July gets off to better start than January in 162-plate frenzy

July could out-pace the more traditional January in the sales race this year, as early figures from Motorcheck.ie suggest that the first seven days of the 162-registration period have been stronger than the equivalent period in January.

The numbers show that 13,444 new cars were registered in the first seven days of July, as compared to 11,939 in the same period of January. (The first ten day figures showed, provisionally, that sales were up to over 15,000, which is impressive albeit slightly behind Jan’s first ten day sales.) By happy coincidence, the two time periods have an identical run of days, starting on a Thursday and with a Sunday in the middle, so they are directly comparable as sales periods, aside from the lack of a major public holiday in the run up to the July period.

Tuscon sales

The top-selling car remains unchanged from January to July - it's the Hyundai Tuscon, a fact which is indicative of both a major shift in the tastes of Irish buyers (from traditional hatchbacks and saloons to SUVs) as well as a shift of finances, with the majority of Tuscons sold costing close to €30,000, as opposed to the circa €25,000 figure for a smaller family hatchback.

In the first week of January, the Toyota Corolla was the second beset-selling car overall, but it was well beaten by the Tuscon, which shifted 874 units to the Corolla's 474. For the first week of July, it's the Ford Focus which has grabbed second place, and it has caught up a little with the Tuscon, selling 611 units to the Tuscon's 954. Either way though, the Tuscon is unlikely now to be overtaken as the best-selling car of the year.

The rest of the top ten is rounded out with what may be described as the usual suspects - Qashqai, Corolla, Fiesta, Yaris, i30, Golf, Octavia and Sportage. The fact that the top five is dominated by larger, more expensive models (the Fiesta is the only sub-€20k model to break into the top five) shows that Irish buyers are prepared to spend more on their cars now, and that the cash to finance a new car purchase has been made significantly more affordable, at least in the short term, by the number of Personal Contract Purchase (PCP) plans on offer.

"We are delighted with the July figures so far" a spokeswoman for Hyundai Ireland told The Irish Times. "In terms of July supplanting January, while it is very difficult to predict, our feeling would be that the market is moving towards having two very big months and that 50 per cent of all cars will be sold during these 2 months of the year."

However, there are a huge number of incentives and discounts being brought into the market in order to sustain consumer interest. While not strictly speaking 'Scrappage' schemes, they are aimed at buyers trading in older, less valuable cars, and can knock as much as €4,500 off the price of a new car, depending on the model. While such trade-in bonuses are welcome news for buyers, they are eating into already narrow profit margins, and it's all too easy to see parallels with the discount-heavy US market that came before the bankruptcy and collapse of General Motors and Chrysler.

Thus far, the Irish market traders are unconcerned about the level of discounts in the market. “In terms of concerns on discounts in the market- from what we can see the market now, in July, is as competitive now as it was in January” said the same Hyundai spokesperson.

Ciaran McMahon, chairman of Ford Ireland is equally sanguine about the heavy discounting. “No more than ourselves at Ford, all of the manufacturers have set out their stalls very well for the 162 market and without a doubt there is great value to be had in the marketplace with the customers being the winners. I wouldn’t be concerned about the amount of discounts in the market. It is a buyer’s market and the great value on offer is the manufacturers’ response to that, as I mentioned, the customers are the winners in this situation” he told The Irish Times.

Strong start

Lars Himmer, head of Volkswagen Group Ireland reckons that demand and discount go pretty much hand in hand, saying that "it is very positive to see the strong start of July registrations across the market driven by strong demand and offers. It is also a clear sign of the successful implementation of an additional number plate creating a strong July and quarter three, even though it has not reduced the January, quarter one share of annual sales."

As for the Brexit elephant in the room, everyone seems to be keeping their heads down and trying to concentrate on the good news of today, rather than worrying about the potential bad news to come. “It is still too early to discern with any real certainty how Brexit may impact” said Ciaran McMahon. “After all, it will be at least two years before any legislative changes will be brought in. Certainly there is no impact on the July market but in the longer term there could be significant implications which are hard to pinpoint at this early stage. Another certainty is that if sterling continues to slide, that will very quickly have ramifications for the second hand market here.”

Brexit

That second hand market volatility could have serious implications for those packing out dealerships this week and next in search of a shiny new number plate. "PCP's have been the lifeblood of new car sales over the past three years" Michael Rochford from Motorcheck told The Irish Times. "If used car values are hit then PCP's will not be as affordable as in recent years since the GMFV (guaranteed minimum future value) of the car is reduced, and if there is a sharp drop in used values due to Brexit then this could have a severe effect on the PCP market here. Many of the PCP's sold in recent years have been sold to consumers who would have previously bought a nearly new car. A nearly new UK import may soon look like better value than a PCP. It is possible that 2016 will see a peak in new car sales in Ireland and 2017 may actually experience a decline in new car sales if some of the potential consequences of Brexit come to pass."

For now though, the motor trade here is looking forward to July being little short of a bonanza period. According to James Brooks, MD of Kia Ireland, the end of the month could be even better than the start, because "there is great value in the market with plenty of offers with customers tending to leave the decision to buy a little bit later than the trend for January."