TAX INCOME from the sale of new cars fell by €309.2 million in January and February compared to the same period last year.
In the first two months of the year – normally the busiest for new car sales – just €108.2 million was raised in Vehicle Registration Tax compared to €417.4 million over the same period in 2008. The 74 per cent drop in VRT returns reflects not only the dramatic slump in sales this year – down 65.3 per cent – but also signals a trend towards lower-emissions and smaller cars, on which lower tax is paid.
The fall in sales has already claimed several well-known dealerships in recent weeks. Pat Keogh Motors, the BMW dealership in Limerick, closed last week with the loss of 45 jobs.
Paraic Mooney, managing director of the EP Mooney dealer network and a former president of the Society for the Irish Motor Industry (SIMI) has warned that worse is to come unless the Government takes action.
In e-mails sent to the Taoiseach and Minister for Finance recently, Mr Mooney warned that up to 40 per cent of those employed in the industry may lose their jobs.
“As dealers abandon the extensive and expensive costs of running franchised dealerships, these people will not readily get jobs or start up on their own.”
The motor industry is seeking the introduction of a scrappage scheme for cars older than 10 years in the hope of boosting sales. Such a scheme might involve a reduction in VRT paid on the new car purchased.
The industry is also seeking a change to VAT charges on dealers. Currently payments are based on the value of the car when it is bought or taken as a trade-in by the dealer rather than on the sale price. With dealers now selling large numbers of used cars at a loss in order to maintain liquidity, the payments arefrequently based on values higher than the sales prices.
New car sales continue to fall across Europe, down 22 per cent last month, while talks on the future of General Motors Europe and its Opel brand continued yesterday in the US, where German economy minister Karl-Theodor zu Guttenberg held talks with GM chief executive Rick Wagoner and US treasury secretary Timothy Geithner this week. GM is seeking up to €2.6 billion in loan guarantees from the German government to prevent GM Europe and Opel running out of cash in the next few months. The firm has warned that 25,000 jobs are at risk in Germany and up to 300,000 across the continent if the firm does not get support.
