Thousands of jobs at risk unless Gov takes action on VRT bands, report says

Thousands of jobs could be lost in the motor industry unless the Government takes action on vehicle registration bands (VRT) - as car sales continue to fall.

The warning is contained in the second quarterly report of the Society of the Irish Motor Industry (SIMI).

Authored by economist Jim Power, the report predicts that by 2020 car sales in Ireland could slump by as much 105,000 (9%) and that without an adjustment in the VRT bands in the next Budget, the new car market could fall as low as 75,000 next year.

"Such a decline would have a devastating impact on many businesses that barely survived the last recession; it would cost thousands of jobs in towns and cities around the country; and would have a very negative impact on the Exchequer revenues. The motor industry is in a high-risk scenario at the moment and policy makers need to be aware of the risks," said Mr Power.

The SIMI data reveals that new car registrations are down 80,712 (7.4%) in the first half of this year, while used car imports increased by 53,119 (2.4%) in the same period.

The organisation said that, since the announcement of Brexit, both new cars and commercial registrations continue to decline with the exception of electric cars and used car imports.

"External threats such as Brexit uncertainty, greater consumer caution and the ongoing growth of used imports continue to undermine new car sales," said SIMI.

SIMI also hit out at the Government's target of electrification of the car fleet as "fanciful and appears totally incapable of being achieved".

Mr Power said that unless the Government takes action on VRT bands, the average price of a new car could rise by €2,500.

While the recently published Inter-Departmental Tax Strategy Group (TSG) paper on motor vehicle taxes makes a number of suggestions about taxation, this does not mean that these suggestions will eventually become part of Budget 2020. The price increase for the more popular mid-range model could rise by significantly more. In the current environment, such price increases would have a devastating impact on new car sales, he said.