2011 Budget is better news for the motor trade than the motorist
A sigh of relief rang around Ireland’s motoring retailers at the end of Brian Lenihan’s budget speech. Fuel hikes aside, it appeared that Ireland’s motorists had got all they had wished for. Scrappage has been extended until the end of June 2011 ensuring that next year will at least be a reasonably healthy one for car sales.
Sure, it is good news for those who work in the motor trade and potentially for the government coffers. This year, the scrappage scheme was credited with saving jobs, some 3,200 new jobs were created and an extra €134 million was added in government revenue.
Up until the end of November, 16,468 new cars have been sold as a result of the scheme. If another 10,000 cars were sold in 2011 as part of the scrappage scheme, this would generate an additional €50 million for the Exchequer.
Good news too for Toyota, Lexus and Honda as there is the extension of the VRT rebate on Hybrid vehicles until the end of 2012. And bizarrely, this same rebate is available on Flex Fuel vehicles. Nobody, it seems, buys these cars on purpose anymore. Ford and Volvo, two of the major champions of the technology, don’t even offer the cars anymore. Maxol are considering ditching the fuel and Topaz aren’t going to bother selling it.
But there will be further price hikes on fuel, four cents per litres on petrol and two centres per litre on diesel. If you have a car you have to buy fuel, so here is a way of hitting every motorist. And despite the fact that there has been a major shift to diesel technology, the average owner of an old car is putting petrol into it. And now they will pay an average of €1.40 a litre. This will mean we are the 10th most expensive country in Europe to buy petrol. In Norway, the most expensive, you will pay €1.59, while in Lithuania, the cheapest, you pay just €0.98. However we will be the 4th most expensive country in Europe to buy diesel fuel.
So what about 2011? It could be argued that with a very busy year for scrappage in 2010, there might not be the same amount of momentum for it again in 2011. Sure, brands like Renault will use it entice buyers in with outstanding discounts, but there is a feeling that most of the scrappage buyers, many of whom didn’t have to go near a bank to get finance for their purchase, have already bought.
What we can expect over the next four years of cuts and belt-tightening, that the landscape of the Irish market will change somewhat. With the likelihood that the tax bands won’t be tampered with until the end of 2012 the sale of low emissions diesel cars will rise and petrol models, SUVs and high-end sports cars will all but dissolve.
The Canonball Run, where rich people drive their fast cars for charity, in Ireland has become a little bit like the last hurrah of a soon-to-be-extinct class of car in Ireland. By 2014 it will become a classic car run.
2011 in the car market will depend on just how battered the Irish public are by cuts, by lack of confidence and by the availability of finance. But by and large it seems that this budget has given it a lifeline for yet another year.