Will VRT savings be passed on in full to the consumer?

Gandalf23

There has been a lot of talk over the last week about VRT savings and people have been estimating the cost of new cars in July 08.

But will garages/manufacturers pass on any VRT savings in full to the customer? Are they legally obliged to?

Opinions please ...

unkel

Gandalf23 wrote: »

will garages/manufacturers pass on any VRT savings in full to the customer? Are they legally obliged to?

EU block exemption laws mean the pre-tax price of a car is the same (more or less) throughout the EU. So if the tax in one of the EU countries is lowered (and everything else stays the same), the full savings is passed on to the customer

Ice_Box

This is from todays Irish Times

Help Desk

Michael McAleer answers your questions

From IH:

I'm considering buying a BMW 320 coupé in the new year, and notice that after the Budget the price could come down significantly based on the VRT changes and engine emmissions from the car.

Do you know if distributors will pass on the savings in VRT to the customer or simply adjust the base cost to keep the selling price the same? Also, any indication if dealers will introduce these reductions before July to keep car sales moving?

Obviously we would hope that distributors will pass on the benefits of savings, particularly on diesel models. However, some were already preparing their positions to take some of the tax cuts. Last week, while carrying out post-Budget phone calls with distributors, one industry spokesman was keen to highlight that several manufacturers had "supported the sale of 2-litre diesel models" over the years, taking a hit on profits. Now that they are competitively priced again due to lower taxation, that could end.

There is no guarantee that all the tax savings are going to be passed on to consumers, and we will have to wait and keep a close eye on the revamped pricelists for July.

On a related issue, we're not suggesting that the motor industry would use confusion over the new tax regime to beef-up profit on smaller items, but buyers need to be aware that the changes in tax rates on the overall car should also be reflected in the accessories and options list. Everything from the radio to the tyres is taxed at the VRT rate when fitted to the new car, so it would only be right if their prices fell commensurately with a fall in VRT for that particular vehicle. Buyers should pay close attention to the pricelist before signing off. Again, it's too early to say if dealers will be offering reductions prior to July, but if they do, it's unlikely to be on popular models and I certainly wouldn't expect to see any deal on the 320 coupé.

unkel

It's interesting that McAleer doesn't mention block exemption

E92

unkel wrote: »

It's interesting that McAleer doesn't mention block exemption

....nor the fact that the price of the 320d before tax in Ireland is only a few hundred euro higher than in Germany at present.

peasant

Who actually sets the open market retail price ...and how?

In the days of the internet it's easy enough to find out the list price of any car in the EU and deduct the VAT for the specific country and so get an idea of the pre-tax price.

But the formula here is too complicated to find out the end price for yourself

X = pre tax price + VAT + (y % VRT * X)

So ..what's X exactly

And who is going to rap the dealers across the knuckles if they set it too high?

And who is even going to notice if they do?

Certainly not the Revenue ...because they profit as well

Henry Ford III

I fear we'll get ridden. As usual.

JHMEG

unkel wrote: »

It's interesting that McAleer doesn't mention block exemption

For marques where the manufacturer is not the distributor then BE will not apply at all, and the distributor will be entitled to set prices however they like.

In the case where manufacturers themselves distribute the cars, if BE does apply (not sure it does), then there is nothing to stop the dealers whacking up the price and making a killing, even if the manufacturer isn't.

Tipsy Mac

peasant wrote: »

And who is going to rap the dealers across the knuckles if they set it too high?

As the suppliers must sell cars to to anyone with a certain spec of garage the "assumption" would be that there would be plenty of competition but you know yourself how that can be.

Mailman

I haven't crunched the numbers on this yet but I'm thinking there will be savings to be made importing brand new more expensive low CO2 models from the UK provided you can find a UK dealer who is willing to negotiate on price unlike some of the dealers here who would as soon spit at you as deal with you.
I'm thinking BMW Diesels here in Band B.

It would go something along the lines of :
Pay the price ex-vat in the UK or from a German dealer who'll supply RHD vehicle.
For a Band B vehicle VRT is calculated at 16% of (10% less than RRP and dealer and delivery charges).
Import here and pay VAT on the car at whatever bargain price you got it at overseas and then pay VRT worked off OMSP price.

Spit62500

The only certainty is that VRT will fall for some cars. The pre-tax price for cars is not aligned in the EU. You can be sure that importers and/or manufacturers are currently doing their sums regarding private imports of new cars from the UK (or RHD cars from Europe). That will dictate the price that we end up with. I don't foresee any bargains.