A strong euro and last year's change in VRT laws means that it may make sense to go North – to the detriment of southern dealers, writes Paddy Comyn
NORTHERN IRELAND car dealers are targeting Irish customers in an attempt to lure buyers north of the Border to buy their new or used cars.
With the euro currently very strong against the sterling, and with last year’s change to the VRT laws working in favour of some models, in particular with diesel engines, many dealers are offering new cars, as well as used models, at thousands of euro less than they can be offered by already struggling southern dealers.
And in a move previously unseen in this type of transaction, many are offering to take Irish registered trade-ins in part exchange, something which was previously seen as a stumbling block to southern Irish customers hoping to avail of cheaper imported models.
Andy Bruce is operations director of Charles Hurst in Belfast, Northern Ireland’s largest motor retail group, and he says that there has been a concerted effort to lure customers north of the border.
“We have seen business from customers from the Republic of Ireland increase in multiples of where it was before. We had always done a small amount of cross-Border business but, with the exchange rate the way it is, it has increased massively. This is quite a new situation for us, but we reckon that so far 30 per cent of our business is accounted for from the South,” he says.
A series of high-profile print media and radio campaigns by Northern Ireland dealers are highlighting the savings to be made – and dealers such as Charles Hurst will offer a one-stop-shop service to anyone hoping to take advantage of the exchange rates.
For example, the firm’s website advertises a brand new Nissan Qashqai from €21,495, with the VAT and VRT paid, which it claims is €4,450 less than the cheapest price for one from a southern Nissan dealer.
“Eight or nine years ago, the reverse was true and Northern Ireland was flooded with imports from the South. There is no commercial reason someone shouldn’t buy a car from the North. The reality is that most cars are covered by the same European warranty,” adds Bruce.
Michael McCartan is director of JC Campbell in Rostrevor, Co Down, a Honda and Citroën dealership. They have enjoyed a record month in January, thanks to the influx of southern buyers.
“Thirty-five per cent of our business now comes from the South. We sold 73 cars so far this year and 26 of those have gone across the Border. Previously we might have done two or three per month.”
JC Campbell, like many dealers in the North, will now take part-exchange vehicles. “We have traders who will take these cars, so there’s no problem for customers to come with a part-exchange – we’re happy to take it.”
McCartan says that his customers are enjoying huge savings compared with prices in southern Honda dealerships. “We have the new Accord here and we can offer it for much less than main dealers in Dublin – there are even greater savings on used stock.”
On the question of trade-ins, Hurst is also quite clear about whether or not they can take a part-exchange. “One way or another, we will deal with a customer’s part-exchange, whether we sell it back to the southern market or retail it ourselves.
“We will also handle all the paperwork in terms of getting the customer’s purchase prepared for the Irish market – getting the VRT paid and the Irish plates fitted,” says Bruce.
But it’s not only Irish customers being targeted; some Irish dealers are also being offered cheaper UK cars to retail by dealers such as Hurst’s. “Yes, we have been offering cars to southern dealers to retail. It’s not a major part of our business but we’re open about it.”
The Northern Ireland car market in 2008 totalled 56,688 cars, a 17.49 per cent drop on 2007 figures, according to figures provided by the UK’s Society of Motor Manufacturers and Traders (SMMT) – and this new stream of cross-Border business is likely to be welcomed by dealers in the region.
However, with January already proving to be a slow month in terms of retail sales for both new and used cars in the State, the prospect of so many customers heading to the North to avail of the bargains afforded by the weak sterling exchange rate will be a further blow to the Irish motor industry.
Commentators are predicting that new car sales this year could drop to levels last seen in 1995, or less than 100,000 units.