Irish Motor Industry

racso1975

Was listening to Colm McCarthy on the last word on today fm( sure it's up on podcast). He is the man who came up with all the different ways to save public finances.

Anyhow Matt asked him about the Motor industry and the goverment investing in the likes of a scrappage scheme or removal of vrt.

Mr. McCarthy replied that there was no irish motor industry and that any money invested would end up going out foreign and there was no rational to getting people to change their cars 3 years earlier then they probably would. Said that the sector will regain sales in time and to leave it alone Also said that any politician calling for this was probably being backed by people in the car retail sector.

Just wondering what peoples opinions are on this

Sleipnir

You might as well suggest a Computer Scrappage Scheme because people aren't buying them as often as the resellers would like.

What's the difference?

Drummerboy08

I've said it before. A scrappage scheme will not work in Ireland. Here's the problem, and maybe you'll understand why.

A scrappage scheme in my eyes is basically an incentive for people to go out and buy a new car. In order to avail of this offer, you'll probably have to have a fairly old car.

So, two things -

1. Old fleet
2. Demand

Now, I dont know about you, but the majority of cars I see on the road every day are 03/04/05/06 onwards. The people driving these cars are not going to be tempted to change - there's no real reason to change a 5 year old car, unless its fcuked.

2. believe it or not, there is demand out there for cars. People want to change cars. The problem is, the availability of credit.
If the goverment want to get cars selling, maybe a credit scheme with the finance companies would be a better option.

But thats an argument for another day.

CarMuppet

...or how about a tax credit instead of a scrappage scheme on a new car?

Afterall the car main stealers will inflate the price of a new car by the scrappage value anyway...

Drummerboy08

CarMuppet wrote: »

Afterall the car main stealers will inflate the price of a new car by the scrappage value anyway...

Statement of the year that is.

racso1975

Not to meantion the car stealer one:rolleyes:

Gurgle

Ireland doesn't have a motor industry.
Its a sales network for 100% foreign manufactured goods.

Who here would benefit from a scrappage scheme?
The (already wealthy) dealers, obviously.
The government coffers - a much larger slice of the sales price goes to the state than any other product.

Who would suffer?

Tax payers would be down the scrappage scheme price and up the VRT + VAT, so its 'profit' there.

So the suffering would be limited to - those who make a living through every other product or service for sale in the country.

All that extra money that would be spent on new cars with a scrappage scheme would have been spent elsewhere. There are few products / services where the majority of the cash spent is divided between just 4 'people' (Manufacturer, salesman, garage owner, government) as with the motor industry. Even fewer where 60% of the cash goes right out of the country.

Sure it would boost the coffers a little in the short term - but it ultimately reduces the cash in the IRISH economy.

Owen

CarMuppet wrote: »

Afterall the car main stealers will inflate the price of a new car by the scrappage value anyway...

Seriously, if you knew anything about the trade, you'd know that Dealers don't set prices, distributors do.

Drummerboy08

Gurgle wrote: »

Ireland doesn't have a motor industry.
Its a sales network for 100% foreign manufactured goods.

Who here would benefit from a scrappage scheme?
The (already wealthy) dealers, obviously.
The government coffers - a much larger slice of the sales price goes to the state than any other product.

The customer would have more affordable cars. I also like your comment of "wealthy dealers". Is that why I've had to take a pay cut, and watch other work collegues walk out the door, knowing they're not coming back?

I think wealthy is the wrong word.

Who would suffer?

Tax payers would be down the scrappage scheme price and up the VRT + VAT, so its 'profit' there.

So the suffering would be limited to - those who make a living through every other product or service for sale in the country.

So what happens to the salesman in the motor trade? The guy who had on average 30k per year to spend in the Irish economy, is now costing the economy more money. What about the mechanics/service advisors/parts managers who had money to spend in the Irish economy? They too are now living off the state because they are unemployed.

I'd be willing to bet that the amount of money paid out of state benifits to former employees of the motor trade would be alot more than the figure being thrown around for this scrappage scheme.

All that extra money that would be spent on new cars with a scrappage scheme would have been spent elsewhere. There are few products / services where the majority of the cash spent is divided between just 4 'people' (Manufacturer, salesman, garage owner, government) as with the motor industry. Even fewer where 60% of the cash goes right out of the country.

Sure it would boost the coffers a little in the short term - but it ultimately reduces the cash in the IRISH economy.

What about the scores of people who have imported cars from the UK in the last 18 months? What about the people who go up North to do their shopping? Joe public has spent more money outside of this economy in the last 18 months than the motor trade has taken.

TBH your post sounds like it was written by someone who has no clue whatsoever what is going on in the motor trade. Its also a small minded, ill-informed, smaller picture post.

What happens if the thousands of people employed by the motor industry in Ireland become unemployed? More people will spend more money outside of the state on cars/shopping etc, while the government spends more money on supporting those who have lost their jobs.

EDIT
This is about keeping people in jobs, so they can continue to spend their money in other areas like tourism, shopping, etc etc. It is not about saving the manufacurers. Ireland is such a small piece of the global puzzle when it comes to car sales.

Owen

Maybe a previous poster is right, what makes the Motor Trade different to the PC trade, shouldn't the government do something to support the IT industry? The truth is that the Government should do something to support every industry. But because of the amount of Dealerships closing over the last 2 years - the Motor Industry here is in need of assistance, they're not just closing for the good of their health.

CarMuppet

PaintDoctor wrote: »

Seriously, if you knew anything about the trade, you'd know that Dealers don't set prices, distributors do.

Hi, you're absolutely right, I don't know anything about the price-fixing that takes place in private between dealers in this country.....

I do know I was in the market for a particular make/model of new (or newish) car May 2008... Depending on what dealership I contacted they gave me the list price (plus charges??). Some of them followed up with a phone call saying "sure call in and we'll do a deal"... Hmmmm so the list price is flexible so? I don't know.... in the end I brought my 6 months old car in from the UK.

I'm a patriotic Irishman, and I'm all for the old “Guaranteed Irish” logo of years gone by. Keeping Irish jobs alive etc.... but I just can't afford to be patriotic anymore... besides I got the car I wanted in England for 40% cheaper, stuffed with loads more kit. I did feel a bit guilty alright bringing the car back to the local dealership afterwards for a manufacturers warranty repair…



Regards,
CarMuppet

Owen

CarMuppet wrote: »

I do know I was in the market for a particular make/model of new (or newish) car May 2008... Depending on what dealership I contacted they gave me the list price (plus charges??). Some of them followed up with a phone call saying "sure call in and we'll do a deal"... Hmmmm so the list price is flexible so?

Yes, the list price is flexible. It's been that way with the Motor Trade since Daimler and Benz put their horseless carriages on the road. But the list price doesn't vary between dealers selling the same price.

The charges are delivery and related charges. Every single dealer up and down the country has a manufacturers price list, which doesn't include the cost of transporting the car to Ireland, PDIing it, valeting it, putting plates on it, and the admin costs of registering it.

This is very basic stuff.

pburns

I think Colm McCarthy's position is spot-on and i've said the exact same thing on here before (maybe he reads the motor forum:D).

I don't believe that most dealers were raking it in, not really. Most got themselves in over their heads with big premises/staff etc. Thing is it was the unrealistic expectations of the distributors and manufacturers that left many dealers feeling obliged to upgrade their premises. I know some smart fellas who could have had franchises but were happy to continue on as indys. At the time they would have been considered lacking in drive and ambition. In retrospect we could say they were wise. 20/20 hindsight and all that:rolleyes:...

On the grand 'macro-economic' scale of things McCarthy is right. There are a few industry people on here that have a pretty mature attitude as well, I was expecting snashing of teeth and the immediate calls for his head from those in the trade...

Drummerboy08

pburns wrote: »

I think Colm McCarthy's position is spot-on and i've said the exact same thing on here before (maybe he reads the motor forum:D).

I don't believe that most dealers were raking it in, not really. Most got themselves in over their heads with big premises/staff etc. Thing is it was the unrealistic expectations of the distributors and manufacturers that left many dealers feeling obliged to upgrade their premises. I know some smart fellas who could have had franchises but were happy to continue on as indys. At the time they would have been considered lacking in drive and ambition. In retrospect we could say they were wise. 20/20 hindsight and all that:rolleyes:...

On the grand 'macro-economic' scale of things McCarthy is right. There are a few industry people on here that have a pretty mature attitude as well, I was expecting snashing of teeth and the immediate calls for his head from those in the trade...

Well, the sad thing is, he's right. No point in arguing it.

Just to point out something in your post though - Most dealers were forced into glass palaces by the distributor in order to keep with the brand image. In most cases, it was not the dealers choice.

If anything, the manufacturers should be blamed for a large part of the dealers struggling finances. I know of one dealer who very recently built a brand new showroom, under the command of the distributor. Now he's struggling to even pay overheads.

talkingdog

PaintDoctor wrote: »

Yes, the list price is flexible. It's been that way with the Motor Trade since Daimler and Benz put their horseless carriages on the road. But the list price doesn't vary between dealers selling the same price.

The charges are delivery and related charges. Every single dealer up and down the country has a manufacturers price list, which doesn't include the cost of transporting the car to Ireland, PDIing it, valeting it, putting plates on it, and the admin costs of registering it.

This is very basic stuff.

Why is there such a price difference between UK and here.

I can buy any new car from the UK much cheaper than here so why can't the dealers ?

BMW have been caught out by the Sterling car swindle, they have reduced their prices by over 10% here and they are still more expensive than UK.

The Irish motor industry has been offering us 3rd class service for years here.

TomMc

But why should the state (taxpayer) subsidise an industry that is largely where it is at down to the vanity of its distributors and poor business acumen of its dealerships. New car sales only benefits a small few. Everyone needs a car but you can only drive one at a time. The industry needs to cut costs and offer value for money to the public. A good dealership should build and sustain its business on aftersales and servicing, not merely new car sales. There is more money to be made servicing nearly new and older cars than brand new ones. The motor trade had it to easy for too long and now they are paying the price. It's a shame the few good people in the trade have been let down by those at the top.

R.O.R

I might be in a minoity here, but I actually think a scrappage scheme will work - not just to the benefit of the dealers / manufacturer's, but to everyone (with a larger tax take).

The scrappage scheme in the UK cost the government £1,000 for every 10 year old car that came in. I've no idea about an average cost of cars, but the government must take in at least £1,000 of VAT for every new car sold. Scheme pays for itself at least, most probably increases the governments tax take.

While it targetted a specific market for 10 year old cars that people want to change, it took everyone by surprise with how popular the scheme was and there is even calls to extend it.

If a similar thing was attempted here with a small scrappage allowance, that is revenue positive for the government (with VAT and VRT wouldn't be too difficult), it will at least get some new cars on the road. As soon as Brendan at 43 see's that Mary the hippie in no. 20 has a brand new Prius, he's going to have to go out and get an new 7 Series or he'll be the laughing stock of Donnybrook.

Everyone else see's consumer confidence returning as folk are buying new cars, the banks start lending, the sun starts shining and the recession is finally over.

Bit hopeful? Sure I've overlooked some minor detail of the plan - feel free to point out what it is.

talkingdog

R.O.R wrote: »

I might be in a minoity here, but I actually think a scrappage scheme will work - not just to the benefit of the dealers / manufacturer's, but to everyone (with a larger tax take).

The scrappage scheme in the UK cost the government £1,000 for every 10 year old car that came in. I've no idea about an average cost of cars, but the government must take in at least £1,000 of VAT for every new car sold. Scheme pays for itself at least, most probably increases the governments tax take.

While it targetted a specific market for 10 year old cars that people want to change, it took everyone by surprise with how popular the scheme was and there is even calls to extend it.

If a similar thing was attempted here with a small scrappage allowance, that is revenue positive for the government (with VAT and VRT wouldn't be too difficult), it will at least get some new cars on the road. As soon as Brendan at 43 see's that Mary the hippie in no. 20 has a brand new Prius, he's going to have to go out and get an new 7 Series or he'll be the laughing stock of Donnybrook.

Everyone else see's consumer confidence returning as folk are buying new cars, the banks start lending, the sun starts shining and the recession is finally over.

Bit hopeful? Sure I've overlooked some minor detail of the plan - feel free to point out what it is.

A scrappage scheme will not work. All it will do is encourage the 40,000 people who want a new car to wait until it is announced. It will artifically inflate gov figures. When the scheme is over we are back to square one again, except this time the gov has lost more money in rebates and less tax.

This recession will not be ending for a long time.

TomMc

A scrappage scheme may give with one hand and take back with the other in terms of the government coffers, but it has to have a worthy purpose. Lower CO2 emmissions doesn't cut it if you scrapping perfectly serviceable cars (which have some life left in them), and manufacturing new ones to replace them, for the sake of it. On the other hand (like in the past) if it gets lots of potentially dangerous vehicles off the roads, well then it makes sense. But the NCT tends to police that nowadays.

The consumption of the last decade was primarily based on credit, backed up by high employment levels, so people had the means to meet their obligations. Things are different now, so nothing is going to change anytime soon. In the old days, it was if you can't pay don't go or save now and buy later. Since most people have no savings only debts and reduced incomes (if still in employment), the money isn't there anymore. And people of means now realise the futility of purchasing fast depreciating consumer items. Taxpayers money is best spent on things, that give a sustainable (not transient) investment on the return. People with savings are now going to be more prudent with their money as well as who knows what the future holds.

robtri

my 2 cents on this......

Firstly, just to second a point made before, and made numerous times all ready, all these beautiful glass and marble showrooms where forced on dealers, very few wanted them but the manufacturers basically said you either upgrade your showrooms to what we percieve as the right standards for our products.. if you don't upgrade... well we will take the franchise off you.....
most dealers went into serious debt to perform these upgrades and the results are very evident now.. is it there fault..... IMHO... no,

will a scrapagge scheme work.... from a financial point of view yes it will.... without a doubt it will shore up some of the dealers with cash reserves and help the coffers of the state....

if a scrappage scheme cost the tax payer/government €2000 per car... they government will recieve more than that back from the following tax takes:

1. VAt on the new car.
2. VRT on the new car ( its still a tax into the coffers)
3. salemen keep jobs and pay PAYE tax
4. Salesmen don't loose jobs and don't get social welfare...
5. Salemen have more money and as a result spend more... more tax in the coffers
6. Dealer pay PRSI and other taxes as the salemen stays employed
7. Dealers will make more money and pay more corporation tax.
8. Dealer stays in business and can pay his local Business rates.
9. Dealer stays in business and renews his insurance.... yep there tax on that that goes to the coffers....

and I am sure there are another 9 or ten items that could be added...

scrapage scheme will work, even if its short term it makes sense and give the dealers and employees more breathing room till the recession ends..

bijapos

If you look at the scrappage schemes that were introduced in some other EU countries, the assumption is that they have not worked, like some have said here, it only results in a short term blip. Car sales, like a lot of other products are determined by market forces, nothing else, market at the moment says 'I'm not buying', so face up to it. The market will recover and at the moment its simply sorting out the strong from the weak.

Anyone got any figures (preferably not some inflated ones from the SIMI) as to how many cars would be sold on a scrappage scheme, and how many jobs are gained for say, every 10,000 cars sold in this country?

TomMc

robtri wrote: »

my 2 cents on this......

Firstly, just to second a point made before, and made numerous times all ready, all these beautiful glass and marble showrooms where forced on dealers, very few wanted them but the manufacturers basically said you either upgrade your showrooms to what we percieve as the right standards for our products.. if you don't upgrade... well we will take the franchise off you.....
most dealers went into serious debt to perform these upgrades and the results are very evident now.. is it there fault..... IMHO... no,

That may be the case but supporting a trade that was by and large self-serving throughout the boom doesn't cut it. The people who benefited the most are private individuals or Ltd companies (some in foreign ownership) who have no concept of the greater good. Why should the taxpayer have to subsidise these business' that are unsustainable while they remain in glass palaces. What you are asking for is a form of NAMA for the franchised dealer network. The main banks are systemic to the operation of the economy, so they can hold the state to ransom, the motor trade are not. If a motor business depends on new car sales aided by government handouts to sustain a business, well then it is better that they go to the wall. Like I said previously, a motor dealership should be self-sufficient and the best way to do this is to run a tight ship, offering the public value for money and good service, which will be rewarded by repeat business and choc-a-block servicing bays.

The scrappage scheme in Germany made sense as they have a motor industry, we have merely a motor trade. Subtle but profound difference.

TomMc

Just heard, Bill Cullen will be on Matt Coopers show re a new car scrappage scheme.

scholar007

While it is sad to see anyone losing their job. I also remember not so long ago doing the rounds to buy two cars (for me and the wife).
This is within the last few years.

I experienced the following:

Car Salespeople ignoring me and my wife when we stood in the showroom, content to be standing around with their hands in their suit pockets having the craic and not even bothering to approach customers because times were so good

Phone calls not being returned

Car brochure requests not being fulfilled

Not keeping Appointments

Having a take it or leave it attitude, not willing to bargain!

Generally Unprofessional behaviour.

It got to the stage where I dreaded having anything to do with a motor dealer because the attitude right across the board in all the dealerships I approached and even the ones that we bought the cars in was deplorable.

In the end we bought the cars because we needed transport, but absolutely no effort was made to sell to us.

omega man

TomMc wrote: »

That may be the case but supporting a trade that was by and large self-serving throughout the boom doesn't cut it. The people who benefited the most are private individuals or Ltd companies (some in foreign ownership) who have no concept of the greater good. Why should the taxpayer have to subsidise these business' that are unsustainable while they remain in glass palaces. What you are asking for is a form of NAMA for the franchised dealer network. The main banks are systemic to the operation of the economy, so they can hold the state to ransom, the motor trade are not. If a motor business depends on new car sales aided by government handouts to sustain a business, well then it is better that they go to the wall. Like I said previously, a motor dealership should be self-sufficient and the best way to do this is to run a tight ship, offering the public value for money and good service, which will be rewarded by repeat business and choc-a-block servicing bays.

The scrappage scheme in Germany made sense as they have a motor industry, we have merely a motor trade. Subtle but profound difference.

100% spot on here TomMc

galwaytt

TomMc wrote: »

That may be the case but supporting a trade that was by and large self-serving throughout the boom doesn't cut it. The people who benefited the most are private individuals or Ltd companies (some in foreign ownership) who have no concept of the greater good. Why should the taxpayer have to subsidise these business' that are unsustainable while they remain in glass palaces. What you are asking for is a form of NAMA for the franchised dealer network. The main banks are systemic to the operation of the economy, so they can hold the state to ransom, the motor trade are not.

May work for you in the-subsidisied-by-the-rest-of-the-country-LUAS, Dublin Bus, and Dart -land, but the rest of the country needs to go to the (few) remaining jobs that are out there. And cars are the only way to do that. And bring kids to School too, btw.

....well then it is better that they go to the wall.

By that logic, you need to close down all food production as well, as ALL food is subsidised. Close the non-Irish-owned 'wealthy' business ones, like, say, Diageo...........is that ok, for fairness ?

Like I said previously, a motor dealership should be self-sufficient and the best way to do this is to run a tight ship, offering the public value for money and good service, which will be rewarded by repeat business and choc-a-block servicing bays

. No it won't. People will still cross the border, because over the border will ALWAYS be cheaper. No matter how you structure your business, business costs here are higher, and so therefore will be the product/service. And people would rather travel then support local efforts. Ask Tesco and ASDA, they have the current account to prove it.

The scrappage scheme in Germany made sense as they have a motor industry, we have merely a motor trade. Subtle but profound difference.

Subtle to you, if you don't work in it. A lot more than bloody profound, if you do.

And, as for 'no motor industry' - we may not make cars, but we make a ****-load of components and parts for them - ask the 1000's of people working in Kostal in Limerick, Cork, Bruss in Sligo, and many, many others. Please inform yourself before committing dia-cide. (suicide-by-diatribe )

greendom

If this goes ahead you might as well just hand the money over to the Japanese, German, French Italian, etc etc economies. There has to be better ways of spending Irish tax payers money than subsidising foreign manufacturing

smash

You want people to start buying cars again? reduce VRT by 50%, ditch the new carbon tax and set a standard fee motor tax for all vehicles!

Scrappage scheme = false hope and good cars being crushed for no reason!

R.O.R

Does no one seem to understand the scheme pays for itself?

Currently in Dublin there have been around 30,000 new cars sold this year. Arbitary figure for total tax on each car say €5,000. That's a government take of €150,000,000.

If a scrappage scheme comes in and costs the tax payer €2,000 per car, but shifts 60,000 cars in Dublin there is a payout of €120,000,000 but an income of €300,000,000. Net gain over the previous year of €30,000,000.

I used figures for Dublin as I know those off the top of my head. Guess you can roughly double all the figures to include the rest of the country.

I also picked €5,000 as it's an easy figure to work with. I'd hazard a guess that the average VAT and VRT would come to more than that.

While it does benefit the importers and the manufacturer's of the vehicles, it isn't the drain on resources some people think it would be.

Gurgle

Drummerboy08 wrote: »

The customer would have more affordable cars. I also like your comment of "wealthy dealers". Is that why I've had to take a pay cut, and watch other work collegues walk out the door, knowing they're not coming back?

You're a sales rep?
What does your boss drive?

Drummerboy08 wrote: »

So what happens to the salesman in the motor trade? The guy who had on average 30k per year to spend in the Irish economy, is now costing the economy more money.

Why should car salesmen be protected at the cost of everyone else?

What about the mechanics/service advisors/parts managers who had money to spend in the Irish economy? They too are now living off the state because they are unemployed.

They have more work because people are keeping older cars with higher maintenance needs. And A much higher proportion of that money stays in the country.

I'd be willing to bet that the amount of money paid out of state benifits to former employees of the motor trade would be alot more than the figure being thrown around for this scrappage scheme.

The scrappage scheme will make money for the state in VRT / VAT on sales. Its the dealer's purchase price that goes off to Japan / Korea / Germany / wherever.

What about the scores of people who have imported cars from the UK in the last 18 months? What about the people who go up North to do their shopping? Joe public has spent more money outside of this economy in the last 18 months than the motor trade has taken.

Whats your point?

yadda yadda ... no clue ... yadda yadda ... small minded...

Did you read my post?
Did you make it all the way to the end?

This is about keeping people in jobs, so they can continue to spend their money in other areas like tourism, shopping, etc etc. It is not about saving the manufacurers. Ireland is such a small piece of the global puzzle when it comes to car sales.

Evidently not.

tbh, as a particular 'special interest' group who will suffer, I have as much sympathy for car salesmen than bricklayers, plumbers etc etc

And its just salesmen who will suffer, as above - fewer new cars means more work for mechanics, motor factors etc.

R.O.R

Gurgle wrote: »

And its just salesmen who will suffer, as above - fewer new cars means more work for mechanics, motor factors etc.

That's weird. I'm pretty sure all those main dealers around the country that went bust had workshops attached to them. Must just have been the sales that were let go, or else that the formerly employed mechanics have now set up themselves and are rolling in cash.

Strange that we struggle to get cars serviced in certain parts of the country as there is no dealer coverage anymore. Must be a figment of my imagination :rolleyes: