Car buyers from Northern Ireland and Britain are cashing in on the disparity between the pound and sterling. As the pound hovers around the 80p mark against sterling, crossing the Border or the Irish Sea ensures bargains on luxury items such as cars.

"With the increase in sterling, the UK has become the most expensive place to buy cars," says Mr Cyril McHugh, chief executive of the Society of the Irish Motor Industry. People in Britain would naturally look to Ireland because of the right-hand drive cars, he says.

Car dealers in Dublin have noted a dramatic change in enquiries since at least mid-1997. "There are calls every day from Northern Ireland and Britain due to the benefit in the currency exchange rate, the value of the car and the Irish market. They are saving anywhere from a massive two to three grand," says Mr Donal Duggan, sales manager at Park Motors in Dublin. "There are many enquiries but delivery is a problem," he says. Mr Brian Murphy, of Belgard Motors in Tallaght, agrees. "There's been a huge upsurge in enquires. We get possibly 15 to 20 calls a day. It's not reflected in orders because we have a supply problem situation. "Most of these cars are those cars that are scarce in their own market such as Mercedes Benz E class V6, Mercedes Benz CLK, Porsche Boxster 911, Audi A4 and A3 and the new VW Golf."

Despite the long wait and extra effort, car buyers are still keen on the Irish market. "The price of cars in Ireland before taxation is cheaper than in other parts of the EU," says Mr Paul O'Grady, editor of Irish Motor Industry Magazine. "The retail price of cars is higher here than in most of the rest of Europe because of a disproportionate level of tax on cars," says Mr O'Grady.

Car buyers planning to export Irish cars to other EU countries do not pay 21 per cent VAT or Vehicle Registration Tax. When they arrive in the export country, they must pay the relevant tax, which in Britain is 17.5 per cent VAT. Reduced tax and the discount offered by sterling make Irish cars a good deal in Britain. "Supply is one thing that does affect availability because ordering cars from a factory is based on six to nine months in advance," says Mr McHugh. Dealers would be foolish to bet on currency fluctuations to fulfil their orders and they usually base orders on the Irish market alone, he adds.

Many Dublin dealers have a customer waiting list of six months or longer for most models. "We cannot legally refuse an export of a vehicle because of the EC directive but if product is not available, supplying those foreign customers is becoming nearly impossible," says Mr Duggan.

"Our first priority is to the Irish market, our repeat customers which we do not get from export."

Export buyers are not put off by the long wait, says Mr Brendan Grace, assistant general manager of Ballsbridge Motors. Orders are being taken from Northern Ireland and Britain for all its models including Mercedes Benz, Volkswagen, Audi and Mazda. However, exports amount to only a small percentage of its business since its brands are in high demand in the Irish market, says Mr Grace.

Despite car supply difficulties, requests for export plates are rising steadily. "The number of ZZ plates have increased phenomenally," says a source at one leading insurance brokers. "I'd imagine there are hundreds of cars being exported this way," he adds.

The ZZ export facility is designed to enable people moving abroad to buy a car here and export it out of Ireland duty free. Exports are not only of luxury cars "across the board from the smallest cars to the Toyota, Lexus, BMW and Mercedes", says Mr Egan. Saving money seems the biggest factor in the decision to export a car from Ireland. "In some cases, the more expensive the car, the greater the savings," he adds.

Manufacturers in Britain are not happy with Ireland's heated car export market. Mr Noel Smyth, regional manager of the Retail Motor Industry Federation in Belfast, says in that Northern Ireland "manufacturers appear to be combating the price differential with incentives such as two years free insurance". They are also offering zero per cent finance.