The SSIA windfalls aren't making their presence felt in the showrooms, says Donal Byrne, and the second-hand market is benefiting.
New figures suggest very strong growth in the second-hand car market, and appear to confirm the predictions of the Central Statistics Office that Irish buyers do not intend to splash out their SSIA savings on new cars.
The AA this week said its analysis of the car market so far this year showed 2.5 second-hand car sales for every new car being bought and GE, one of the country's largest car finance companies, says there is unlikely to be a spike in new cars sales when the majority of SSIA accounts mature in April or May.
"Many SSIA holders appear to have chosen to hang on to their lump sum and borrow for a replacement car on the basis that if they use that money for a new car, it seems unlikely that many will have the discipline to repeat the savings exercise," says GE's head of marketing, Rosie Dunne.
The CSO figures published last summer predicted that only about 6 per cent of savers would use their SSIA money to buy a car, with the vast majority of savers opting to invest their money, spend it on home improvements or continue to save.
Some in the motor industry are, however, predicting very strong sales in April and May.
"We are expecting a good April and May because the feedback we are getting from dealers is that people are waiting, doing a lot more homework and willing to spend on moving up from the cars they are driving. We believe people will be moving up from small cars to bigger cars and even up to small SUVs," says Ian Corbett, spokesman for Toyota Ireland.
He too confirms very strong demand for second-hand cars this year: "We have noticed very strong sales in the order of two second-hands to every new car and people seem to be shopping around more intelligently. Also, a lot of dealers have completed development work on their premises and are in a position to stock more cars and prepare them better for customers."
The first figures for January sales show the car market has increased by about 10 per cent, with the top end of the market showing very strong growth.
Niall O'Gorman, managing director of Suzuki in Ireland, says the growth is not widespread, however.
"We are getting mixed signals. Some dealers are very busy and others are not. The effect of SSIA's has been that people are tending to look for a GLX model instead of the more normal GL choice." He predicts that 2007 will be a very strong year, but that sales will be hit next year when there are no SSIA accounts maturing and the full effect of interest rates kicks in.
GE says demand for second-hand cars is driven by an "increased customer astuteness" with people looking for exactly what they want without paying new car prices.
Its analysis says the top end of the market is where people are making huge savings by buying second-hand.
"It is often possible to take up to 25 per cent off the cost of a luxury car by buying one that is less than a year old. The cost of owning a second-hand luxury car has effectively dropped by 15 per cent in the past 12 months because of residual value changes. The overall average price has fallen from €23,000 to €20,200 over the past two years," it says.
GE predicts that the mini car sector will show growth and a lot of more attractive cars on the second-hand market because of the arrival of cars like the Citroën C1, Toyota Aygo and the Peugeot 107 (all of these cars are effectively the same and are built on a partnership basis between the three companies).
The small to medium sector is static for cars up to three-years-old, but demand for 2001 models has added some €400 to the value of these cars.
Demand from immigrants is a factor, says Rosie Dunne. She adds that the family segment has shown strong growth in values too, with good diesels making strong prices. The large family and fleet sector has also grown with up to €1,000 being added to values for cars between three and five years old because of a large number of new models and people wanting to trade up.
Executive and luxury values have been clawing back with these cars being worth significantly more than a compact executive car after five years.
These compact exeecutive cars, such as the BMW 3-Series and the Audi A4, have slipped back a little over the five-year stretch, but the drop is marginal and reflects the higher number of manufacturers with cars in this segment, according to the GE research.
GE also says the value of older cars (five to eight years old) is decreasing markedly because, among other reasons, many immigrants who bought these older cars are now in a better financial position than previously and many are moving up to better models.