Car dealers under pressure: ‘Give us more regulations on imports’

In its pre-budget submission, the Society of the Irish Motor Industry provided a list, showing how the 10 per cent overall decline in new car sales this year has spread out across the 26 counties.

A handful of counties, Dublin and Waterford notably, have bucked the trend, and seen falls of 5.21 per cent and 7.02 per cent respectively. Others, though, are doing far, far worse. Notably, Donegal, which with a 16.43 per cent fall in sales from 2016 to 2017, is the third-worst performing county (behind only Mayo and Offaly) when it comes to new car sales this year.

It's not hard to see nor imagine why. Perched, Alaska-like up in the north west, Donegal has since time immemorial been a different place to the rest of Ireland, and since 1922 has been as closely connected to Northern Ireland as to the Republic. In a Brexit-led age of tumbling Sterling values and towering increases in imported cars, this connection has unpleasant consequences. "We're on the Border, right on the Border here, so anyone heading down to Dublin has to pass through the North, really," says Kerrill O'Donnell, dealer principal with S&R Motors, a Volkswagen main dealer based in Donegal town. "So dealers in the North are as valid and easy an option for customers in the area as we are. Thankfully, we do have solid, loyal customers, but there are plenty who are voting with the feet and their wallets."

The dramatic fall-off in the value of Sterling relative to the Euro has triggered a tsunami of imported second-hand cars from the UK. At the time of writing, a Euro will buy you 89p Sterling, and the most recent peak was 92p at the end of August. Many are the predictions that Sterling and Euro will cross into parity some time in 2018, but that’s probably irrelevant – most industry watchers agree that once the rate rises close to or above 80p, that’s the trigger for imports.

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“The media has a big part to play in all of this,” says O’Donnell. “Every time Sterling drops, you see a slew of features online, in print, on the radio all saying people should be shopping in the North or the rest of the UK. But when Sterling recovers, you don’t see anything about how Irish dealers might be able to offer better value.” The issue clearly rankles, and O’Donnell laments that many are simply not bothering to so much as to ask what he, and others, can actually offer them. “People are not even checking our prices, so they might be saving, say, €1,000 to €1,500 on a car being imported, but we can offer them a 1.9 per cent used-car finance rate, and they’ll easily lose that €1,500 again to interest. I heard from a colleague the other day that he had seen a buyer with an imported car come into the local NCT centre to have the car inspected for re-registration, and they hadn’t even bothered to check beforehand how much VRT (Vehicle Registrations Tax) they might have to pay.”

One issue, constantly flagged up by Irish dealers, is the quality of the imported cars coming in. The received wisdom is that UK cars are better-kept, better-equipped, and generally in better condition than local stock, but Laurence Harrigan, of Highland Motors in Muff, says that's simply not the case. "A lot of the cars that are coming in have to be questioned as well, it mightn't be the best of stuff. We feel that England is trying to dump a lot of its cars, older stuff, older diesels, onto us and we're kind of taking them in hand on heart," he told The Irish Times. "Obviously, you can't say that about everything, but a lot of the stuff that we would see coming into our forecourt will have some form of history on it. People need to be aware that they need to check the history of cars, but they don't seem really to be switched on to that. They're seeing the bargains, and then it's only after the bargain's got that they realise that it was a bargain because of an issue."

O’Donnell agrees with the concerns over the quality of imported cars. “We’ve seen numerous instances of people importing a car and then, a few months down the line, bringing it into us to have some issue looked at and it turns out that the car has been clocked, or damaged, or even crashed.”

With a recovery in the price of Sterling not likely in the immediate terms, dealers are now starting to call for some sort of tighter regulation on the importing of cars from the UK. “I think the imports thing needs to be reviewed at least, and there needs to be more protection put in there for the consumer, because we see an awful lot of stuff coming across that’s been clocked, and it’s only when the stuff comes in that they realise it. But again, I think to take a car from the UK into Ireland is pretty simple but to go the other way is a minefield,” says Harrigan. “Obviously, it is a situation that we will have to get used to and live out. I don’t see any major changes coming. But as I said, I do feel that a lot of the UK stuff is just being dumped into Ireland, whereas if you go an take a car across into England, there are a lot more hurdles you have to jump over, whereas we just welcome the cars in here with open arms.”

“The problem is a lack of regulation,” says O’Donnell. “There are lots of regulations on us in the motor industry, but very few on imported cars. Put it this way, if you went and tried to buy €30,000 worth of cigarettes or alcohol and tried to bring it all in here, there might be a problem. But a €30,000 car? A big issue is that the cars are simply not checked properly, in a lot of cases, and we really need some more regulations, at least to make sure that these cars are roadworthy.”

Both men conceded that, with imported cars being a useful source of revenue for the Exchequer, there was little or no impetus on the Government to make any major changes. “There’s more than 50 years of experience in the motor trade in here,” said O’Donnell, “and in that time, I’ve seen plenty of other industries get Government help and backing, but never for the motor trade. And it’s not just the Sterling thing on its own – there hasn’t been the economic recovery in Donegal, or Cavan, or Monaghan or other Border communities that there has been in, say, Cork, or Dublin, or Galway. People are more price sensitive here, and their take-home pay is lower. All of which drives them across the Border.”

There is, of course, a significant downside for the consumer in all of this. While it’s fine to go bargain-hunting in Northern Ireland or in the rest of the UK, the rise in imports (which stands at 72,000 cars at the time of writing, a 37 per cent increase on 2016) has put enormous pressure on used-car prices in Ireland. Many dealers are reporting that they’ve had to reduce the prices of their used stock by 10-15 per cent, which sounds good, but then one must remember that also means that those trading-in are going to be getting lower and lower bids for their existing cars.

With Theresa May’s speech and her falling “F”, and Boris Johnson’s politicking, at the Conservative Party conference hardly inspiring any confidence in the UK’s ability to manage or cope with Brexit, the value of Sterling is likely to come under ever-greater pressure. Which means commensurate pressure on the car dealers of the Border counties, and beyond.