Driving a better bargain

Buyers can save up to €20,000 by buying cars in the North or Britain, writes Paul Kelly

IN an industry known for the black arts of exaggeration, amazing second-hand car deals can often turn out to be anything but.

Yet research by the Irish Examiner shows today how buyers can save up to €20,000 on choice second-hand models by buying abroad instead of at home.

Punitive rates of Vehicle Registration Tax (VRT) of up to 30% on cars in Ireland mean the price of used motors here is kept sky-high artificially.

As 60,000 motorists have found out this year so far, it’s far cheaper to buy a car in Britain or the North, pay the VRT on arrival back in Ireland and drive away a bargain.

For example a year-old Saab 9-5 diesel 2.2-litre Vector car will set you back as much as €42,090 here — compared to a mouthwatering €19,453 in Britain.

Add the €12,043 VRT you still have to pay upon arrival in Ireland then you stand to save a whopping €10,594.

To put that sum in context, you could also buy a 1998 BMW 3-series from Britain with the amount you’ve saved, pay the VRT and still have change left over.

And that’s not all you’d get, according to Paddy Comyn, editor of the influential Car Buyer’s Guide.

“Cars in Britain tend to be better looked-after, better kept and of a higher specification than ours,” he says.

“There are big savings to be made but it really depends on the car.

“A lot of people are going for more premium brands as the savings tend not to be great for one to two-year-old average family cars.

“The savings are to be made by going back four or five years for an Audi A4, BMW three-series or Mercedes E-class,” he says.

The reason why used cars in Britain and the North are cheaper boils down to one reason alone: there’s no VRT tax.

In the Republic, a new Audi A6 costs €35,941 pre-tax but by the time VRT and value added tax (VAT) of €23,632 is added the selling price hits an eye-watering €59,573, according to EU statistics.

But in Britain and the North the only tax is VAT so the selling price of that same car is €38,275 — a difference of €21,241 on prices here.

This lack of VRT means second-hand cars are also much cheaper in Britain — and massively popular among Irish buyers as a result.

Look at the competing costs faced by a motorist in the Republic who wants to buy a year-old 2.4-litre Volvo V70 second-hand:

nAverage price here: €46,900 to €52,211.

nAverage in Britain: €20,870 to €22,401.

nVRT payable on import: €12,126.

nTotal: €32,996 to €34,527.

nSaving: up to €19,215.

Although the buyer has, by law, to pay Irish VRT to bring in a second-hand vehicle from abroad, the savings are proving a great temptation for many.

So far this year around 60,000 to 70,000 vehicles have been imported into Ireland by buyers and newcomers. In the same period, 172,000 new cars were sold in the Republic.

Industry experts believe the knock-on result of high imports will be good news generally for consumers, who will see used-car prices fall on the forecourts at home.

“You are going to have car parks full of used-cars that are going nowhere fast because imports are filling up the market,” says Paddy Comyn.

“(As a result) we expect prices of used cars will soften because of over-supply and cheaper imports.”

Anyone predicting the demise of the traditional Irish second-hand car dealer, though, would be wise to think again.

Garages in Dublin are also buying in cars from Britain and the North to sell on to customers who want to get more for their euro.

One Northern dealer on the Border in Newry, Co Down, does just that, supplying cars to dealers in the Republic.

“They’re buying the most expensive cars, like 2004-2005 Mercedes, and the saving on them is a huge sum of money like €2,000 to €3,000,” he says.

“There are a lot of cars going south now because of the VRT and there are a lot of people doing it.

“But the prices of second-hand cars have started to go up in the North because people realise cars will go south,” he adds.

AA Ireland, which campaigns for motorists in the Republic, is in favour of buyers hunting out the best bargains abroad and says Irish VRT amounts to a trade tariff hindering the free movement of cars.

“There’s no reason why motorists should not do it (buy abroad) but there are a couple of things they need to be careful of,” says AA spokesman Conor Faughnan.

“The VRT you pay is not based on the price you paid in the UK but on the value here in the Republic and it can be more than you think.

“Buying outside the network of registered dealers in the Republic also means you are cut off from the after-sales protection. If there’s a minor problem then you are not going to go all the way back to Wales, say, and get it sorted out.

“You would not go abroad to buy a Ford Focus but for something with a hefty price tag like a Mercedes we would not warn people off doing it but they must do it with their eyes open and remember the VRT.”

The Society of the Irish Motor Industry (SIMI), the trade body representing distributors and dealers, takes a different view of the practice.

Buyers are vulnerable to clocked cars, motors with poor history and a crackdown by the Revenue on owners who paid too little VRT, it says.

“There’s nothing to be gained by buying in a used car (from abroad) at the moment,” says SIMI chief executive Cyril McHugh.

“You don’t really know the history of the car whereas here you can find out previous owners and whether the car is genuine or not.”

Citing VAT fraud, under-declaration of VRT and mileage scams, Mr McHugh says buying cars abroad is a minefield.

“If things are done properly then there’s no economic advantage to buying a car abroad.

“Here there’s a great supply of cars in garages and there are great bargains to be had.”