New-car purchase incentives are keeping market buoyant

The record buoyancy which characterised the new-car market last year has spilled over into 1988 as motor distributors offer a choice of post-scrappage scheme incentives in order to sustain demand.

Giveaways, ranging from compact disc players and camcorders to interest-free finance, are on offer while Fiat has devised its own scrappage scheme on the Punto range.

However, while positive sales figures and enhanced competition in the new-car market mean that 1997 is unlikely to be remembered as the year when the Government scrappage scheme ended, 1998 may well be recalled as the year when mandatory car testing was introduced.

Last year's record car sales numbered 136,655, an increase of 18.7 per cent on the 1996 figure of 115,121.

According to the Society of the Irish Motor Industry (SIMI), around 33,000 new cars were purchased under the scrappage scheme which provided a £1,000 reduction in VRT when a car more than 10 years old was traded in for a new model.

According to Auto Ireland magazine, Ford overtook Opel in 1997 as the top selling brand with 17,606 units registered. Opel, with 15,653 units, was followed by Volkswagen/Audi which came up from fifth place, increasing its sales on 1996 from 10,954 to 15,300.

The chief executive of SIMI, Mr Cyril McHugh, said that the Budget decision to reduce the level of vehicle registration tax (VRT) should go some way to help the industry maintain the high level of employment in garages and to ease the elimination of the scrappage scheme.

However, the reductions involved are small 0.8 per cent to 22.5 per cent on cars under 2500cc and 1.25 per cent to 28 per cent on cars over 2500cc. Mr McHugh added that high levels of economic activity, lower interest rates and increased competition within the trade would boost business.

According to motor distributors, including those who are not offering special sales incentives, high levels of demand are being sustained this January traditionally a good month for the industry as buyers seek new 98 number plates.

A Citroen spokesman said sales so far this month had exceeded those last January. The company sold 2,150 units in 1997 - a 36 per cent increase on the previous year.

There was also evidence of buoyancy in the upper end of the market with the sale by BMW in the first 10 days of January of 158 cars. The company cleared 9,572 units last year.

Some manufacturers can hardly keep up with the demand.

Volkswagen says it is selling every Polo and Golf it can lay its hands on. The latest version of the Golf arrives in Ireland in March.

This combined with the advent of new versions of the Opel Astra and Ford Escort should fuel interest in the market this year as well as the competitive sales environment.