Car sales have slumped by over 10% in the first nine months of the year as Brexit continues to hurt the motor trade.
According to the third quarterly review of the sector by the Society of the Irish Motor Industry (SIMI), sales up to the end of September hit 128,578 — a drop of 10.2% on the same period last year.
Imports, by contrast, jumped by more than 37% to 70,821 between January and September.
Used imports, according to a report by SIMI/DoneDeal, remain a significant feature of the market in 2017, with the October figure of 8,509 bringing the total to date to 79,322.
Despite the economy performing strongly this year and the expectation of this positivity continuing into 2018, the motor industry says sales performances are not mirroring the strong growth.
New car sales every month this year have been lower than the equivalent period in 2016. During the first nine months, new car sales declined in every county, with Mayo experiencing the largest decline at 19.28%, while Dublin had the smallest fall at 5.4%.
New car sales in Dublin accounted for 41.63% of the total new car market.
The report highlighted Brexit-related uncertainty and the weakness of sterling as impacting negatively on the industry, with the increases in used imports also impacting on the residual values of Irish new cars, which increases the cost to change for the consumer looking for a new or newer car.
In addition, with an increase in used imports of less than three years old, it is likely some of those are displacing new car sales. The report predicts used imports are likely to reach 97,000 in 2017, an increase of 34.4% on 2016, while new car sales are to finish at around 131,650, a decline of 10.2% on last year.
The diesel share of the market fell slightly from 70% to 65%, while the total hybrid and electric vehicles increased from 2% to 4% in market share.
The report also shows a number of price decreases in the cost of motoring. The average price of a new car in September was 3.5% lower than a year earlier, while the cost of motor insurance was 14.3% lower than it was a year earlier.
Jim Power, an economist and author of the report, said the surge in used imports from Britain effectively means that those prices are now setting prices for the domestic second-hand car stock and that this is hurting new car sales.
“In normal circumstances, the positive economic backdrop would be expected to deliver growth of up to 20% in the new car market in 2018,” he said.
“However, the distortionary impact of sterling weakness and the associated surge in used imports from the UK will, in all likelihood, more than offset the positive economics.”
Brian Cooke, the deputy director general of SIMI, said this was backed up by car dealers across the country.
“In a recent survey, our members confirmed Jim Power’s observation that Irish used car values have dropped, with members indicating a 15% reduction year on year, and indications are that this trend will continue,” he said.
“On the positive side, this means that there is real value to be had for consumers looking for a used car; however, this is a double-edged sword and it also means their used car is devalued on a trade in, thus impacting negatively on their cost to change.”
© Irish Examiner Ltd. All rights reserved