Car market could plummet to as few as 55,000 sales next year

A senior motor executive in Ireland has warned that the market for new cars in Ireland could plummet to as few as 55,000 sales next year if the Government does not move to adjust the Vehicle Registration Tax (VRT) and motor tax bands before the new year in line with changes to the emissions testing regime.

A new light duty testing procedure has replaced the outgoing discredited test last year. By using stricter testing procedures, it produces more accurate figures for fuel economy and emissions.

The downside is that those emissions figures are much higher than before – high enough to trigger major price increases for many big-selling models, as much as €4,000 on the price of new mainstream family cars, if the tax bands are not adjusted.

Industry officials say the new, more stringent testing regime is resulting in some cars having their official CO2 emissions figures rise by as much as 40g/km, pushing several popular models into higher tax bands when they are being sold as new.

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Failure to adjust the motor tax bands into line with the emissions figures for cars would spell doom for new sales, according to Paddy Magee, country operations manager for Renault Ireland, and would likely push more and more buyers to import used cars from the UK, which would still be taxed according to their older figures.

Blunt instrument

The introduction of the WLTP (World-harmonised Light Duty Testing Procedure) emissions testing regime is supposed to be revenue neutral in terms of tax for EU governments but there are worries that, as part of the Government’s climate change action plan, it will use higher taxes on cars as a blunt instrument to get people to switch to electric cars.

The Government’s target to have 950,000 electric vehicles on the roads in the Republic by 2030 – and a ban on any non zero-emissions new car sales from then – is already being described as unrealistic within the motor trade.

The problem is that supply of those electric cars will be tight for the foreseeable future, given the timeframe for car companies to introduce new electric models, and to meet global demand, particularly in major markets like the US and China.

There are also indications that most will be too expensive for many car buyers to afford.

Mr Magee told The Irish Times that neither he nor anyone from Renault had been approached by the Government for advice on how to push car buyers into electric models, not even if electric cars could be built and sourced in sufficient numbers in the coming years.

Clear plan

His comments echo those last week from Volkswagen brand director in Ireland, Gerrit Heimberg, who said no one within the VW Group was asked to talk with Government about their electric vehicle plans.

“By 2030, we said as a group that 40 per cent of our vehicles would be electric vehicles. We have five brands here in Ireland and we are on a very clear plan to introduce electric mobility as fast as we can.

“However, we also have to have realistic targets and we need the support from the Government for installing the infrastructure to charge their vehicles. We believe we can’t tell customers there will be one million cars on the road by 2030 when this is simply not possible and that make the customers uncertain about purchasing a car.

“We’re hoping we get a clear commitment from the Government in reducing CO2 but with realistic plans and a realistic timeframe keeping customer mobility in mind.”