Ireland car prices accelerate higher despite euro driving down costs

ALTHOUGH the strength of the euro has driven down car prices in Britain, we are still paying some of the highest prices in Europe. According to the latest figures from the internet research site, Eurocarprice.com, Irish car prices have risen 7% faster than the European average over the last five years.

A 1.6 litre Toyota Corolla costs €20,410 here, €5,000 more than in France, €4,350 more than in Germany and €3,892 more than in Britain. Since the EU issued a directive to harmonise car prices, manufacturers generally supply cars at the same price to all dealers. But the Irish tax rate pushes up the selling price substantially.

“I think it is evident that Irish taxes are extremely high in relation to other countries. Irish VAT is higher than each of the other countries and Ireland then applies Vehicle Registration Tax on top of VAT. This is not applied in the other markets,” said Europrice operations director Robin Goodyer said.

Europrice measures the recommended retail price of all the cars and does not take individual dealer discounts into account. The list price of the Mercedes E Class 240, which is the most popular luxury car in Ireland, is €61,7000 but in practice it retails for around €58,000.

“At the tax-free level, our cars are the most evenly priced across Europe. But on the E Class, there is 24% VRT added on and then 21% VAT. It’s a tax on a tax,” said Bill Duffy, the national sales manager of Mercedes Ireland.

He said no Irish buyers were buying cars abroad to save money.

“Nobody is going abroad because there is no advantage in it. The prices are fairly standard by the time you’ve paid the tax and it’s not worth the hassle,” he said.

By October 2005, all EU car dealers will be free to sell into any other member country. This will mean the end of the block exemption where manufacturers supplied cars at cheaper prices to countries with high car tax such as Ireland, Denmark, Portugal, Greece and Finland.

The Society of the Irish Motor Industry (SIMI) has warned that this will lead to price rises for motorists.

“If the exemption didn’t go, a Danish dealer could sell cars in Germany at half the price. The manufacturers just couldn’t allow the market to be damaged like that and it means the base price of cars here will rise,” said SIMI president Cyril McHugh.

The new car market has declined by 6% this year but is still in a healthy state. More than 100,000 cars have been sold so far and the motor industry believes overall sales for the year will reach 146,000. Last year’s sales were 154,000 new cars.