Motor trade seeks 'swappage' incentive to boost sales
One-stop swap shop based on €2,000 VRT rebate on cars six years or older
The issue facing the Irish motor trade is, according to SIMI, a structural one. The average age of the national car fleet is increasing fast, and is already coming close to nine years. At that point, the drop-off in residual value of a car reaches a point where it is very difficult for an owner to get a decent trade-in price for their car, effectively shutting them out of the new car market. That being the case, SIMI fears that those customers may not return to the market for a considerable time, perhaps ever, denying its members much needed sales and the Government much needed tax take.
“What we’re saying is that because of this, the market will not recover naturally. Most people buying a new car have a car to trade in” says Nolan. “For many people that trade in their car is now six, seven, eight years old. So for many of them the price of change is too high and the State will not reap the benefits of 120,000, 130,000 new cars sales unless we do something about this.
“They’re not in a position to buy a new car, so the idea is that a buyer with a car of six years or older to trade in would get a VRT rebate of €2,000. We believe that will bring people into the market who would like to, whose cars do not currently have a level of value that who would allow them to do so. And more, that sale would start a cycle of business; that trade in can be repaired or serviced and sold on again to another owner for whom it would be an improvement in both safety and economy, all the way down the line until a much older car drops off the end. It drives further VAT and further employment beyond the direct Swappage benefits.
“This is actually about saying to the Government that we need to move away from austerity. We’ve seen increases in VAT and VRT, yet the increase in rate did not increase the Government’s take because the unit sales dropped. So for all the reasons you’ve said, for schools, for the Gardai, for hospitals, the State needs to take taxes in. So a proposal like this can both bring in €129-million and support employment, well that has to be a winner. Can we get it over the line? Well, that’s a political issue and we will certainly have it on the agenda. We think it’s time to move away from austerity and to show that you can increase the tax take by encouraging business and turnover and we think it makes sense at this stage.”
The issue facing SIMI, and the wider industry, is that it has been down this road before. The Scrappage scheme introduced in 2010 was indeed successful, but its effect was strictly temporary and car sales fell flat again soon after. There is a potential argument that Swappage is what the trade needs to kick-start sales again as a hopeful general economic improvement arrives, but the Government could just as easily take the line that any such economic improvement will increase car sales by itself, so an incentive scheme is simply not needed.