SALES OF new cars have collapsed since the end of the scrappage scheme in June, according to the motor trade.
The Society of the Irish Motor Industry said sales of new cars in November were 49 per cent down on the same month last year.
Director general Alan Nolan expressed particular concern that the fall-off in car sales could be exacerbated next year if the proposed 2 per cent VAT increase is brought in at the start of 2012
“At the launch of our pre-budget submission in October, we predicted that 70,000 new cars would be sold next year,” he said.
“Following the announcement of the proposed 2 per cent VAT increase, we have concerns that this figure will reduce further if the VAT increase were to impact in the first quarter.”
In addition to the 2 per cent VAT increase, which was confirmed by Minister for Finance Michael Noonan in mid-November, Minister for the Environment Phil Hogan has confirmed plans to increase motor tax.
Mr Hogan has, however, denied reports that the charge for low-emission cars could rise by as much as 63 per cent. Motorists are also expected to face additional charges because of an anticipated increase in carbon tax.
Mr Nolan claimed yesterday that with the increases in VAT, combined with increased road taxes and fuel duties set to be announced next week, the car sales industry was “facing another year where employment is again negatively impacted”.
While he accepted that tax increases were inevitable, he urged the Government to delay the implementation of the VAT increase until after the first quarter of next year.
More than half of all new cars for the year were likely to be sold in the first three months of 2012, he added.
“We understand that the exchequer needs to recoup lost revenue but increasing the VAT during the busiest retail period is unlikely to achieve this. It is more likely to have the opposite impact.”
He claimed that a deferral of the VAT increase until after the peak selling period would give the industry “some chance of stability next year”.
The “extreme seasonal nature” of car sales meant that if business was bad in January, it would be “bad for the entire year and if the VAT increase is introduced in January, we will no doubt see a fall in sales for the whole year, which will have a serious impact on jobs”, he said.
The scrappage scheme, which offered people trading in a vehicle aged 10 years or over a discount of up to €1,500 on a new low-emissions model, was introduced in the December 2009 budget.
Following a successful year in 2010, when new car sales increased by 56 per cent to some 89,000, the scheme was extended for a further six months but with a reduced saving of €1,250 for individuals participating.
Recently released new car sales figures show that Toyota has been the best-selling brand so far this year, with sales of 11,784 new cars, representing 13 per cent of the market. It is followed by Volkswagen with 12.5 per cent and Ford with 11.8 per cent.
