Prices for the Passat have fallen by 11 per cent, while the Comfortline and Highline models also benefit from up to €1,500 additional specification.
Volkswagen has also released details of various pack options offering added value in terms of specification.
Ford has been less aggressive with its price cuts than some of its major rivals and aside from €5,000 off the slow-selling Kuga SUV and €3,000 off the Ford Ranger, the car maker has focused on giving value to their Focus and Mondeo models. The Ford Focus Style 1.6TDCi 90PS engine comes with air conditioning, alloys, fogs and Bluetooth voice control as standard for €21,750. The entry-level Mondeo Style 1.8 TDCi diesel, starting at €26,695, has been given improved specification to include alloys, front fogs and Bluetooth as standard; these features were available as options for €1,130.
Kia has announced generous price reductions off its Picanto, Rio and Cee’d models. Picanto has been reduced by €1,850, Rio by €1,500 and Cee’d models by €2,000. These are huge price reductions on what were already inexpensive cars. The Kia Cee’d diesel had come down in price by €1,850 in July 2008.
This of course raises the question: could Kia and other manufacturers not always have offered cars so cheaply?
“Kia Motors Ireland is funding these price reductions out of our normal marketing support budgets,” says Kia Ireland’s managing director James Brooks. “In the past we have used mechanisms such as trade-in top-ups and finance offers to bridge the gap between residuals and new car prices. We feel, however, that consumers now prefer the clarity and transparency of a simple price reduction rather than promotional offers.”
Peugeot has announced similar prices reductions this week:prices for the 207 have dropped by an average of €845 and by €2,330 for the 308 range (petrol and diesel models). There is a specification upgrade too, with new SE models featuring air conditioning, alloys, six airbags and front fog light.
Peugeot is also offering a €500 eco bonus on all models ordered up to the end of December 2009.
Des Cannon, national sales manager for Peugeot in Ireland, says: “In response to massive commercial pressures from imports, the economic downturn and thousands of job losses in the Irish motor industry, all manufacturers have had to realign their pricing to try and kick-start January 2010 motor sales.
“We have worked very closely with Automobiles Peugeot with regard to giving the customer the very best value-for-money offering possible.”