Is the current Irish car market a house of cards?

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Big profits still in the Irish car market but a few warning signs on the horizon.

The increase in UK imports, the levels of pre registering car sales and the increase in the number of PCP cars on the road appear to be elephants in the room that have gone unnoticed.

Cee-Jay-Cee

PCP trade in values have to take a hit in the next few years, there simply isn’t the market to sustain that many used 2/3/4 year old cars being available and so they have to reduce the prices if they want to sell them.

Uk imports will eventually taper off with Brexit although only cars sold after Brexit is complete will be liable to additional vat as cars sold before that will have had EU vat paid so it’ll take up to 7 or 8 years for the UK import market to dry up.

I’d say if they can sustain the market for another 5 yrs they’ll be in a good place at that stage.

DaveyDave

People keep mentioning PCP sales as if people haven't been buying new cars every 2 years anyway. My mam alone got 3 new Octavia's consistently every 2 years without PCP. I'd say a lot of people using PCP are people who were already trading in every 2-3 years because it's more financially viable to use PCP rather than an 8% bank or credit union loan.

It's only in the last 3 years that car sales were above 100,000 for the first time since 2007 and the population has grown 500,000 since then too. I don't really think there's anything to worry about other than what happens when people want to sell their diesels to an already flooded market.

Casati

Cee-Jay-Cee wrote: »

PCP trade in values have to take a hit in the next few years, there simply isn’t the market to sustain that many used 2/3/4 year old cars being available and so they have to reduce the prices if they want to sell them.

Really? If their isn’t a market for these second hand cars then why are we seeing so many 2/3/4 year old cars being imported? I know it’s a little cheaper due to the weak sterling but the level of imports is actually proving out that local supply isn’t meeting demand of good second hand cars.

Leprechaun77

Casati wrote: »

the level of imports is actually proving out that local supply isn’t meeting demand of good second hand cars.

As somebody looking at purchasing a 2-3 year old car, I can assure you that the supply of cars is certainly there in Irish garages for the cars I want, but when I compare prices with importing from the UK there is a massive difference. There is certainly a demand at the moment for used cars, but not at the prices being quoted in Ireland....that's why people are importing in my opinion. For me to purchase here in Ireland the prices would need to be lowered to be somewhere close to importing a similar car....I believe this ties in to some posters opinions that future PCP values will take a hit?

Random Bloke

Nowhere near a house of cards.
Population of Republic is heading close to 5 million. There are over 2 million registered cars on the road. Cars per capita level in Ireland is lower than EU average, and is likely to increase.
Based upon 2 million cars, and with a replacement cycle of (say) 14 years, new car sales should be approx 150,000 per year to keep the national fleet reasonably fresh. We have only seen that level once or twice in last 10 years, so we have lots of older cars. UK imports have acted as a substitute for new cars, but that will almost certainly end in 2019 when 23% vat gets added to all used U.K. imports. It's possible that free trade might still apply between EU and UK, but that is looking unlikely, certainly for used cars anyway.
Despite everything that the media tell us, the Irish economy is doing OK, and new car sales will eventually reflect that.
I would be betting on the Irish new car market increasing from 2019, and secondhand prices increasing (no UK imports).
There will also be some interesting changes in supply of cars to the Irish market post-brexit. If the UK stops importing a lot of EU cars (Renault, Peugeot, Fiat, Citroen, Seat, etc) will all of those manufacturers continue to make right hand drive cars for much smaller markets? I doubt it. Bigger manufacturers (VW, Ford) and Japanese / Korean brands will still make RHD cars for the global RHD market, but those who rely primarily on the U.K. market for RHD sales may not be able to justify the additional production costs for a much smaller proportion of sales.

Casati

Leprechaun77 wrote: »

As somebody looking at purchasing a 2-3 year old car, I can assure you that the supply of cars is certainly there in Irish garages for the cars I want, but when I compare prices with importing from the UK there is a massive difference. There is certainly a demand at the moment for used cars, but not at the prices being quoted in Ireland....that's why people are importing in my opinion. For me to purchase here in Ireland the prices would need to be lowered to be somewhere close to importing a similar car....I believe this ties in to some posters opinions that future PCP values will take a hit?

Dealers always have priced cars at a premium versus buying at auction, private and indeed importing but ultimately they will price their used cars at a level they can sell them at- they might look expensive v UK but that doesn’t mean they aren’t selling

Trade in values have certainly taken a hammering with cheap sterling but folks on pcp are still trading in or buying their cars outright, PCP was v popular in 2014/2015 but it hasn’t resulted in a flood of cheap cars on the market that nobody wants

acronym Chilli

RE used cars: they are dear, but Irish people are generally pretty poor on managing money and realising when getting ripped off
e.g.

• Dublin: €350 for IKEA microwave
  
• Belfast: £250 for same IKEA microwave
• Paris: €249 for the same IKEA microwave
• Graz: €249 again for the Framtid

So there's probably a fair bit of room left for the car makers/dealers.
(Even the breakfast is more expensive: €2.50 vs £1.50, while sterling trades at £1=€1.13, so £1.50 is €1.70)

Doddles88

What I would love to see develop over the next 2/3 years is the car leasing market in Ireland. I have family in the UK who effectively rent cars for 3 years at a time and the offers available to them trump any PCP offer here in Ireland.
Some of the offers available:
Audi A6 Black Edition - Deposit £2,000 & Monthly payments of £250
Range Rover Evoque 2.0 eD4 SE TECH Man  - Deposit £2,500 & Monthly payments of £392
BMW 4 Series Gran Coupe 420d M Sport Auto - Deposit £2,280 & Monthly payments of £380
Treat your car simply as a monthly expense and harbour no hopes of ever owning it outright and leasing would be perfect!

cros13

Getting diesels dumped on the us from the UK market between now and 2019 is going to be an increasing problem.

They'll stay on the road here for 10+ years and we'll have to pay the emissions fines.

Casati

cros13 wrote: »

Getting diesels dumped on the us from the UK market between now and 2019 is going to be an increasing problem.

They'll stay on the road here for 10+ years and we'll have to pay the emissions fines.[/quote

What evidence is there that U.K cars are getting dumped here? Dealers and private individuals are traveling to the U.K. to purchase cars in demand here/ cars that they specifically want.

carsfan2

Diesel is still very much in demand here.
I was in a Dublin Bmw dealer last week interested in trading in my hybrid Bmw for another and the dealer recommended I go back to diesel...

cros13

Casati wrote: »

What evidence is there that U.K cars are getting dumped here? Dealers and private individuals are traveling to the U.K. to purchase cars in demand here/ cars that they specifically want.

Well, the current low market prices for used large diesel saloons in particular in the UK are at least in part due to the diesel bans and toxicity charges in city centers in the UK.

Bigus

carsfan2 wrote: »

Diesel is still very much in demand here.
I was in a Dublin Bmw dealer last week interested in trading in my hybrid Bmw for another and the dealer recommended I go back to diesel...

Well he would say that wouldn't he if he can sell you a diesel with bigger margin and make conquest sale to others with the hybrids, and also the fact hybrids are in short supply.

Stallingrad

"I was in with a dealer and he/she said..."

You'd get better advice shouting down a well.

Casati

cros13 wrote: »

Well, the current low market prices for used large diesel saloons in particular in the UK are at least in part due to the diesel bans and toxicity charges in city centers in the UK

UK cars all drop a lot in value in the first couple of years. Are Nissan Leaf’s also being dumped onto the Irish market?

cros13

Casati wrote: »

UK cars all drop a lot in value in the first couple of years. Are Nissan Leaf’s also being dumped onto the Irish market?

There was a short term drop in some EVs resale value caused by a ton of them coming off lease all at once (an after effect of the UK's 0% BiK on EVs).
So you had a situation where market prices for 2nd hand Leafs in Ireland were higher than the UK and the VRT credit meant there was no tax on import.

That's pretty much ended now, after peaking in August it will drop over the next few months.
The sterling price of a used Leaf has risen by about £2-3k in the last six to nine months as the supply dried up. So even though sterling is down buying an EV from the UK (at least at the cheap end of the market) has got a little less attractive.

Model S are a different story as some uncertainty/foul play on the OMSP has got cleared up in the last month. Half of the few EV registrations last month were used Model S coming in from the UK.

Cee-Jay-Cee

DaveyDave wrote: »

People keep mentioning PCP sales as if people haven't been buying new cars every 2 years anyway. My mam alone got 3 new Octavia's consistently every 2 years without PCP. I'd say a lot of people using PCP are people who were already trading in every 2-3 years because it's more financially viable to use PCP rather than an 8% bank or credit union loan.

It's only in the last 3 years that car sales were above 100,000 for the first time since 2007 and the population has grown 500,000 since then too. I don't really think there's anything to worry about other than what happens when people want to sell their diesels to an already flooded market.

PCP has really taken off in the last 4 or 5 years, before that it wasn't that common at all and cars were sold on finance only, ie you finance the car over x years and at the end of that period the car was yours, there was no handing the car back after 3 years so yes the number of PCP cars is going to effect future prices of second hand cars. I know numerous people on PCP deals who have openly admitted that only for PCP deals they'd be driving around in a much older car (which they would own outright admittedly) and I know a lot of other people who never owned a new car until PCP deals came along.

Casati wrote: »

Really? If their isn’t a market for these second hand cars then why are we seeing so many 2/3/4 year old cars being imported? I know it’s a little cheaper due to the weak sterling but the level of imports is actually proving out that local supply isn’t meeting demand of good second hand cars.

Its considerably cheaper in many cases and that's the reason you are seeing so many of them being imported right now and if it continues it has to start hurting at some stage, you cant suddenly introduce that many similar aged cars to the market and expect them all to sell.

You're completely wrong on your point that the level of uk imports means there isn't the supply to meet demands. There are more than enough cars to meet demand but people are choosing to buy UK imports and save 2 or 3 grand on the price of the same car here meaning that irish cars being traded from PCP deals will either lie in a yard unsold or the dealer will have to drop the price and if theyre dropping the price to sell these cars then FMV for PCP cars has to be adjusted accordingly down the line.

carsfan2 wrote: »

Diesel is still very much in demand here.
I was in a Dublin Bmw dealer last week interested in trading in my hybrid Bmw for another and the dealer recommended I go back to diesel...

Ha ha ha, you are joking aren't you!!! He recommended you go back to diesel to up his margin and not for any other reason and certainly for no reason that would benefit you. Ireland will be the dumping ground for all these manufacturers engines when the rest of Europe starts heavily taxing and/or banning diesels engines.

antiskeptic

In 2011 I bought an 03' Audi A4 1.8T. My mate, who was selling it to me told me to find the average price of that car at ca. that mileage and he'd give me his one for 500 euro less than that figure.

The average price of the car then (an 8 year old) was €3500. The average price of an 8 year old Audi A4 now seems to be more than double that (private sale)

What's gone on in the interim (the economy then was in crash mode, granted - but is that the extent of it?)

Cee-Jay-Cee

antiskeptic wrote: »

In 2011 I bought an 03' Audi A4 1.8T. My mate, who was selling it to me told me to find the average price of that car at ca. that mileage and he'd give me his one for 500 euro less than that figure.

The average price of the car then (an 8 year old) was €3500. The average price of an 8 year old Audi A4 now seems to be more than double that (private sale)

What's gone on in the interim (the economy then was in crash mode, granted - but is that the extent of it?)

The recession really killed petrol car prices. I bought a 7 year old Subaru legacy in 2012 for €2800, two owners from new, 76k miles and FSH from Subaru. I could have got the car for less as the owner was desperate to sell it, he drove from west cork to Dublin to meet me!! I didn't push him any more on the price as it was a steal at that and I actually felt sorry for him but I know I could have got it for €2500. The car was circa €27,000 when new.

antiskeptic

Cee-Jay-Cee wrote: »

The recession really killed petrol car prices. I bought a 7 year old Subaru legacy in 2012 for €2800, two owners from new, 76k miles and FSH from Subaru. I could have got the car for less as the owner was desperate to sell it, he drove from west cork to Dublin to meet me!! I didn't push him any more on the price as it was a steal at that and I actually felt sorry for him but I know I could have got it for €2500. The car was circa €27,000 when new.

Hmmm. Hard to believe that 2nd hand car prices have rebounded better than even house prices...