Skoda predicts NOx tax will drive new car sales recovery in 2020

Skoda Ireland is predicting that the new NOx emissions tax on new and imported cars will trigger a small recovery in new car sales in the Republic this year.

The NOx tax, which kicked in at a minute past midnight on January 1st, will add only a small amount to the cost of a new, or relatively recent, car but its impact on the cost of an older import will be profound.

Skoda reckons that this difference will see new car sales rise, albeit only very slightly, to 120,000 in 2020.

As an example of the potential for the NOx tax to dissuade Irish car buyers from shopping in the UK second-hand market, Skoda offers this example: “With the introduction of the new Government NOx tax from 1st January; used imports will not be as advantageous as was previous. Take for example: a 2016 Skoda Superb 2.0 TDI 4x4 170bhp; regardless of purchase price and excluding currency fluctuations this vehicle is subject to a further €2,400 NOx tax in addition to vehicle registration tax (VRT). This is likely to increase the cost significantly of importing a used vehicle.”

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Caveats

Now, that comes with a lot of caveats. The NOx tax will affect older models (of at least four years old or more) rather more than newer cars. Of the 103,900 used imports brought into Ireland in 2019, a full 64,000 were four years old or older, so there’s clear potential for a tax-based upset. Then again, simply by switching from diesel to petrol, or better still hybrid, power buyers will be able to cancel out a lot of the extra NOx tax cost, so we shall have to wait and see. It seems likely that the mere fact of an extra tax will be sufficient to put many off, though.

If that is the case, then the values of second-hand cars in Ireland will rise. Clearly, those 64,000 people buying older used cars aren’t all going to suddenly become new car buyers, but buy buying instead from Irish dealers they will increase trade-in values across the board, and that will have an obvious knock-on effect on new car sales.

Commenting on 2019 and beyond, John Donegan, brand director at Skoda Ireland said: "The Skoda brand has enjoyed its most successful year in the Irish market climbing to fifth position with 9,300 vehicles delivered to customers. The introduction of the new Scala and the recent launch of the new Skoda Kamiq provide us with an increased offering for our customers. The industry is changing at a faster pace than ever before. Electrification, digitalisation and alternative mobility solutions will provide challenges and opportunities for our brand in the coming years. I would like to thank our dealer network and customers for their support and custom in 2019 and wish them a prosperous new year."