January has seen a five-fold increase in new car imports. But is it worth the trouble for the private motorist? Catherine Cronin studies the figures
Readers interested in buying new cars abroad write to Motors regularly. Though it's a trend not witnessed here in years, it seems to be changing slightly - as we reported last week, 145 privately imported new cars were registered here in January, a 500 per cent increase on the same month last year.
Many queries relate to buying in Northern Ireland, given the recent fall in car prices there and a stronger euro. Based on readers' letters, we selected three models and contacted approved dealerships in the North.
Most said they get few enquires from private buyers in the Republic though there were one or two exceptions. VRT on new cars here should keep many of us buying at home, though this seems to depend on the model of the car and the exchange rate at the time.
Sterling has strengthened since early January and, at current exchange rates (€1 = £0.678) and prices quoted, importing the likes of an Audi A3 or even a Toyota Avensis doesn't add up. A Toyota salesman in the North reckoned the rate would need to €1/£0.75 before it would even start to make sense. "Come back if that happens and buy big," he advised.
A Mercedes C180 seems fractionally cheaper if imported - about €185 - though the saving is hardly worth the effort. And, if you have to wait for delivery, a slight negative turn in the rate might wipe out the saving, though if the euro climbs again it could be more attractive.
The Mercedes man also argued that the best savings are with the bigger high-spec models. He reported a growing number of queries from the Republic and claims to have sold 12 new cars, mainly larger E-Series diesels, across the border in the past few months. The E320 certainly works out cheaper if imported, though this depends on the discount wrung out of a salesman here.
On the face of it, buying in the North, or even in Britain, seems tempting. According to the European Commission's 2003 survey of 91 European and Japanese models sold in the EU, the North and Britain had the lowest pre-tax prices for the BMW Mini, Citroën Saxo, VW Polo, Saab 93, Mercedes C180, E220 and S350, Opel Signum, Audi A8 and Audi TT, BMW 735i and X5, Volvo S40, S80 and XC90, Citroën C8 and Range Rover. It had the second-lowest pre-tax prices for the Audi A4 and A6, Volvo S40, BMW 520i, Saab 95, Peugeot 807 and Renault Espace. This was mainly due to the fall in sterling which was about 70p to the euro at the time of the survey.
Because of the VRT & VAT here, it's prices in the North relative to ours that matter. The survey indicated that, at pre-tax level, the largest pre-tax price differential at that time was €6,700 for the Audi TT 1.8 225 bhp.
At that time, there were smaller but still significant differences between the Northern and Republic pre-tax prices of the Renault Espace and the soon-to-be-updated Volvo S40, followed by cars such as the BMW 735i, Mercedes C180, Mercedes E220cdi and Renault Clio.
Apart from having the exchange rate on your side, arbitrage auto-style requires research. Prices are the manufacturer's recommended prices which are subject to change. Over the past year, some harmonised their pre-tax prices across the EU as new models were launched. So it's important to look at current exchange rates and obviously dealers' prices and offers for the model and specification of interest, to see if real savings can be made.
New cars bought in the North are registered there and fitted with plates. When imported, the local Vehicle Registration Office (VRO) calculates VRT and re-registers the car. It can provide a VRT estimate in advance based on model and various optional extras. It also collects VAT at 21 per cent of invoice price and checks the vital Certificate of Conformity provided by the dealer proving the car meets European standards.
A car bought in the North - or Britain for that matter - is exclusive of 17.5 per cent VAT if the buyer intends taking it out of the North within two months, signs Form 411 confirming this, and also confirms the intention to pay VAT in the home country.
Buyers should be happy with the dealership and verify the waiting period and the specification of the car. Some equipment may be standard in imported models or the options may be cheaper than in the Republic.
The manufacturer's warranty travels with the car. Though you may end up paying a lower price to start with, dealers in the South say an import is worth slightly less at trade-in than the same car bought here.
Interestingly last year's survey found that Denmark, also outside the euro zone, had the lowest pre-tax prices generally, while Irish pre-tax prices hovered around the average for most cars.
At a pre-tax level, Denmark was cheapest for the Toyota Yaris, Corolla and Avensis, Ford Focus and Mondeo, Nissan Almera, Mazda 2, Audi A4, and Honda Civic, among others.
Buying in a eurozone country means no currency risk but also no benefits when the currency is in your favour. It still involves examining price differentials to see if it's worthwhile importing, and, as in Denmark, finding an authorised dealer abroad prepared to supply a right-hand drive car for which a supplement must be paid. This right-hand supplement can vary between 4 and 10 per cent of the price, according to the EU survey.
Ultimately, the secret to saving by importing is proper research. The key factors are price differentials and currencies. However, the odds are stacked against us in the Republic. If even if you beat the VRT trap, you have to go through the hassle of going overseas, searching for value and then paying the right-hand drive supplement.
The next EU survey of car prices is due to be published in March