Why hasn’t Brexit opened the floodgates for cheap used car imports?

The number of used cars being imported into Ireland has spiked upwards in July, but possibly not to the extent which had been predicted prior to the UK's vote to leave the European Union. Many experts had expected that, with a fall in the value of sterling versus the euro, Irish customers would look eastwards in search of cars that had suddenly become cheaper.

While sterling certainly plummeted in the days following the referendum result, the change in the rate hasn’t yet opened the floodgates of used imports from the UK.

The numbers have increased, that much is certain. According to figures from Motorcheck.ie the number of used cars imported into the country in July of this year was 5,707, an increase of 35 per cent compared to the same month in 2015. June’s figures were even more stark: they saw a 40 per cent year-on-year increase from June 2015, rising from 3,927 to 5,535.

Slight fall

By comparison, in January, when sterling was a little stronger (hovering at around the 80 pence mark) and we would have all been concentrating on buying new cars, there were 4,523 imports, a slight fall from January 2015’s number.

But there does not seem to be a strong correlation between the value of sterling and the number of used imports coming into Ireland from the UK. That 35 per cent climb in July of this year looks like an exciting, possibly alarming, figure and it would be if you took it as a standalone number. But it has to be taken in context. First of all, the strong figures for June, almost all of which will have been imported before the Brexit vote on the 23rd, were being paid for with sterling at or around the 76 to 77 pence mark.

Looking further back, to January 2008, when you needed 75 pence to buy one euro, and the used import rate stood at a very healthy 5,338. July of 2008, when sterling was still trading at a relatively robust 79 pence, saw 6,766 cars imported into Ireland.

John Byrne of Cartell.ie told The Irish Times that while there is a correlation between the value of sterling and the rate of used imports from the UK, it doesn't necessarily mean a flood.

“In terms of imports, Cartell recently conducted a study which examined the impact of the price of sterling on the numbers of vehicles imported into Ireland over a seven-year period,” said Byrne. “The study found that there is a core market in Ireland for vehicle imports irrespective of prevailing market conditions. However, there was no evidence of a rush by Irish buyers to import vehicles when sterling was low. A reduced sterling price does affect the market in other ways: the age of the vehicle imported into Ireland tends to be younger when prices are more affordable.”

Deferring purchases

It is the summer and families may be deferring car purchasing in favour of holidays, or the used import market could be suffering from the same consumer confidence blues as the new car market did in July. According to

Michael Rochford

of Motorcheck.ie, this year’s import numbers are likely to return to the relatively high level seen in 2007 and 2008.

“Over the past five years the volume of imports from the UK has hovered between 40,000 to 45,000 units, whereas it looks like there will be in excess of 60,000 units imported this year,” he said. “This puts imports more in line with the levels experienced back in 2007 and 2008. The result of this influx of used cars from the UK will mean a lot more value and choice for the consumer in the used car market, especially since there has been a pronounced shortage of indigenous stock over the last number of years.”

However, Rochford warned: “With 10 per cent of all imports being previously written off in the UK and around 18 per cent of all imports having mileage discrepancies, consumers need to be vigilant and ensure they carry out a full car history check before parting with their hard-earned cash.”

Top ten imported used cars in July

Top ten imported used cars in July

1. Ford Focus (447 imported) 2. Volkswagen Golf (333 imported) 3. Volkswagen Passat (258 imported) 4. Audi A4 (201 imported) 5. Vauxhall (Opel) Insignia (156 imported) 6. Audi A6 (143 imported) 7. BMW 3 Series (135 imported) 8. Vauxhall (Opel) Astra (132 imported) 9. Toyota Avensis (121 imported) 10. BMW 5 Series (121 imported)

(figures courtesy Motorcheck.ie)