AN INCREASING number of former employees from dealerships are setting up on their own, with insurance statistics pointing to a rise in the number of new motor trade policies being taken out by sole traders.
According to Suzanne Sheridan, spokeswoman with the Society of the Irish Motor Industry (SIMI), 70 members of the association, both independent dealers and the larger franchises, have closed their garages in the first 11 months of the year, meaning unemployment in the sector has risen to about 11,000 since January 2008. “New car sales were down 62.2 per cent for the year to the end of November. Sales people would have borne the brunt of that, with aftersales not as much,” she said.
With so many out of work, a growing number of skilled car sales people and mechanics are looking to work for themselves.
Canice O’Reilly, director of Campion Insurance, has noted an increase of 15 to 20 per cent in the number of motor trade policies for salesmen and mechanics taking out cover with his firm over the last 12 months.
“This is particularly the case for small sole traders in the motor industry,” he said. “While it’s only anecdotal, we believe it does indicate that many of the former employees of the larger franchised dealerships are now setting up on their own.”
John M Power, a director with Power Insurances, said it’s a definite trend, adding that he has seen an even more significant increase in new policies, as unemployed mechanics are setting up their own service and repair outlets, valeters are setting up valeting units and sales people are going out on their own selling older cars.
“Judging by the feedback from them they’re doing okay,” he said, although he said his firm has seen some cancellations, in addition to monthly direct debits bouncing and policy holders downsizing policies.
Setting up as a sole trader in the motor trade is fairly straightforward, with businesses required to register for VAT and purchase insurance cover. Costs are much less, with no obligation to build sophisticated show rooms. This means the start-ups “have a much better chance of surviving than the bigger guys”, says Power.
The coming weeks will see liquidation sales from some of these “bigger guys”, whose businesses collapsed due to the recession. This Saturday, Merlin Car Auctions will be selling off 120 cars from Limerick Auto X Change and used car stock from the collapsed EP Mooney is expected to go to auction in January.
