Buying an imported car? Better do it before Brexit

Yes vote could complicate the purchasing process for buyers, say experts

The June 23rd vote on a potential exit from the European Union by the United Kingdom will have far reaching consequences for the Irish economy, not least its car market.

We have an odd situation here in Ireland (don't we always?) as some of our major car importers are independent agents, who report sales and income figures to continental European headquarters, while others are effectively offshoots of a UK-based operation. Either way, our car market is umbilically connected to that of the UK's simply because we share both a right-hand drive configuration and a common physical border, thanks to the existence of Northern Ireland.

And we have been taking advantage of those facts, and the our joint membership of the European community, to easily and simply import cars both new and used into Ireland. Customers for those cars (and 12,914 used cars have been imported so far this year alone) generally quote either better value, more choice or some combination of both when it comes to opting for the import route, rather than simply strolling down to their local dealership.

The free flow of goods and people between Ireland the the UK, as a fellow EU member, makes that process pretty simple, even if there is the dreaded Vehicle Registration Tax to deal with once the car lands here.

What if that all goes away though? Back in the 1960s, before Ireland and the UK joined what was then called "the common market" there was still relatively free movement of goods and services between the two nations but it was not entirely free. Remember the customs checkpoints on the old Belfast road? While their return might seem like something of a nuclear option, it has been spoken of already.

The car-makers and importers do not really seem to know quite what to do, and that is probably because no one does. Neither the leave nor stay camps in the UK seem quite certain what would happen were a leave vote to romp home on June 23rd.

Presumably, individual agreements could be hammered out with the EU or with individual EU nations to keep trade and goods flowing – it would hardly be in UK Plc’s interest to start throwing up barriers, but the EU may not feel the same way.

Political spite

If the UK turns its back on us, would we, legislatively, do the same to it? Would extra barriers be placed in the way of imported goods from the UK, out of sheer political spite? Such a thing may not make much of a difference to food, or consumer electronics or other items that can just as simply be sourced from

France

,

Germany

or

Spain

but cars with the steering wheel on the correct side are quite another matter.

"I assume, that should the UK leave the European Union, that the our relationship will revert to the pre-EU relationship of the 1960s" Declan Maguire of Suzuki Ireland told The Irish Times. "This will allow for the free movement between our Islands of people and goods. So, even though I spend a lot of time in Suzuki's offices in Milton Keynes, I don't envisage waiting in long emigration queues at Birmingham Airport.

"It is a complicated issue and a big decision for the people of Great Britain. It is not as polarised as the Daily Mail or the Telegraph would have you believe. All I hope is that the voters get a chance to hear all sides of the argument before they make up their minds."

BMW faces greater difficulties: the Irish office is essentially an offshoot of BMW GB and while the company is putting a brave face on what it would do in the case of a Brexit, you can, reading between the lines, sense the nervousness when a spokesperson told The Irish Times that "as a major employer, exporter and investor, the BMW Group is committed to the UK which is home to two of our brands, Mini and Rolls-Royce Motor Cars.

“Our experience shows that the free movement of components, finished products and skilled workers within the EU is extremely beneficial to British-based business. We firmly believe Britain would be better off if it remained an active and influential member of the EU, shaping European regulations which will continue to impact the UK whatever the decision in June.”

Nissan is also heavily invested in the UK market, with its vast factory in Sunderland turning out the Qashqai, Leaf and the new Infiniti Q30 models, but its chief executive, Carlos Ghosn, has repeatedly warned that this huge commitment may not survive a Brexit, saying that "if anything has to change, we would need to reconsider our strategy and our investments for the future."

That’s the corporate side but what about the personal one? What if you’re looking at the UK car market and fancying going down the import route yourself?

Well, according to one senior Irish car trade executive (who should really be encouraging people to buy locally, but anyway…) the message is “if you’re going to import a car, better get it done before June 23rd.”

That is advice that's echoed by Ashley Winston, head of Palmdale, a service which locates and sources cars in the UK market and which has a number of Irish clients on its books. "I'm not a very political person" he told The Irish Times, "but generally I would think it would be better for the UK to stay in Europe. As far as exporting cars to Ireland goes, I think people need to ask themselves two questions – if the UK exits, does the process become more difficult, and what does it mean for interest rates?

“For the first question, I guess that things would stay the same at first but looking into the future, they’re almost bound to get more difficult. As for the interest rates, well change usually means that things become more stressed, so you could see them changing for the worse.”

Exchange rate

Winston is less sure on the exchange rate question – he reckons that a Brexit would trigger a fall in sterling, which would make purchases more tempting for Irish buyers, but other experts have suggested that the euro would also fall in the event of the UK seeking to break up the EU, so the exchange could well balance out.

“Either way, there’s really one thing you need to think of,” he said, “is it better for me to shop in the import market? And if you’re buying an expensive, high-end car then right now the answer is yes, so I would say do it without delay because there is a risk of things becoming much worse. Grab the opportunity now because no one knows what could actually happen in the event of a Brexit.”

There is a final consideration for Irish buyers, and it’s in the sphere of consumer rights. According to the European Consumer Centre (ECC), a pan-European consumer rights organisation, it received 37,609 complaints from consumers in 2014, only 2.1 per cent of which were related to the purchase of cars or car parts between EU nations.

Nonetheless, the ECC regards these cases as significant in seriousness if not volume, because of the large costs associated with cars.

It told The Irish Times of one Irish customer who, having paid by electronic bank transfer for a car from a UK dealership, arrived to collect the car only to be refused at the point of sale. The reason given? The staff at the dealership refused to accept his Irish passport as a valid form of ID. Eventually, after complaining to the ECC, the dealership refunded not only the price of the car (a not-insignificant £35,000) but also the customer's cost of travel and some compensation for the inconvenience.

Martina Nee, press and communications officer with ECC Ireland said: "ECC-Net has come up with a one-stop shop to give EU consumers relevant and practical information on cross-border car purchases. While the report highlights some of the issues faced by consumers when purchasing a car in another EU member state, the fact sheets will act as a handy guide to purchasing or registering a car in a specific country," he says.

“For example, Irish consumers tend to go to the UK to make a car purchase so there is information on paying by cash, payment of VAT, obligation on sellers to provide vehicle inspection, what to look for in contract of sale, how to cancel the contract, and what documents to provide the seller. There is also advice on temporary plates or insurance, how to report a complaint, seek redress, or report fraud,” says Nee.

A Brexit may excuse the UK and its businesses from such scrutiny, yet another brick in the wall which may, post-June, be erected along the Irish Sea.