SIMI proposes rescue package for motor industry, as sales figures drop by 66.5% SIMI has released the official figures for the number of new vehicles registered in January '09 (15,929), which shows they are down 66.54% on January '08 (47,609).
The January sales results come as no surprise to SIMI who predict new vehicle registrations to fall below 100,000 units this year. However, demand for used cars is encouraging and dealerships are reporting a move towards vehicle aftermarket services i.e. parts and servicing.
In response to the current situation, SIMI is proposing a rescue package that it describes as a viable and necessary step to assist the Motor Industry, in both the short and long term.
The five key points of the package are:
1. Scrappage
2. VAT on losses
3. Road Tax Incentive
4. Enforcement
5. Finance
Scrappage In July '95 to Dec '97 (incl) the government introduced a scrappage scheme that saw almost 65,000 cars scrapped and replaced with newer, safer, cleaner cars. The national car park figures of cars ten years or older stood at 213,000 during that scrappage scheme period. Today that figure is closer to 312,000.
The introduction of a similar scheme again, (already introduced in Germany and France), would provide much needed tax revenue without applying additional taxes on vehicles already on the roads. This scheme would assist motorists' transition to cleaner, greener vehicles and allow customers take advantage of preferential tax rates. We are better able now, following the introduction of the End of Life Vehicle Regulation, to deal with the safe recovery, reuse and treatment of any vehicles scrapped.
VAT on losses The motor trade is the only industry that is required to pay VAT on losses incurred. Dealers have to pay VAT even on transactions where they make a loss. For example, if a dealer buys in a car at €20,000 and sells it for €15,000, he is still liable to return VAT on the €20,000. A revenue neutral change in the current VAT law, would simply provide the industry with a level playing field and give dealers a much needed boost.
Road tax incentive SIMI are asking the Department of the Environment to explore whether any concessions on road tax are possible, given the very negative impact that the new rates have had, particularly on specific sectors.
Enforcement Irish motor dealers are not been given the opportunity to trade in a level playing field.
UK registered vehicles continue to be imported into Ireland and the VRT and road tax on many of these vehicles goes unpaid by many drivers. This disregard for the law results in a loss of revenue for the government that is estimated to be between €50 and €100 million per annum. Meanwhile, motor dealers in Ireland continue to collect and process the VRT for Irish registered vehicles on behalf of the government, which increases the sale price of the vehicle and gives an obvious advantage to the UK market in this country.
Following a brief crackdown by the Revenue customs service, over 140 vehicles as well as motorists, were given fines amounting to almost €500,000. This operation was as much the result of the "name and shame" campaign that SIMI introduced and illustrates what the Society has been saying for years. In ten days the government made €500,000 and SIMI estimates that if the issue were dealt with seriously and the rules enforced and acted upon as the law dictates, the government could expect to boost its revenue by between €50 and €100 million.
Apart from the issue of lost revenue, those purchasing in the north must be aware that their vehicle may have issues that are not necessarily evident on initial viewing. Firstly, out of over 103,000 UK imports that were registered in Ireland between the years 2005-2008, 21% had either a problem with finance, damage, or had been previously written off or stolen in the UK, or a combination of the above. These recent results from Car History Check, the car history service operated by Experian, have also confirmed that one in eight vehicles imported from the UK have been illegally clocked.
SIMI and its members have in its forty years, built an organisation that sets the bar for the code of acceptable conduct in the industry and it is detrimental to the credibility of the market in Ireland, that we are now seeing an influx of vehicles of dubious history that are in some cases dangerous. These statistics make a mockery of the efforts that have been made to put safer cars on our roads.
SIMI calls on Government and local authorities to crack down on roadside trading.
The practice of illegal roadside trading continues on the nation's roads, showing a disregard for road safety and consumer and taxation laws and the poor enforcement by the authorities responsible. Roadside traders operate at a greatly reduced cost base, compared to compliant professionals and are therefore given significant advantage. Illegal roadside traders do not have to pay planning permission, council rates, commercial insurance and other rates.
This is a black market openly trading on our roads and SIMI are renewing their call to Government and Local Authorities to enforce the law and prevent these illegal traders from damaging further the fragile market.
Finance Banks and lending institutions must work with the Motor Industry to promote the sale of vehicles and assist consumers and indeed motor dealers by releasing funds, negotiating favorable terms and creating movement in the market once more. Neither the banks nor the Motor Industry can afford to allow this market to stagnate and finance must flow again for those who are in the position to borrow.
