Confusion reigns in motor trade as politicians are blamed

Motorists are at a crossroads, faced with the greatest upheaval since Karl Benz offered an alternative to the horse.

Looking for some clear direction on what to do, they are met with politicians fixated on delivering snappy soundbites and a car industry more interested in cutting each other’s throats than singing from the same hymn sheet. One word sums up the car market at present: confusion.

A decade ago, motorists were told to opt for diesel to save the planet. Now they’re told diesel is poisoning the air and they should switch to electric, or hybrid if the leap to full-electric is impractical for them right now. At the same time, they hear plans by Government to ban even hybrid new car sales from 2030.

Election manifestos haven’t helped deliver any more clarity, setting out different targets and goals for the decade ahead. Given that cars are often consumers’ second biggest investment after a home – and usually the largest depreciating one – no one wants to make the wrong call.

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The outgoing Government says it will ban the sale of petrol, diesel and hybrid new cars from 2030. Car dealers say that’s unachievable and counterproductive as carmakers won’t be ready to meet the demand in a market where only electric cars are offered. They also regard the Government’s target for one million electric and plug-in hybrid cars on our roads by 2030 as far too ambitious.

Dealers say the Government’s targets are not in line with what is happening at EU level, where the plan is to introduce a ban by 2040. Or even with the UK, which this week announced its plan for a ban from 2035.

In a letter to election candidates, a newly formed independent group of car dealers claims that bans and unrealistic targets are “only leading to increased carbon emissions as Irish motorists delay switching their older cars”.

“We have seen first-hand widespread consumer confusion over this proposed ban, leading to inertia in purchase and a year-on-year decrease in new car sales which are cleaner for the environment and produce less emissions. In short, as the sales of newer cars fall, emissions will go up.”

And there are concerns about the level of infrastructure to support the switch to electric. According to the letter: "Ireland does not have the infrastructure to support one million electric vehicles on the roads by 2030. Norway, the European leader in electric vehicle (EV) transition has approximately 12,000 charging stations for 300,000 EVs and plug-in hybrid electric vehicles (PHEV) so we have a long way to go in Ireland." There are about 1,200 charging points in Ireland at present.

Frustration on forecourts

The creation of the new lobby group is a sign of the frustration on forecourts about the perilous state of the Irish car trade. Between 2007 and 2013, some 12,800 jobs were lost in the Irish motor trade, 150 garages closed, and new car sales fell from 186,000 a year to just 73,000, leading to a loss to the exchequer of €1.4 billion in tax.

While other sectors have rebuilt some of their fortunes, the Irish motor trade still seems stuck in the lay-by. Stephen Gleeson, managing director of Hyundai Motors Ireland, points to the new car sales figures for January – the busiest month of the year. In January 2008, 47,275 new cars were registered. Last month, new car registrations hit 32,370. Over a decade later "with the economy bigger than ever, we are just 65 per cent of the way back compared to 2008. It's not down to a massive rise in used imports either, for in January 2008 there were 5,452 used imports and last month there were 6,623".

"It's been a rough few years with Brexit and the fall in used car values due to imports, which has stabilised at this stage," says Denis Murphy, managing director of Volkswagen and Audi dealerships Blackwater Motors, who is a leading member of the new dealer lobby group. "Historically, the new car market followed consumer sentiment. So as consumer sentiment went up, the new car market grew. But that relationship seems to have been broken now, which is a serious concern to us."

Brian Cooke, director general of the Society of the Irish Motor Industry (SIMI), points to a general cautiousness among Irish consumers when it comes to expensive big-ticket spending items. However, he also says buyers are enormously confused as to what is the right choice for them.

Cooke believes motorists and the motor trade want to be on the right side of the environmental debate, but they need clarity as to what’s going to happen in the future. They don’t know who to trust.

The root of the current problem derives from a diesel debacle that has dominated the last decade of motoring. In the budget speeches of December 2007, the Fianna Fáil-Green Party coalition rolled out a new emissions-based tax regime aimed at overhauling the Irish motoring fleet and converting it from petrol to diesel. It knocked thousands of euro off the value of petrol cars overnight.

As part of the new regime, a dramatic reduction in the number of tax bands, changed motor tax from an incremental charge to a deal-breaker in car sales.

And if proof were needed that Irish motorists will be led by their wallets, the percentage of new petrol cars fell from 70 per cent in 2007, to 32 per cent by the end of 2009.

Diesel tailpipes

What policymakers ignored, however, were the other emissions coming out the diesel tailpipes, particularly nitrogen oxides (NOx). These gases contribute to the formation of smog and acid rain. In the US, where climate change was still up for debate, air quality issues were taken more seriously and NOx figures were tightly scrutinised.

By 2012, the World Health Organisation had declared diesel exhaust fumes a carcinogenic, a cause of lung cancer in the same category as asbestos and mustard gas.

Then, in 2015, came the Volkswagen “dieselgate” scandal, with the German car giant forced to admit it cheated US emission tests. When the history of the electric car is written, VW will be credited with unwittingly killing the internal combustion engine. The spotlight on diesel led to new studies, which showed that a large number of diesel vehicles emitted more than 12 times the current limits. Suddenly major cities were announcing future diesel bans, while politicians were rolling out punitive diesel taxes.

By 2018, a Lexus ad campaign for its petrol-electric hybrid fleet was proclaiming “diesel is dead”. The campaign created enormous rancour among rivals, that still have forecourts full of diesel cars to sell, but it has stuck in the public’s mind.

If you believe it, then it’s bad news for the 1.3 million diesel car owners on the Republic’s roads. Many simply can’t afford to change to electric right now, particularly as the family-sized electric cars are priced at over €30,000, even after the very generous government grants of €10,000 are taken off the list price.

In reality, diesel still makes sense for many rural motorists, particularly new cleaner diesel engines. They offer better fuel efficiency than petrol engines, better range than electric cars, and lower emissions than ever before.

But it’s probably too little too late. The backlash is too strong to rebuild diesel’s reputation and the public has moved on.

According to Murphy: "People are coming in looking for electric cars and they're currently driving the likes of a VW Polo. You bring them out and show them the latest electric car for €50,000 or so and they say 'Jesus I can't afford that'. So you point them to the newer Polo at €18,000 or so, but they say 'sure that's going to be worthless in three years and the Government is going to ban it'. That's the sort of discussion that's happening on the ground."

Consumers are concerned about talk of diesel bans in towns and cities, future punitive tax on diesel emissions and fuels, and the impact any of these will have on the residual values of their diesel cars.

Murphy blames politicians and “the misinformation that’s out there”.

NOx-based tax

In terms of recent policy, the Government has replaced the 1 per cent diesel surcharge with a new NOx-based tax that targets more polluting, used diesel imports.

They have also continued with the generous grants and tax rebates for electric vehicles, which are among the highest in Europe. However, the recent Climate Action Plan states that "the mix of fiscal incentives will be revised annually as grants are gradually withdrawn".

Then there is the plan for a 2030 sales ban on non-electric cars. A similar ban proposed by the Danish government elicited a letter from the European Commission warning "a complete ban of the marketing, import or registration of new petrol and diesel cars in a member state is not compatible with EU law".

While the EU legislation could ultimately be changed if other member states agree to roll out similar bans, auto industry executives are adamant they are not able to cater for electric-only new car markets over the next decade. However, another consequence of the VW scandal has been the collapse in trust between the auto industry and governments. Politicians are more interested in telling car manufacturers what they have to do than discussing with them what can be done.

That was evident from the Climate Action Plan. Irish distributors say they were never consulted or asked about their ability to supply vehicles to meet the Government’s targets.

As for the Irish election manifestos, Fianna Fáil wants to ban diesel cars in cities by 2030 and to "aim for a complete removal of fossil fuel cars by 2035".

Recharging infrastructure

Fine Gael reiterates its promises to ban the sale of all new non-electric vehicles by 2030, plans for greater investment in recharging infrastructure, and says it will consider introducing a new scrappage scheme to support electric car sales.

Sinn Féin just says it will encourage the use of electric vehicles, but says “cultural change away from private cars is the best way to reduce our emissions. We will not set completely unrealistic targets for the uptake of electric vehicles”.

Labour commits to "phasing out diesel cars", while the Green Party barely mentions electric vehicles in its manifesto, though earlier this week party leader Eamon Ryan said he supported a future ban on the sale of new non-electric cars, one that would include hybrids and plug-in hybrids.

According to Hyundai’s Stephen Gleeson, the current problems in the car market are down to politicians. “We need to address that confusion and give people an assurance of what’s the right thing to do. I don’t think the industry can do that. The Government comes out with statements and then whatever the industry says is seen as being from vested interests.”

Cork dealer Denis Murphy says: "The manufacturers are all vying for position and there are going to be massive winners and massive losers in all this. In the meantime, we, as dealers, have to create the honesty in the narrative that it's still okay to buy a petrol or diesel car and there is a roadmap there, created by the European Union, and which it's forcing manufacturers to meet.

“Our Government is interfering with this timeline, and they have zero influence over it. So they have caused massive confusion and what we have got is that people are hanging on to their cars for longer, and these cars have higher CO2s and NOxs.”

For such a seismic shift in a cornerstone of Irish daily life, moving from filling stations to recharging points and replacing half the national car fleet with electric cars in the next 10 years, we still seem to be lacking direction about where we are going and how we are going to get there. That’s leaving consumers understandably confused and the car trade in trouble.