THE MOTOR industry – hailed by Government as the one of the beacons of recovery – is showing signs that the worst may be over. New car sales are up 47 per cent at 74,111 to the end of July, partly on the back of 10,000 new cars sold under the scrappage scheme. Scrappage has been a success for the industry in that it removed some qualms motorists may have had about buying a new car in the midst of a recession, while also benefitting the exchequer: €470 million in VAT and vehicle registration tax (VRT) on new cars this year, up €70 million on 2009, according to industry figures.
It has also led to a 12 per cent drop in the carbon emissions of new cars taking to our roads compared to last year. This reduction is not simply down to scrappage, however. There has been a notable shift in consumer attitudes. Emissions levels now dominate the motoring agenda, both here and internationally, driven by an industry eager to reduce its role as one of the pariahs of the environmental debate.
The changing approach of Irish motorists is most evident on our roads with a dramatic fall in the number of new SUVs and a noticeable growth in small car sales. Credit here should go to the Government for its introduction of the emissions-based tax system in July 2008. At the time many in the industry baulked at the changes but it has had a seismic impact on buyer behaviour. Of the new cars sold this year, 77 per cent have emissions of less than 141g/km. In the months prior to the tax system change, the majority had emissions of 155g/km or more.
The problem for a Government eager to bolster its diminishing finances is that the success of the system in persuading buyers to opt for lower emission cars is leading to a significant drop in tax revenue. Some 33 per cent of new cars sold this year carry an annual motor tax charge of just €104 while for another 44 per cent, the rate is €156. Against this backdrop, motorists and the industry will fear that a revision – or even another overhaul – of the current tax regime may prove too tempting for the Government to ignore. The negative response yesterday to a reported crackdown on the private use of commercial vehicles highlights public sensitivity to any perceived changes to the motor tax system.
Although the industry is campaigning for an extension of the scrappage scheme and a review of the car registration system, buyers have demonstrated that taxation is what really influences their behaviour. This should be the primary issue for the industry, not number plates. It is clearly the main focus of motorists.