Tumbling UK car sales will lower the value of your Irish registered car
A decade on from the CO2 tax change, Irish drivers could be looking at another round of residual value reductions
This swell of UK imports has hit the Irish motor trade hard, with claims that imports are chiefly responsible for the ten per cent dip in new cars sales here last year.
The market for cars in the UK contracted by 5.6 per cent in 2017, according to figures released this week by the Society of Motor Manufacturers and Traders (SMMT).
Diesel sales across the Irish sea fell by even more, 17 per cent. Normally these two figures would mean little or nothing to Irish consumers, but these are not normal times. Last year, we bought 93,454 used cars from the UK, their prices made that much more affordable for us by the plunge in the value of sterling triggered by Brexit. This swell of imports has hit the Irish motor trade hard, with claims that imports are chiefly responsible for the ten per cent dip in new cars sales here last year.
Now, 2018 is looking as if it could be worse again, and it is the slumping new car, and especially diesel car, sales in the UK that could trigger something of a crisis in used car values in Ireland.
Ten years ago, with the introduction of the Co2-based tax system, there was an avalanche of used car values as once-desirable petrol-engined models suddenly became forecourt poison, and both consumers and dealers were left carrying a weighty can of fallen resale prices. Ironically, that 2008 tax system change, which pushed us all towards buying low-carbon diesel, is this year coming home to roost as buyers both here and in the UK turn back to petrol.
“Our 181 pre-sales figures show a real shift towards petrol cars where there is a choice on offer. The economic factors governing the cost of change and residual values sharply influencing consumer behaviour across the urban and rural divide,” said James McCarthy, chief executive of Nissan Ireland. “The rate of change is far more accelerated than predicted and the trend from our 181 pre-sales figures provides very real evidence that the split between petrol and diesel car sales is well on track to being close to equal by the end of next year.”
Toyota Ireland, which had in 2017 predicted that diesel may slump as far as 55 per cent of Irish sales this year, has now revised that figure further downwards, saying that diesel cars may account for only 45 per cent of sales.
Fallout from VW scandal
That move away from diesel, as Irish buyers absorb the fall-out from the VW diesel emissions scandal, and coverage of the many proposed diesel engine bans across Europe, is going to hit used diesel values all by itself.
According to Nissan Ireland’s McCarthy: “The VW emissions scandal also led to extensive regulatory change which has influenced manufacturers and consumer alike. The cost of regulatory compliance has led manufacturers to consider the financial viability of producing diesel cars below €35,000, while consumers are considering the merits of buying diesel at a time when Governments are introducing bans that prevent them from driving those cars into their capital cities.”
Added to which, there is likely to be a major flood of used and nearly-new UK diesels shunted across to the Irish market just as fast as dealers can load them onto boats. With that 17 per cent fall in UK diesel sales, there are going to be forecourts the length of our nearest neighbour clogged with unsold diesel cars, all of them falling in value, all of them just begging to be flogged off cheap here.
Alex Buttle, director of car buying comparison website Motorway.co.uk, told The Irish Times that “quite frankly, 2017 has been a year to forget for the UK car industry. You’d have to dig pretty deep to find anything positive to take from the past 12 months which has seen diesel demonised in the media on a weekly basis. As sales of new diesels continue to fall, 2017 could well mark the end of one era of motoring and the dawn of a new one, as hybrid and electric sales start to take off. The destiny of diesel may already be set in stone.”
That’s a potential millstone around the neck of Irish dealers. Laurence Harrigan, from Highland Motors in Muff, Co. Donegal told The Irish Times that “as a whole, the motor industry, even though it’s a resilient industry, we’ve seen prices for used cars drop, to come back in line with a lot of the stock coming in from England.
“Definitely there is a lot of stuff coming across, and you’d see lorry-loads of cars coming across day by day around here in Donegal. Our prices are as good now as they’ve ever been, our used car prices are as good as they’ve ever been, we have the back-up here to support people if anything does go wrong, and there are some great offers out there at the moment. So there is light at the end of the tunnel, but things have to be re-adjusted, and prices re-adjusted and I think dealers have done that, and there are some great bargains out there, if people are willing to take a look. But I think a lot of people have it in their head that they’d best go to the UK at the moment.”