MOTOR INDUSTRY:WHILE IT might be propitious for saving the planet, the introduction of a new carbon emissions-based tax for cars could not have come at a worse time for the Irish motor industry, writes Michael McAleer.

A slowing economy, tightening credit lines and job worries are keeping potential buyers off the forecourts. After four years of growth, sales this year are down nearly 10 per cent. While the economic climate has certainly not helped, part of the fall-off is undoubtedly down to consumer confusion over the new tax changes, due to be introduced from July 1st.

Alan Nolan, director general of the Society of the Irish Motor Industry, acknowledges that the downturn in sales reflected some slowdown in the economy generally, but he also blames a degree of confusion among consumers on impending changes to the vehicle registration tax (VRT) and road tax regimes.

Under the new rules, the current VRT and annual road tax, based on a car's engine size, would be replaced by a new system depending on the car's carbon (CO2) emissions. Among the changes, the outgoing three-band VRT system has been replaced with seven bands. The lowest rate is now 16 per cent compared to 22.5 per cent, while the top rate - on cars with emissions over 226g/km - is now 36 per cent, up six per cent.

Not only are buyers confused by the new rates, most are unaware of the emissions figures of new cars. Where once you could often read the engine size on the bootlid of a car, identifying its emissions rating is not as obvious.

Dealers are hoping for a post-July sales splurge as the system takes effect and people notice a drop in prices of popular low-emissions diesel cars. However, realists expect no such sales boon, as many motorists back from summer holidays with overloaded credit cards will simply defer any buying decisions to the New Year and get a "09" registration plate rather than late "08".

Along with falling new car sales and customer confusion, there is also concern within the industry at the high levels of used stock being carried by dealers. Lower-priced private imports from the North and Britain are also eating into sales here.

Not that the local car industry giants are missing from our list of the Top 1,000 companies. While there has been some movement in their rankings compared to other years, the big distribution operations and dealers are still there.

Topping the list in the motor industry is O'Flaherty Holdings. Ranked 45 and with a reported turnover of €1.14bn, the firm has several investment interests, but is best known for its car distribution arm MDL. This firm holds the franchise for the Audi, Mercedes, Skoda and Volkswagen brands in Ireland. It also controls several dealerships through its MSL network.

The firm has long topped the Irish car industry rankings, but there are significant changes afoot. For a start, three of its four car brands will leave its stable this October as Volkswagen Group takes back the Irish franchise for its three brands - Audi, VW and Skoda - thereby ending a 58-year partnership between the O'Flaherty-owned MDL and the German car giant.

VW is the latest company to take back control of its Irish operations from a local distributor. Last year Renault called time on the franchise for its Irish business held by Bill Cullen's Glencullen Group. Two years ago Mazda took back its franchise from MDL as well, while in 2003 the BMW Group took control of its Irish operations from Frank Keane Holdings. It's a trend many in the industry believe is likely to continue as car firms seek to cut costs.

The second highest motor industry firm in the rankings is Toyota Ireland (86), the best selling car brand on the Irish market. Under the control of Dr Tim Mahony, the Irish operation has been selling the Japanese cars for over three decades.

One apparent anomaly in the list seems to be IM Automotive Group, coming in at 113 place, ahead of the likes of Ford and Nissan, and with a turnover of €420 million in 2006. IM Automotive is responsible for the Irish distribution of Subaru, of which 436 new cars were registered in Ireland that year. However, the group lists as its principle activities the importation and distribution of motor vehicles and parts in Britain, Ireland, Finland, Denmark, Sweden and the Baltic Republics. Clearly selling Subarus in Ireland is not its main concern.

Third place in the motor industry rankings goes to Ford Ireland with a turnover of €398 million, while the Nissan Group takes fourth spot with a turnover of €350 million.

Following up in fifth place is the Gowan Group, which holds the Irish franchise for the Citroen and Peugeot brands, but also has significant interests in the kitchen appliances sector. It's likely the group would not rank so highly if it were not for these non-motoring activities.

Of the other distributors on the list Renault makes its first appearance under its new guise of a subsidiary to the French firm; ranked 199th, with an estimated turnover of €250 million. It is followed by General Motors, another subsidiary operation, with a ranking of 210 and a turnover of €209.5 million.

Aside from the large distribution companies, several dealers also make the list. Windsor Motors, which shares two directors with Nissan Ireland, tops the dealer rankings with a turnover of €270 million. Others include midlands-based dealer group Michael Moore Car Sales with €81 million in turnover, closely followed by Dublin-based car dealer Joe Duffy Motors with a turnover of €80.5 million.

One interesting motor-related firm that makes it onto the list this time is the National Car Testing Service (NCTS), the firm licensed by the Department of Transport to inspect used cars, with a turnover of €33 million.

As for the current year's performance, most expect the year to end with new car sales down by 10 per cent to about 170,000. Whether they are recouped in 2009 remains to be seen. Certainly the new taxes will change the profile of the Irish motoring fleet, with buyers likely to move away from petrol to lower emissions diesel engines. The companies best positioned to reap the rewards of this shift, such as BMW with its low-emission diesel engines, may well be cushioned from whatever storms befall the economy in the next few months.