Car trade redoubles its call for Budget action

The car trade in Ireland is making a last-ditch plea to the Government to leave vehicle taxation alone when it comes to the Budget in October.

Speaking at a recent press conference highlighting the fragility of the industry at this time, Brian Cooke, Director General of the Society of the Irish Motor Industry (SIMI) said: “Increased taxes in Budget 2020 will only lead to a further reduction in new car sales and potentially a further increase in used imports, which could be exacerbated by a further devaluation in sterling in the increasing likely event of a no deal.

“This is bad for the Exchequer, the consumer and for employment in the industry. But it is more than that. The motor industry is key to providing solutions to reducing emissions from transport in the years ahead, but this can only succeed with a strong new car market replacing the oldest cars in the Irish fleet.

“By allowing older polluting imports into the Irish car fleet, we are only adding to our environmental challenge. In this regard, the surcharge introduced in last year’s Budget, which had a much greater impact on new cars, should be replaced by a charge that is focused on older imports.”

The plea is a far cry from previous calls for a ‘scrappage’ payment that might tempt owners of those older, more polluting vehicles, to trade up to a new electric car. Such ideas have been generally shot down, as the likely small incentive from the Government would not be enough to bridge the gap between the value of an older model, and a new electric car, most of which are still much more expensive than an average family vehicle.

Nonetheless, there is an increasing feeling that something must be done to contain the constantly rising tide of cheaper imports from the UK. While the Department of Finance has said that the Budget is being put together with a no-deal Brexit in mind, if there is a last-gasp deal, or if the UK government is forced to ask for an extension from the EU, then the import flood will continue unabated.

Indeed, it’s significant that the car trade is one of the few major economic players in Ireland for whom a no-deal Brexit would potentially be good news, as increased red tape might put many buyers off the prospect of shopping in the UK market.

Economist Jim Power, who regularly provides reports for SIMI, said: “The motor industry is currently in its most vulnerable place since 2008, with any vehicle registration tax (VRT) increases in conjunction with Brexit likely to undermine new car sales and place as many as 10,000 jobs at risk.

“When you are looking at any taxation changes for next year, you can’t ignore the issue of Brexit for the motor industry. For the industry, car sales have been reducing for the last three years and used imports have been on the rise, much of which is down to Brexit and the collapse of sterling. VRT increases now will only further reduce new car sales.”

Previously, SIMI had claimed that as many as 12,500 jobs could be lost if sales of new cars stall next year in the face of tax hikes.