Irish dealers are fighting back against rising used car imports, writes Paddy Comyn
LEADING FIGURES in the Irish car industry are fighting against the increased focus by car dealers in the North on the market in the South and are calling for Government intervention to re-awaken the car market.
Provisional figures for January 2009 indicate that, for the first 20 days of 2009, there has been a 67 per cent reduction in sales, with some brands showing a 96 per cent reduction compared with last year.
A general slowdown in the economy is blamed, along with the lack of consumer confidence that inevitably follows this, as well as poor availability of credit. There has also been increased import activity, as buyers from the State head to the UK and Northern Ireland. Some Northern Ireland dealers are reporting that up to 35 per cent of their retail business comes from Southern Ireland and are now actively taking part-exchange vehicles from the State.
Many within the car industry here are claiming that bargain hunters heading to Northern Ireland in search of savings are not getting the full picture.
According to Gabriel Keane, chief executive of the Windsor Motor Group, one of the Republic’s largest car retailers: “It is not just the headline price that needs to be looked at, but the cost to change – and a southern dealer is likely to give you more for a southern car than a northern dealer will.
“Customers need to be clear on things like the spec of the car and the name of the car and you could end up buying a car in the UK that isn’t retailed here. That could negatively affect the residuals of the car.
“Often a UK car with a different mileometer can be more difficult to resale and this can make dealers nervous.”
According to Keane, the main drawback of buying in the North occurs when the car breaks down. “If there is a problem with the car, we will supply a customer with a loan car and they are a priority to us. If you encounter quite a serious problem with a UK dealer, it can be a bit harder to fight your case.”
A spokesperson for Nissan Europe, when asked about warranty, told The Irish Times that “under European law, a manufacturer is obliged to honour its warranty obligations in all EU countries, provided the car is of European specification. We would always recommend anybody who buys their Nissan in one country and moves it or uses it or registers it in another country to contact Nissan in that country to tell them so that they have it on their system and it could reduce any confusion when they visit their dealer.”
On the issue of finance, Keane says that it isn’t accurate to assume that finance isn’t available to potential car customers.
“In today’s market, getting finance is more difficult, but we are arranging finance for most of our customers coming in. If you are dealing with your dealer in the south they can arrange car finance for you, which is something a dealer in the north won’t be in the position to do.”
Another dealer that has seen his business affected by both the downturn to the economy and by the increased import activity is John McCabe of McCabe’s in Ardee. McCabe’s has been a Toyota dealer since the early 1970s and, situated about 20 minutes from the Border, they have seen some of their customers lured by the promise of cheaper cars in Northern Ireland.
But, standing in his vast, spotlessly clean showroom on a Saturday morning, McCabe says customers should think twice about going North for purchase.
“A man I have dealt with for a long number of years came into me and said: ‘John, I’m just letting you know that I am heading up the road.’ He has seen a 2005 Corolla and was heading up to buy it. Well, I asked him to have a look here first and, as it turned out, I had three cars for €1,500 less – he did the deal there and then.”
While that particular customer had called into the local dealership, there are many that don’t and, according to McCabe, these people are missing out in many cases. He showed us two examples of cars on his forecourt; a Yaris model and a Ford Focus, which he says, could not be beaten in price by Northern dealers.
“We have seen customers coming in with UK cars with faulty mileage and major problems. We tend not to retail UK cars, and if they come in we tend to send them off to the trade, as we can’t quite stand over some of the examples out there.”
According to Cartell.ie, an internet site specialising in checking the history of cars, they estimate at least 18.5 per cent of vehicles imported from the UK are clocked.
Despite the claims of better deals in here than in the UK or the North, Alan Nolan, director general of the Society of the Irish Motor Industry (SIMI) says the Irish motor industry needs much-needed boost from Government.
“We would like to see the introduction of a scrappage scheme. And from our point of view, if there is not a move on this within a matter of weeks the year will be gone; March 1st would be the latest that this could be introduced to make any difference, but we would prefer it immediately.
“It might not have the runaway effect that the previous scrappage scheme would bring, but it does have the capacity to boost business and increase customer flow to dealerships,” says Nolan.
He estimates that the shortfall in Government tax revenue from the motor industry in the current situation could be over €1 billion this year.
“Revenue take on VAT and Vehicle Registration Tax (VRT) looks likely to have drifted from €2 billion in 2007 to somewhere close to €1.5 billion in 2008 and, looking at this year, it looks set to be below €1 billion. How far below depends on what action is taken.”
Some within the industry, such as Toyota Ireland’s managing director Dave Shannon, have suggested that a reduction in the VAT on cars to match Britain’s 15 per cent rate would be beneficial, a sentiment echoed by McCabe. On this issue Nolan is less hopeful. “There are European requirements on VAT so that is not so straightforward.”
According to the SIMI, in the last quarter of 2008, the motor industry lost 3,000 jobs.
“When put in the context of the likes of Dell, it’s a huge employment loss. When you see job losses coming up as they did at what is supposed to be peak buying time it is a sign that that something needs to be done.”
There are real fears that the situation will worsen if there isn’t a fast solution to the poor start to the year. Dealers are offering heavy discounts on the sticker price of their cars – it seems that all the Irish customers need to do is ask. And, while there is a call on Government to intervene to boost this industry, there is also the need for dealers to urgently show their best hand.
Case in point: BMW's pragmatic approach to imports
BMW IRELAND has taken a pragmatic approach to the problem of used imports from the UK. It is importing selected used models from the UK in order to avail of weak sterling and to pass on savings to Irish customers.
Speaking to The Irish Times, Michael Nugent, sales director of BMW Ireland, said: “We are pointing out to potential customers that you need not go to the UK to avail of the currency situation as we have access to a fleet of used cars from there.”
Rather than putting out the message that importing from the UK is bad and that there may be issues down the line, the brand is taking a realistic stance. “There are two choices at the moment – one is that you fight it like that or you decide that this is the new game and embrace it. We are very much taking the latter view.
“When you look at the amount of BMWs that have been imported over the last number of years, we take the view that we should make the best of the business. Customers want to buy a car from a dealer, they want to trade in and they want the warranty but are looking at the value available in the UK and hopefully this will provide an answer,” says Nugent.
The BMW fleet of imports comprises the vast UK fleet of demo, staff and fleet BMWs, all of which have remained within the BMW system and this means that they can stand over the cars and provide full 12-month warranties and pass on the savings to the customer.
“Our cars have the same specification apart from the speedometer, which is in miles, and if people want that changed we will of course do it,” says Nugent.