One thousand jobs lost in sector since June, writes MICHAEL MCALEER, Motoring Editor
THE COLLAPSE of the EP Mooney Group brings the jobs lost in the motor industry in southwest Dublin alone to more than 170 in less than three weeks.
Earlier this month Belgard Motors closed with the loss of 82 jobs. It is estimated that up to 1,000 jobs have been lost in the motor retail sector since June.
With the new car market down by 62 per cent to just 57,000 this year and expectations that next year will be no better, many see further closures as inevitable.
The recession has undoubtedly hit the industry hard. Many dealers invested heavily in new facilities – often at the behest of manufacturers.
New car sales carry relatively low margins, compensated for by higher volumes. The business plan required the availability of working capital finance and a steady growth in sales.
Unfortunately the market collapsed. Changes to the tax system in the December 2007 Budget initially left many dealers with heavily discounted models that carried punitive tax. A weaker sterling saw buyers heading North and the influx of cheaper used cars from there devalued cars in this market. Dealers saw thousands of euros fall off the value of the cars on their forecourts.
Finally, the banking crisis meant access to working capital has become increasingly difficult. At this time of year, when new car sales have virtually stopped, cashflow issues have compounded the problems.
Many distributors reckon the market cannot continue to support the Irish dealer network at its present scale. Most of the distributors contacted yesterday said they expect to reduce the number of franchised dealers in the next 18 months. One distributor, whose brand was sold through EP Mooney, said: “Sadly, the industry is changing and for most brands Dublin is really only big enough for two dealerships holding their franchise.”
Last year, Paraic Mooney warned that the economy was “being talked into recession”. At the time his firm employed nearly 250 staff and recorded sales of 400 new cars that June. Overall new car sales in the State totalled 151,607, which was 19 per cent down on 2007.
In March, Mooney wrote an open letter to the Taoiseach warning of the imminent collapse of the Irish motor industry and calling on him to introduce a scrappage scheme “with some urgency” alongside changes to the VAT system for dealers. He signed off: “This is a plea for survival, it’s time for brave action.”
