Irish car buyers are having to pay more than the originally agreed price for a car, as dealers are able to raise their prices after a deposit has been paid.
With massive fluctuations in the prices for raw materials, energy, and shipping costs car makers and dealers are faced with having to constantly adjust the prices of their cars, usually under advice from the factory supplying the vehicles. One senior industry manager only half-joked that “we’re having to change prices every five minutes.”
With the bottleneck in the supply of new cars, caused by the continuing microchip shortage and supplier shortages thanks to Russia’s invasion of Ukraine, the gap between a customer paying a deposit and a customer actually receiving their car can be several months. In that time frame, the price of a new car might have increased several times.
According to the Society of the Irish Motor Industry’s guidelines, once a customer has paid a deposit the dealer must inform them in writing of any increase in price. The customer then has the choice to either continue with the sale at the new price, or decide within 14 days to terminate the sale and get their deposit back. While most dealers will act accordingly, given the huge waiting lists for new cars, there’s clearly scope for abuse in such cases.
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One car buyer, Adrian Ryan from Cork, told The Irish Times: “We called into one dealer to look at a car, and were told that not only would they not take our order, but that they were ringing round customers who had already ordered, and telling them that their cars were going to be delayed and that they’d have to pay €4,000 on top if they wanted to keep their place in the queue.”
Price increases are generally driven by two things — increased production costs, and model year changes. Model year changes sound innocuous, but if a car maker decides to add extra standard equipment, or changes an engine specification that increases a car’s CO2 levels, or if an electric car’s battery is increased in size, then that can add significantly to the final invoice price. In normal circumstances, this would not present a problem — a customer who’s ordered a car that’s changing model year could usually be sold a current version from stock. However, in 2022, there is no stock ...
So, what is the Irish motor trade doing to protect customers in these circumstances? Not very much, at least at the official level. Brian Cooke, the director general of the Society of the Irish Motor Industry told The Irish Times that: “There is unprecedented levels of volatility at this time, with uncertainty over supply chains, a shortage of semiconductors and other raw materials and ever increasing energy costs.
“These issues all impact on the cost of producing a vehicle, and this combined with longer lead times for the supply of vehicles can make pricing highly volatile. In addition, Irish distributors and retailers have seen over the last two years significant changes to vehicle taxation, and also on two separate occasions the reduction of vehicle incentives, which also impact on the pricing of cars. These factors are all outside the control of Irish motor businesses.”
No help there, then. Volkswagen Ireland is offering some help at least — a spokesperson for the company told The Irish Times that: “Customer orders are generally price protected subject to terms and conditions. If customers are uncertain regarding their vehicle order they should contact their authorised dealer.” However, there was the sting of a warning in the tail: “External factors such as the rising costs of raw materials and components have led to production cost increases for brands in the Volkswagen Group. Not all of these increases can be absorbed and, in some cases, retail price increases have been unavoidable.”
Hyundai is one that has had to increase prices for its very popular Ioniq 5 electric car. Most current Ioniq 5 order holders have been told that their delivery is bing pushed back to January, and that coincides with a model year update that sees the car’s battery size increase from 73kWh to 77kWh. Clearly, as well as improving the Ioniq 5′s one-charge range, that also brings with it cost implications.
Sarah Hayes from Hyundai Ireland told The Irish Times: “If the battery goes from 73kWh to 77kWh then clearly there’s going to be a price increase, and there is additional standard equipment for the car as well. What we’re trying to do is to manage a bad situation as well as we can, and the majority of people we’re dealing with have actually been quite happy, not least because they’re getting the extra range.”
Steve Tormey, Toyota Ireland’s managing director told The Irish Times that price increases will be all but inevitable this year: “Customer trust is very important to us across the entire organisation and we and our dealer network will always be as transparent as possible with customers. Naturally this is a fluid situation especially with so much flux in the global situation, and we will be monitoring this carefully. Like all other industries, we expect there will be increased pressure on raw materials later in the year which may impact the price of cars.”
There are other issues that mix in with this unpleasant cocktail, notably what can be done to guarantee the trade-in prices quoted at the time of sale.
Paddy Comyn from AA Ireland told The Irish Times: “Under normal conditions, buyers are able to get the final price at the deposit stage, but we aren’t in a normal situation, and it wouldn’t be sustainable for retailers to take sustained losses on prices that are being passed on by distributors and OEMs. Used car prices, which were very strong are also said to be softening too, which leaves even less of a buffer for the costs to be absorbed. It seems in the short-term, customers have to live with this slightly vague situation. But we’d hope that this is remedied once supply chain issues are resolved.”
What, if anything can be done to actually protect consumers in these troublesome times? The Competition and Consumer Protection Commission (CCPC) is Ireland’s watchdog for consumer issues, and a spokesperson told The Irish Times that: “Our advice to consumers in such circumstances is to engage with the trader and satisfy themselves as to the price of the car they intend to buy. Do ask about additional charges and how they will be calculated. The trader must provide the consumer with the total price of the car. If it is not possible to calculate the price of the car the consumer must be told in advance how the price will be calculated. We would expect traders to take the consumers interests into consideration and exercise professional diligence in this regard.”
