With the car sales already down 5 per cent on last year, the importance of the annual Easter sales to the fleet and rental segments will be a key factor in the end-of-year results for the industry. Four out of every 10 cars on Irish roads are either rented or part of a company fleet. Donal Byrne reports.
"This is a most unusual year and a difficult one to call," says Fergus Conheady, fleet sales manager at Crosson Motors in Dublin, where rental and fleet sales account for almost 40 per cent of business. "We scaled back on rental business this year and we reckoned anyone depending on business coming from the US was going be to be in trouble."
With Bord Fáilte cutting back significantly on marketing expenditure in the US, some people involved with the rental trade here say the emphasis should be on Britain and Europe.
"The Iraq war seems to be coming to an end and people from the US will travel here if they want," says Greg Turley, managing director of Argus Car Rentals. "But the British market is on our doorstep. The sterling advantage is huge and there are short, cheap flights. People can travel here at the drop of a hat."
Easter normally sees an increase in sales to the rental sector, which last year accounted for 22,000 new cars, but the Iraq war and the drop in airline passenger numbers have made things far less certain this year.
The fleet and rental segments are regarded by many as one of the most accurate barometers of the economy. "The minute the economy starts to go soft," says Turley, "demand for rented vans drops off. It's an instantaneous thing."
Those in the motor industry who depend on fleet and rental sales are currently having an anxious time of it. Argus, for instance, is currently offering "depth of winter rates" on its cars. But it has also had to reduce its fleet size from an admittedly false high of 650 during 2000 to 350 now.
According to Cyril McCabe, Fiat's fleet sales director, "companies are still buying cars but we're now seeing a situation where they are extending their period of ownership from the normal three to four years. The big rental companies are still buying cars but the smaller ones are feeling the pressure. A lot of people think the rental market is way down when they look at last year's figures, but they forget that Easter came in the first quarter last year - it comes in the second quarter this year."
Ford's sales director, Dave O'Driscoll, says the big rental firms are very competitive but the smaller companies are finding it difficult to compete.
"There are many uncertainties but the US market has been the big factor," he says.
"Last year we would have sold 4,300 cars to rental companies and this year we are hoping for about 4,000. So far we've had no cancellations, which is a good sign."
Ford is holding on to fleet customers, he says, but, again, there are factors causing uncertainty.
Benefit-in-kind is a big issue for people driving company cars but the fact that this tax now extends to PRSI contributions makes it a further penalty for employers and employees, according to O'Driscoll.
There is now a move towards the payment of allowances instead of providing cars. Bank of Ireland and Intel are among the high profile companies now paying allowances.
Industry sources say these can be worth between €500 and €800 a month, depending on grade. "Most companies still prefer to own their own cars. The figure for ownership is still up at 80 per cent and that includes very big companies such as Diageo," says McCabe.