Many Irish car buyers are being left in limbo this January as delivery times for new cars, especially electric vehicles, stretch towards the horizon, while final prices are often not being nailed down until much closer to that elusive delivery date.
Traditionally, January is the busiest month for new car sales in the State, and between the turn of the new year and April half of all new cars sold in the year are generally ordered and registered.
Unfortunately for 2023′s car-hungry consumers, we’ve arrived at this busiest month with some brands in disarray over deliveries and pricing.
One customer of a premium car brand – who asked us not to name names, as he wants to stay on good relations with his dealer – originally ordered a car quoted as having a four-month wait, which expanded rapidly to 14 months, and which was finally cancelled altogether. He eventually bought a second-hand car instead. That has proved to be fine for him, but the rising costs, and restricted supply, of used cars amount to another tale of woe yet to inflict its full pain on Irish consumers. Brexit has already crippled the supply of used cars from the UK.
How has it all come to this? Many in the car trade have made the point that Ireland is a small market at the end of a long supply chain – a supply chain replete with pinch points and constrictions. The Irish car trade is still feeling the dread effects of Covid, and the ongoing global shortage of computer chips is leaving Irish car buyers feeling the cold shoulder, especially if they want a new electric car.
Indeed, not only are the cars scarce and delivery times lengthy, but in many cases the final price that you’ll pay for a new car cannot be guaranteed until the car arrives in the State. The current situation is not only leaving consumers distinctly unhappy but also upending the industry’s traditional “happy time”, and that could have significant consequences for future sales and resale values.
What is the being done about it? Little enough, it seems. Several distributors contacted by The Irish Times were asked to give a price and delivery date for high-profile models just introduced to the market. Significantly, several said that, as of last week, they could not commit to either a price list or a delivery time for these new EVs.
The Society of the Irish Motor Industry is the umbrella group that represents motor manufacturers, importers, and dealers. Simi’s director general, Brian Cooke, told The Irish Times: “While there does appear to be some improvement in the supply of electric vehicles in 2023, as we do not manufacture vehicles in Ireland, Irish retailers have no control over production or delivery times.”
The Irish Times asked Simi what’s being done to protect the interests of consumers in this period. The answer seems to be not very much.
“With regards to the retail price of a vehicle, there are number of reasons prices of cars can change from when they were ordered to when they are delivered. This issue heightened during Covid, with factory lockdowns and the shortage of semiconductors. While we are seeing improvement in the supply of semiconductors, and with China taking a different approach to Covid meaning production shutdowns are less likely, there may still be a time lag before this fully feeds into production and supply of new vehicles.
“In addition we still have the war in Ukraine, which is impacting on some component supplies, while there is large volatility in both fuel and energy costs which feeds into the cost of manufacturing. In the context of Ireland, any price increases also attract increased taxation, both VAT and VRT. In addition, in the event a customer orders a new EV for delivery in the second half of this year, we still don’t know what the SEAI grant system will be,” said Cooke.
This refrain – deflecting blame on to the Government – is an increasingly familiar one amid the industry. James McCarthy, group chief executive of Nissan Ireland, told The Irish Times: “In the overall scheme of things, Ireland’s EV target is minuscule in relation to global car production. Production and supply of EVs to meet an Irish target is not a problem. The real challenge is to convince manufacturers that sufficient demand exists in Ireland and that it is profitable enough for them to prioritise Ireland for supply. The moving target EV is undermining public confidence in Ireland’s EV strategy.”
Similarly, Stephen Gleeson, managing director of Hyundai Ireland, said: “Regarding your question of ‘how have we found ourselves in this mess’, I would say that we will possibly be the largest EV seller in January, so I don’t believe we are in a ‘mess’ – I cannot speak for others, of course – against a background of a shortage of supply worldwide of EVs. Ireland is not unique at all in this regard. What would help the industry in Ireland would be clarity as regards grants for 2024 as early as possible. We are now ordering cars for 2024 and have no guidance as to what level or where the grants will kick in. This makes ordering EVs in the correct specification a game of chance and guesswork, not the situation for planning.”
Whatever about the Government’s role in this situation, it’s a sad state of affairs that several big players in an industry which prides itself on just-in-time production techniques and lauds its supply-chain management cannot provide either cars or definitive pricing to customers in what should be the busiest selling period of the year. Supply-chain failures – which are not impacting other tech sectors as severely – would seem to be down to the car firms, not the Government.
While lengthy waiting times for one’s new car might be considered a ‘first-world problem’, there is a bigger issue for consumers, which is the price they will finally pay when an order is fulfilled. Many buyers, at the point of ordering, are being told that they won’t actually know the final price of their car until it arrives in the country, and that price could be significantly higher than they one they were expecting.
Quite apart from the dread effects of inflation, the issue lies with spiking costs for raw materials and the price of shipping. For instance, the price of lithium, vital for making electric-car batteries, has increased fourfold in the past five years, and although it has retreated slightly from a peak seen last November, it’s still savagely expensive compared with what it cost in 2020. Then there are the ongoing issues with freight costs and capacity.
Little wonder that car dealers are so reluctant to name a final price – they’re being told, from further up the car supply chain, to hedge all bets until the final vehicle arrives. Which doesn’t do much from a consumer protection point of view.
While some brands have confirmed that they will lock in the price of a new car when a customer puts down a deposit, in other cases, dealers are being instructed not to confirm the final price of a car until it physically lands in the country, to allow for any upward volatility in manufacturing costs. Not a great position for any consumer to be in. Imagine filling your trolley with groceries only to be told that the final price will be calculated once you’ve got home and filled your fridge.
Some brands are even resorting to extreme measures – Kia, which has risen high in the Irish best-sellers list on the back of introducing a series of successful electric models, is also quoting a relatively brief delivery time, saying that it takes about six weeks to make and ship one of its current EV range from factories in Korea.
However, it too is being bitten by supply shortages, and so it has instigated a system with its dealers that can best be described as a form of rationing. “For us we took a slightly different approach this year as we did have longer-than-expected delays last year,” said Cathal Kealy, Kia Ireland’s head of marketing and PR. “This year we gave each dealer an allocation by model of their sales and customer orders were mapped to their allocation so at all times the dealer knew when they would be able to supply a car. This has worked well for us so far; however, as you can imagine, it means that there’s a simple answer [to the supply issues]. One dealer may, for example, be sold out of their first-quarter allocation on one model, whereas another dealer may still have supply. As a result we are encouraging our customers to engage with the dealer network for accurate delivery times.” Or, in other words, shop around and be prepared to travel.
Tesla price cuts
Prices will be coming under further pressure this year. Tesla has put the electric car cat firmly into the flock of panicking pigeons by announcing significant price reductions for its most popular models – the Model 3 and Model Y – at a time when the headline-grabbing electric car maker is said to be facing falling demand for its products. A Model 3 saloon, which had seen its price inflate significantly in the past 18 months, is now cheaper to buy than it was in 2019, a fact which may leave rival car makers out in the cold (and never mind the potentially disastrous effects on resale value, which may, in fairness, be compensated for by a vastly overheated used-car market). Beyond Tesla, the big Chinese car makers are now starting to bring significant new models to the market, such as the MG 4 and the Ora Funky Cat, both of which undercut their big European, Japanese and Korean rivals on price.
Car component supplier Forvia has estimated that Chinese car makers – thanks to lower research and development costs, lower levels of capital spending and lower labour costs – have a €10,000 price advantage baked in relative to their European rivals. It has led to big European car makers, especially Stellantis Group (which includes Peugeot, Citroen, Opel, Fiat and Jeep) to call for the European Union to follow the lead of the United States and impose higher import tariffs on Chinese cars. Currently, the EU charges 10 per cent on all Chinese car imports, but China itself charges between 15 and 25 per cent on European cars sold there.
None of which is much help to Irish consumers currently trying to buy a car, and buy it at the price originally quoted. Car importers here are, uniformly, praising their dealer networks for their hard work during their period, and their efforts to keep frustrated customers happy while they wait and wonder. The real wonder is how long that forbearance may last among consumers.