simi motor industry review with donedeal
Post on 03-Jun-2018
225 Views
Preview:
TRANSCRIPT
-
8/12/2019 SIMI Motor Industry Review With DoneDeal
1/47
A report by Economist, Jim Power
-
8/12/2019 SIMI Motor Industry Review With DoneDeal
2/47
A report by Economist, Jim Power 1
About Jim Power 4
About SIMI 4
About DoneDeal 4
Executive Summary 5
Economic background to the Irish Motor Industry 8
Key Economic Dynamics Q1 2014 10
The Retail Sector 10
Export Performance 10
Manufacturing Activity 10
Exchequer Finances 10
Credit 11
Labour Market 11
Consumer Confidence 13
Overall Assessment 14
The Motor Industry 15
Recent Trends 15
Trends in Commercial Vehicle Registrations 20
Economic and Financial Contribution of the Motor Industry in
Ireland 22Employment 22
Exchequer Contribution 23
The first quarter of 2014 25
New and Used Car Sales 25
Tax Receipts Q1 2014 29
Motor Dealerships 29
2
-
8/12/2019 SIMI Motor Industry Review With DoneDeal
3/47
Employment 30
Cost of Motoring 30
Market Issues 32
DoneDeal Motor Report Q1 2014 35
New vehicles 37
Used vehicles 39
Vehicle servicing 40
Vehicle parts 41
Vehicle body repair 42
Finance 43
Employment 44
Apprentices 45
Outlook for year ahead 46
Appendix 47
3
-
8/12/2019 SIMI Motor Industry Review With DoneDeal
4/47
About Jim Power
About SIMI
About DoneDeal
4
Jim Power is owner manager of Jim Power Economics
Limited, an economic consultancy. In 2013, he co-founded
CJP Consultants with Economist Chris Johns. He isEconomic Advisor to the Friends First Group and was
previously Treasury Economist at AIB Group and Chief
Economist at Bank of Ireland Treasury. Jim writes a weekly
column in the Irish Examiner and Sunday Business Post
online edition. He has lectured on the full-time and part-time
MBA at Smurfit School of Business UCD, and on the Local Government MBA at
DCU. He is a board member of Agri-aware, the food awareness body and is
Chairperson of Love Irish Food. Jim is a native of Waterford and comes from a
farmin back round.
The Society of the Irish Motor Industry Motor Industry (SIMI) is
the national representative body for the Motor Industry in
Ireland. The launch of the Motor Industrys first Quarterly
Report marks a change from our previous approach of
commissioning an Economists review of the Industry once a
year in advance of developing our pre-Budget Submission. The
concept with this report is to review not just the businesshealth of the Industry on a quarterly basis but also to collate information from
various sources to help develop a wider picture of where our sector fits into the
overall economy and into the social life of the country. We would wish to thank
the Reports author, Economist Jim Power, and to acknowledge the support of
the sponsor and our partner in this project, Done Deal.
DoneDeal, Ireland's largest and most successful onlinemotor sales website are delighted to partner with SIMI
to present a comprehensive overview of both the
private and trade motoring market in Ireland. With over 955,000 registered
users and over 28 million visits to our motor section already in 2014, DoneDeal
are providing data that gives a true reflection of the rapidly growing online
market for the country. The value of private goods sold in DoneDeal's Motor
Section increased by over !30 million in Q1, 2014 to !280 million, with over
60,000 private cars sold in this period representing a significant economic
impact and highlights the importance of the private car buying and selling
market. On behalf of DoneDeal, I would like to thank all those involved increating and publishing this insightful industry report.
-
8/12/2019 SIMI Motor Industry Review With DoneDeal
5/47
Executive Summary" After more than five very di#cult years for the Irish economy, 2013 saw a
stabilisation and some recovery. This trend of gradual improvement was sustained
in the first quarter of 2014. The export sector is doing well; the labour market
continues to strengthen; the public finances are continuing to improve, particularlytax receipts; business and consumer confidence continue to improve; and
consumer spending is showing modest growth. Car sales are making the biggest
contribution to the growth in consumer expenditure.
" There are still many challenges to be tackled before the economy can be
considered to be approaching normality. Sovereign, personal and SME debt levels
are dangerously high; the banking sector is still not in a position to supply
necessary levels of credit to the economy, although motor dealers are seeing an
improvement in credit to the auto industry; personal discretionary incomes are still
being pressurised, which is putting considerable pressure on discretionary
spending; and a further fiscal adjustment of %2 billion is scheduled for Budget
2015, which is due to be delivered in October.
" While all of these domestic issues will have to be addressed and worked through,
the key risk to the Irish economic outlook is still posed by external developments.
Provided the external environment maintains a modest recovery trajectory, the
Irish economic environment should continue to move in the right direction in a
gradual fashion.
" Conditions for the motor trade have been very challenging since 2007 against a
background of a sharp correction in the overall economy and particular problems
for consumers. Between 2007 and 2013, retail sales excluding the motor trade
have declined by 11.8 per cent in volume terms and by 16.8 per cent in value
terms. Over the same period, retail sales in the motor trade declined by 43 per
cent in volume terms and by 49.8 per cent in value terms.
" The motor sector makes a very strong contribution to the Irish economy through
the employment that is created in sales and servicing, and the contribution to the
Exchequer through taxes on employment, but also through the VAT and VRT
payable on vehicle sales. In addition, the motor industry is spread geographically
around the country and makes a very strong contribution to economic activity in
the regions, including small towns and many villages.
" Employment in the motor trade stood at 37,400 in the final quarter of 2013. This is
12,100 down on the peak employment level of 49,500 in the final quarter of 2007.
Employment levels stabilised in 2013 and are starting to show some modest
growth. It is estimated that for every extra 1,000 new car sales, 130 additional
employees are hired in the industry.
5
-
8/12/2019 SIMI Motor Industry Review With DoneDeal
6/47
" The motor industry makes a very strong contribution to the Exchequer finances.
The total tax take peaked at almost %1.8 billion in 2007 and then declined by
almost 80 per cent by 2009. In 2013 new and used car sales contributed a total of
almost %763 million to the Exchequer. These figures clearly show the potential that
a normal car market can make to the Exchequer.
" The first quarter of 2014 saw a strong recovery in vehicle sales, reflecting ongoing
improvements in consumer and business confidence. The number of new private
cars licensed for the first time reached 39,366, which represented an increase of
27 per cent on the first quarter of 2013; New goods vehicles increased by 50.9
percent; New tractors increased by 28.6 per cent; and total new vehicles licensed
increased by 29.2 per cent.
" Motor dealers report that during the first quarter of 2014, the number of Enquiries
in the show room was 37 per cent higher than the first quarter of 2013 and thenumber of Orders increased by 62 per cent.
" Average C02emissions from newly registered cars have been declining steadily
since 2008. Average emissions in 2013 were almost 24 per cent lower than in
2008. This trend towards environmentally friendlier cars has continued in the first
quarter of this year, with average emissions 4.8 per cent lower than a year earlier.
" Every county has experienced a strong rebound in new car registrations, ranging
from Leitrim with the strongest growth of 57.6 per cent to Dublin with the lowest
growth rate of 16.6 per cent. However, Dublin accounted for 36.4 per cent of thenational market in the first quarter.
" A survey of SIMI members show there is a greater level of optimism in the industry
at the moment than we have seen for some time. However, the sense of optimism
is tinged with a realistic level of caution.
" The trend in classified ads carried by DoneDeal is indicative of the growing
importance of web-based sales in the second-hand car market.
" There are still many issues facing the Irish auto industry, but it is now moving in
the right direction. The issues include the age of the car fleet; the increased
penetration of imports; personal discretionary incomes are still pressurised; and
there are legacy debt issues. It is essential that nothing is done to undermine the
fragile recovery in the sector.
" Sales this year look set to exceed 85,000 and could be as high as 90,000. From
the perspective of the motor industry and the safety and age of the car stock, the
minimum level of sales required to maintain the current dealer network is around
100,000 per annum. The Motor Industry supports 37,000 jobs throughout 400
towns in Ireland. New car sales help to contribute to activity throughout the Motor
6
-
8/12/2019 SIMI Motor Industry Review With DoneDeal
7/47
Industry, we have already seen how a drop in the market in 2009 and 2010 led to
a situation where older stock is not available and therefore must be imported.
" Looking ahead to the market over the next three years, it is certainly possible that
the market could breach 100,000 in 2015; 110,000 in 2016 and 120,000 in 2017.
For every increase of 10,000 in car sales, an extra %82 million would accrue to the
Exchequer. In terms of employment, it is estimated that every 1,000 cars sold
supports 130 jobs in the industry, so 10,000 extra sales would support an extra
1,300 jobs. All of this would of course be dependent on a continuation of the
current improving economic trend and the absence of any additional or increased
negative taxation burdens on car purchases/ownership over the period in question
" The strong growth in new car registration during the first quarter of 2014 has
resulted in a much stronger contribution to the Exchequer finances. In total in the
first quarter, the Exchequer collected%453.7 million from new and used car sales.
This was %97.4 million (27.3 per cent) higher than the first quarter of 2013. It
accounted for almost 5 per cent of total tax revenues collected in the first quarter.
7
-
8/12/2019 SIMI Motor Industry Review With DoneDeal
8/47
Economic background to the Irish
Motor Industry
The Irish economy has experienced a dramatic shock since 2007, but over the past18 months there has been growing evidence of stabilisation and some recovery in
certain aspects of the economy. In general terms 2013 was a challenging year, but
while some parts of the economy experienced recovery, other parts continued to
operate in a very challenging environment.
On the surface the overall data for 2013 are somewhat confusing and di#cult to
interpret. Gross domestic product (GDP) contracted by 0.3 per cent, but gross
national product (GNP) expanded by 3.4 per cent. In Budget 2013 which was
presented in December 2012, the Department of Finance had forecast real GDP
growth of 1.5 per cent in 2013 and real GNP growth of 0.9 per cent. So GDP turned
out significantly weaker than expected, but GNP turned out considerably stronger.
Source: CSO
In seeking to interpret what is really going on in the economy, it is important to
distinguish between the two measures of economic activity, GDP and GNP.
GDP is the total value of goods and services produced in the economy in a given
time period. On the other hand GNP is basically that part of GDP that ends up in the
pockets of Irish residents. The di&erence between the two measures is called net
factor income from the rest of the world. This primarily consists of the di&erencebetween the profits that foreign-owned companies operating here send back to
GDP GNP
8
-
8/12/2019 SIMI Motor Industry Review With DoneDeal
9/47
their home country and what Irish companies operating overseas send back to
Ireland; and interest on the foreign component of Irelands national debt. The
preliminary data for 2013 show that GDP totalled %164 billion and GNP totalled
almost %138 billion. Hence there were net factor outflows of %26 billion last year.
In assessing what the latest data tell us, it is instructive to examine the key
components of economic activity last year.
Personal consumer expenditure declined by 1.1 per cent. This includes
consumption of both goods and services. The sales of goods expanded by
0.2 per cent, but the sales of services declined by 2.3 per cent. These data
are totally consistent with the challenging environment that most businesses
dealing with the stretched personal sector experienced during 2013. Indeed,
during the final quarter of the year, personal consumption declined by 0.2 per
cent. Gross Domestic Fixed Capital Formation (which is basically investment in
machinery & equipment and construction output) increased by 4.2 per cent in
2013. Within this category overall construction output increased by 11.6 per
cent, with new dwellings down by 0.2 per cent and other building &
construction up by 14.3 percent. Investment in machinery & equipment
declined by 4.8 per cent, but if we exclude the fact that investment in new
aircraft was %1.7 billion lower last year than in 2012, this category would have
grown by 16.3 per cent.
Exports of goods & services increased by just 0.2 per cent, while imports
increased by 1 per cent. The weak export performance reflected the patent
issue in the Pharmaceutical sector. A number of blockbuster drugs
manufactured in Ireland have come o&patent protection over the past couple
of years. When the patent protection ends, generic drugs enter the market at
significantly lower prices and the value of production and exports falls
significantly. This reduction in pharmaceutical exports meant that fewer
royalties had to be paid to the home country and lower profits were earned,
meaning that the net factor outflows were more than %5 billion lower than
2012. This primarily explains the disparity between GDP and GNP growth last
year.
The overall assessment is that during 2013, the economy was bumping along the
bottom, but started to show some real signs of improvement. Construction and
agriculture are expanding; excluding the Pharmaceutical sector the export
performance is good, but the consumer side of the economy remained quite
challenged.
9
-
8/12/2019 SIMI Motor Industry Review With DoneDeal
10/47
Key Economic Dynamics Q1 2014
The Retail Sector
In 2013, the value of retail sales was 0.2 per cent lower than 2012, but in volumeterms, sales increased by 0.7 per cent. The di&erence between volume and value
growth shows that consumers are still very resistant to higher prices and retailers
are being forced to discount prices to shift volume. This has significant implications
for management of margins in the still challenged retail sector.
In the first quarter of 2014, the value of retail sales was 5.6 per cent higher than the
same period in 2013, and the volume of sales increased by 7.9 per cent. However,
when the motor trade is excluded, the growth in retail sales was much more modest
the value of sales increased by 0.5 per cent and the volume of sales increased by
2.6 per cent. The auto industry has been the key driver of consumer spending so farin 2014!
Export PerformanceThe value of merchandise exports declined by 5.2 per cent in 2013. This is
disappointing, but is attributable to the impact of patent expiry in the
Pharmaceutical sector. Last year, exports of Chemicals & Related Products declined
by 8.4 per cent, but exports of Food & Live Animals increased by 7.6 per cent and
Machinery & Transport Equipment (includes IT sector) increased by 1.1 per cent. InJanuary 2014, merchandise exports increased by 4.5 per cent. Exports of
Chemicals & Related Products increased by 5.6 per cent; Food & Live Animals
increased by 9.2 per cent and Machinery & Transport Equipment declined by 2.8
per cent.
Manufacturing ActivityIn the first 2 months of the year the manufacturing output was 2.3 per cent stronger
than the same period in 2013. The modern sector, which comprises a number ofhigh technology and chemical sectors, was down 1.3 per cent, while the traditional
sector, which comprises indigenous sectors such as food, expanded by 3.2 per
cent. Output of Food expanded by 11.6 per cent; Chemicals & Pharmaceuticals fell
by 0.3 per cent; and output of Computer, Electronic, Optical & Electrical Equipment
declined by 12.9 per cent.
Exchequer Finances
The Exchequer finances continue to improve. In the first quarter of the year anExchequer deficit of %2.3 billion was recorded, which was %1.4 billion lower than the
10
-
8/12/2019 SIMI Motor Industry Review With DoneDeal
11/47
same period last year. Tax revenues are running %257 million ahead of target, while
overall gross Government expenditure is running %164 million lower than expected.
The overall taxation data are consistent with a stronger labour market and stronger
consumer spending, particularly on cars. Car sales were 26.5 per cent ahead of the
first quarter of 2013.
CreditThe overall credit situation is still challenging. In the year to February, credit
outstanding to business declined by 5.6 per cent, credit outstanding for mortgage
purposes declined by 3.1 per cent and credit outstanding for other consumer loans
fell by 8.3 per cent. The overall economy is still not getting su#cient credit to fuel a
meaningful and sustainable economic recovery. This is the major challenge in the
economy right now. Within the motor industry, credit is seen as less of a constraint.In the Q1 survey of SIMI members, it is clear that there has been some improvement
in both retail and wholesale finance since the first quarter of 2013.
Labour MarketLabour market conditions are continuing to get better. In February, the number of
people signing on the live register fell below 400,000 for the first time in five years
and this trend continued in March. The unemployment rate has fallen to 11.8 per
cent of the labour force, which is just below the Euro Zone average of 11.9 per cent.It is possible to argue that some of this reduction is due to people deciding to
withdraw from the labour force, or leave the country. However, the number of
people actually at work in the economy is more di#cult to argue with. Data
contained in the Quarterly National Household Survey (QNHS) showed that in the
year to the end of December, employment increased by 60,900 to reach just over
1.9million. In the final quarter of 2010, employment stood at just over 1.85 million.
11
-
8/12/2019 SIMI Motor Industry Review With DoneDeal
12/47
Source: CSO
12
-
8/12/2019 SIMI Motor Industry Review With DoneDeal
13/47
Consumer ConfidenceDespite the ongoing pressures in the economy, consumer confidence is getting
steadily better (Figure 3). It reached the highest level in almost seven years in
February. Confidence is being supported by the improving labour market, a belief
that the economy has turned the corner, and that the bulk of the painful fiscaladjustment is now almost complete. However, the challenge now is to convert the
improvement in consumer confidence into stronger spending. The imminent
payment of the full-year 2014 Local Property Tax (LPT) will extract at least %550
million out of the economy over the coming months and will have a dampening
e&ect on overall consumer spending. In addition, discretionary incomes are being
undermined by higher health insurance costs, transport costs and other consumer
spending areas. Water charges await the consumer early in 2015. On a more
supportive note, the ongoing improvement in employment conditions, modest
growth in wages, and growth in personal disposable incomes will be supportive ofconsumer spending.
Source: CSO
13
-
8/12/2019 SIMI Motor Industry Review With DoneDeal
14/47
Overall AssessmentIn the first quarter of 2014 the economy has continued to build on the progress that
was made during 2013. Confidence levels at both the business and consumer level
are continuing to improve; the public finances are gradually being restored to health;
the export performance is strong, notwithstanding the manner in which the patentissue is impacting on Chemical & Pharmaceutical output; employment creation is
picking up and the unemployment rate has fallen below the Euro Zone average; and
consumer spending is modestly stronger than last year.
Despite the positive progress, there are still many challenges to be tackled before
the economy can be considered to be approaching normality. Sovereign, personal
and SME debt levels are dangerously high; the banking sector is still not in a
position to supply necessary levels of credit to the economy; personal discretionary
incomes are still being pressurised, which is putting considerable pressure on
discretionary spending; and a further fiscal adjustment of %2 billion is scheduled for
Budget 2015, which is due to be delivered in October.
While all of these domestic issues will have to be addressed and worked through,
the key risk to the Irish economic outlook is still posed by external developments.
The US economy is doing reasonably well; the UK economy continues to surprise
on the upside; but the Euro Zone economy remains is a di#cult economic
environment that is characterised by low growth, high unemployment, high levels of
sovereign debt, and deflationary threats. The ECB will have to keep interest rates at
least at current historically low levels, but may have to resort to Quantitative Easing
(QE) of money supply to prevent the Euro Zone economy from becoming stuck in a
Japanese-style deflationary spiral.
Provided the external environment maintains a modest recovery trajectory, the Irish
economic environment should continue to move in the right direction in a modest
and gradual fashion. '
14
-
8/12/2019 SIMI Motor Industry Review With DoneDeal
15/47
The Motor Industry
Recent Trends
Conditions for the motor trade have been very challenging since 2007 against a
background of a sharp correction in the overall economy and particular problems
for consumers. In real terms, consumer spending declined by 7.1 per cent between
2007 and 2013 and in nominal terms, total spending declined by 10.3 per cent
Source: CSO
Retail sales represent an important component of overall consumer spending,
accounting for around 44 per cent of the total, with the other 56 per cent accounted
for by spending on various services.
Retail sales have weakened sharply since 2007, but the weakness has been
concentrated in the motor trade.
Between 2007 and 2013, retail sales excluding the motor trade have declined by
11.8 per cent in volume terms and by 16.8 per cent in value terms. Over the same
period, retail sales in the motor trade declined by 43 per cent in volume terms and
by 49.8 per cent in value terms (Figure 5).
REAL NOMINAL
15
-
8/12/2019 SIMI Motor Industry Review With DoneDeal
16/47
Source: CSO
New cars licensed reached 180,754 in 2007, fell to just 54,432 in 2009, and
subsequently received some boost from the car scrappage scheme to reach 86,932in 2011, but declined to just 71,348 in 2013.
16
Motor Trade Volume Motor Trade ValueRetail Sales ex-Motor Trade Volume Retail Sales ex-Motor Trade Value
-
8/12/2019 SIMI Motor Industry Review With DoneDeal
17/47
Source: CSO
In line with the sharp decline in new car sales, there has been a significant increase
in the market penetration of imported used cars. In absolute terms, the number of
imported cars peaked at 60,091 in 2008, accounting for 24.5 per cent of total car
registrations. In line with the downturn in the economy and in consumer spending,there has been a decline in the number of imported cars to 38,469 in 2012. There
was some recovery in 2013 to reach 49,762. In 2013, imported cars accounted for
41.1 per cent of total cars licensed (Figure 7).
17
New cars Second hand cars
-
8/12/2019 SIMI Motor Industry Review With DoneDeal
18/47
Source: CSO
There is a di&erence between vehicle licensing and vehicle registration. The O#ce
of The Revenue Commissioners has responsibility for the compilation of vehicleregistrations, while the Department of Transport, Tourism & Sport has responsibility
for vehicle licensing. The licensing process where applicable, follows the registration
process. Registration and licensing figures may di&er in a given month for a number
of reasons. These include:
" Vehicles which under an old system would have been licensed in the latter part of
a particular month may not now be licensed until a later month because of the
time lapse between registration and first licensing; and
"Registered vehicles which are not used in a public place, such as tractors that areexclusively used inside the farm gate, may not need to be licensed.
In practise, on a monthly basis, the licensing data is probably a better reflection of
vehicle sales, as in some cases vehicles may be registered by a dealer in advance
of sale. Typically, vehicles are only licensed at the point of sale.
NEW CARS (%)IMPORTED CARS (%)
18
-
8/12/2019 SIMI Motor Industry Review With DoneDeal
19/47
Figure 8 shows the trends in and the di&erence between vehicles licensed and
registered.
19
Registrations Licensed
Source: CSO & SIMI
In 2013, there were 74,303 new passenger cars registered, which represented a
decline of 6.6 per cent compared to 2012. This compares to 71,348 new
passenger cars licensed for the first time, which represents a decline of 6.4 percent compared to 2012.
-
8/12/2019 SIMI Motor Industry Review With DoneDeal
20/47
Trends in Commercial Vehicle Registrations
Registrations of commercial vehicles also fell very sharply in line with the collapse in
business investment spending and the overall economy after 2007.
Light Commercial Vehicle registrations peaked at 44,056 in 2007, but by 2009 had
collapsed to 9,267. There has been a modest recovery subsequently, with 11.076
vehicles registered in 2013 (Figure 9).
Source: SIMI, statistics available on the Societys used car website BeepBeep.ie
Heavy Commercial Vehicles (HCV) registrations peaked at 5,859 in 2006. They fell
all the way to 1,020 by 2010. There has been a modest improvement subsequently,
with 1,554 vehicles registered in 2013.
20
-
8/12/2019 SIMI Motor Industry Review With DoneDeal
21/47
Source: SIMI, statistics available on the Societys used car website BeepBeep.ie
21
-
8/12/2019 SIMI Motor Industry Review With DoneDeal
22/47
Economic and Financial Contribution of the Motor Industry
in Ireland
It is often asserted that Ireland does not have a motor industry based on thepremise that cars or other vehicles are not manufactured in the country. The reality
however, is that the motor sector in Ireland makes a very strong contribution to the
economy through the employment that is created in sales and servicing, and the
contribution to the Exchequer through taxes on employment, but also through the
VAT and VRT payable on vehicle sales. In addition, the motor industry is spread
geographically around the country and makes a very strong contribution to
economic activity in the regions, including small towns and many villages. In an
economy where economic activity is becoming increasingly concentrated in the
large urban areas, the motor industry is one of the few sectors that has a strongregional spread.
EmploymentEmployment in the motor trade stood at 37,400 in the final quarter of 2013. This is
12,100 down on the peak employment level of 49,500 in the final quarter of 2007.
However, between the peak in the final quarter of 2007 and the final quarter of 2009,
employment in the sector declined by 14,300 or 29 per cent. It recovered modestly
in 2010 on the back of the boost to sales emanating from the scrappage scheme.
The good news is that employment levels stabilised in 2013 and are starting to
show some modest growth. It is estimated that for every extra 1,000 new car sales,
130 additional employees are hired in the industry.
22
Source: CSO
-
8/12/2019 SIMI Motor Industry Review With DoneDeal
23/47
Exchequer ContributionThe motor industry makes a very strong contribution to the Exchequer finances
both through taxes on employment and the VRT and VAT payable on car sales.
Table 1 shows the VAT and VRT contribution from new car sales. The total tax take
peaked at almost %1.8 billion in 2007 and then declined by almost 80 per cent by
2009. It has subsequently recovered and by 2013 was almost 66 per cent o&the
lows of 2009.
Source: Revenue Commissioners & SIMI
Table 2 shows the tax contribution from used car imports.
Source: Revenue Commissioners & SIMI
23
-
8/12/2019 SIMI Motor Industry Review With DoneDeal
24/47
In total, in 2013 new and used car sales contributed a total of almost %763 million to
the Exchequer. These figures clearly show the potential that a normal car market
can make to the Exchequer.
24
-
8/12/2019 SIMI Motor Industry Review With DoneDeal
25/47
The first quarter of 2014
New and Used Car Sales
The first quarter of 2014 saw a strong recovery in vehicle sales, reflecting ongoing
improvements in consumer and business confidence.
Figures from the CSO show a strong recovery in all categories of new vehicles
licensed during the first quarter.
The number of new private cars licensed for the first time reached 39,366,
which represented an increase of 27 per cent on the first quarter of 2013;
New goods vehicles increased by 50.9 per cent;
New tractors increased by 28.6 per cent; and
Total new vehicles licensed increased by 29.2 per cent.
Source: CSO
" Used imported vehicles licensed for the first time also showed strong growth
during the first quarter.
" Used private cars increased by 27.2 per cent and accounted for 25 per cent of
total private cars licensed during the first quarter.
25
-
8/12/2019 SIMI Motor Industry Review With DoneDeal
26/47
Source: CSO
Figures from the SIMI show that new car registrations in the first quarter showed
annual growth of 26.6 per cent, with strong growth experienced in every month.A
copy of the ACEA report for all European countries is contained in the appendix to
put this into a European context.
This more buoyant car market reflects improved consumer confidence;the
improving labour market; positive growth in disposable incomes; a general belief
that the economy has turned the corner, and that the bulk of the painful fiscal
adjustment is now almost complete.
Source: SIMI, statistics available on the Societys used car website BeepBeep.ie
Motor dealers report that during the first quarter of 2014, the number of Enquiries in
the show room was 37 per cent higher than the first quarter of 2013 and the number
of Orders increased by 62 per cent. 126
Source: CarsNow1
-
8/12/2019 SIMI Motor Industry Review With DoneDeal
27/47
Source: SIMI, statistics available on the Societys used car website BeepBeep.ie
Figure 12 shows the changing nature of the environmental factors in the auto
industry. Average C02 emissions from newly registered cars have been declining
steadily since 2008. Average emissions in 2013 were almost 24 per cent lower thanin 2008. This trend towards environmentally friendlier cars has continued in the first
quarter of this year, with average emissions 4.8 per cent lower than a year earlier.
(
Table 6 provides a breakdown of new car registrations by county in the first quarter
of 2014. Every county has experienced a strong rebound in new car registrations,
ranging from Leitrim with the strongest growth of 57.6 per cent to Dublin with the
lowest growth rate of 16.6 per cent. However, Dublin accounted for 36.4 per cent of
the national market in the first quarter.
27
-
8/12/2019 SIMI Motor Industry Review With DoneDeal
28/47
#$%&'() #*+*, -./0-0'- /1/23/43( $5 .6( #$'2(.78- %-(9 '/& :(4-2.( ;((
-
8/12/2019 SIMI Motor Industry Review With DoneDeal
29/47
Tax Receipts Q1 2014The stronger growth in new car registration during the first quarter of 2014 has
resulted in a much stronger contribution to the Exchequer finances. The VRT take is
up by 25.3 per cent, the VAT take is up by 30.4 per cent and the total tax take is up
by 27.7 per cent.
Source: Revenue Commissioners & SIMI
Table 8 shows the tax take from used car registrations during the first quarter. The
VRT take was up by 24.4 per cent, the VAT take was up by 23.6%, and the total tax
take was up by 24.3 per cent.
Source: Revenue Commissioners & SIMI
$n total in the first quarter, the Exchequer collected %453.7 million from new and
used car sales. This was 27.3 per cent higher than the first quarter of 2013.It
accounted for almost 5 per cent of total tax revenues collected in the first quarter. In
addition to this, Road Tax receipts stood at %316.2 million compared to %282.3
million last year, an increase of 12%.
Motor DealershipsIn the first quarter of 2014 there were 94 new companies formed in the motor
industry and 70 were dissolved.
29
-
8/12/2019 SIMI Motor Industry Review With DoneDeal
30/47
EmploymentO#cial data are not yet available for employment in the motor industry in the first
quarter of 2014. However, based on sales data, it is expected that there will be
further growth in jobs in the sector. During the first quarter, the motor trade had 247
apprenticeships. This is 6.9 per cent up on the first quarter of 2013 and 40.3 percent higher than the first quarter of 2012.
Cost of MotoringFigure 12, 13 and 14 show the trends in some of the key costs of motoring. In the
year to March 2014:
" Petrol prices were 5.3 per cent lower than March 2013;
" Diesel prices were 4.7 per cent lower than March 2013;
" Motor taxation costs were unchanged;
" Motor Insurance costs were 4.4 per cent higher than March 2013; and
" The average price of a new car was 2.7 per cent lower than March 2013
Source: CSO, Consumer Price Index
30
Petrol Diesel
-
8/12/2019 SIMI Motor Industry Review With DoneDeal
31/47
Source: CSO, Consumer Price Index
Source: CSO, Consumer Price Index
31
Motor car insurance Motor tax
-
8/12/2019 SIMI Motor Industry Review With DoneDeal
32/47
Market Issues
New car sales fell sharply in line with the sharp deterioration in domestic economic
conditions since 2007. This has had a very negative impact on the overall economy,
in terms of employment, tax revenues, and regional economic activity.
The market is now improving strongly, reflecting the generally improved level of
confidence in the overall economy. There are key challenges ahead for the overall
economy and for the motor industry. Average personal disposable incomes are
starting to improve, but discretionary incomes are still under pressure from issues
such as property tax, health insurance costs and water charges.
Despite the improvement in car sales during the first quarter of this year, the
industry is still under pressure and is coming back o&a very low base and a number
of very di#cult years. Sales sales this year look setare not likely to hit 90exceed
85,000. From the perspective of the motor industry and the safety and age of the
car stock, the minimum optimal level of sales required to maintain the current dealer
network is around 100,000 per annum.
It is important to recognise the contribution that a stronger auto market would make
to the economy. For every increase of 10,000 in car sales, an extra %82 million
would accrue to the Exchequer. In terms of employment, it is estimated that every
1,000 cars sold supports 130 jobs in the industry, so 10,000 extra sales would
support an extra 1,300 jobs. In the context of Irelands current unemployment crisis,this would be a significant level of additional employment in the economy.
As new car sales fell o&, imported used cars became an increasingly important part
of the market, and the existing stock of cars is getting older. This trend has
significant implications for the motor distribution model in Ireland as new car sales
have reached a level where continued presence on the ground in Ireland is not
economically viable, with consequent implications for employment; it is costing the
Exchequer because the tax take from imported cars is significantly lower than the
tax take from new car sales; there are issues concerning the VAT treatment of
imported cars, with possible financial losses for the Exchequer; the cars being
imported are older and quality issues may arise with implications for road safety and
environmental standards.
As the average age of the existing car stock gets older, it becomes increasingly
di#cult for car owners to re-enter the new car market. This will have two results
the average age of the existing car stock will increase, and imports will become an
increasing and permanent part of the car market.
New Zealand is an example of a market where this has happened. Imports
permanently account for around 60 per cent of the overall car market. This would
32
-
8/12/2019 SIMI Motor Industry Review With DoneDeal
33/47
not be a positive development in Ireland as it would pose considerable road safety
issues and would also represent a significant loss of revenue to the Exchequer.
Table 9 provides a breakdown of the age of the private cars on the road at the end
of 2013. Of the total cars on the road, 77.8 per cent are five years or older, with only
22.2 per cent registered in the past five years. This is a worrying statistic because
the older the car stock, the issues around safety and environmental standards
become more significant. Furthermore, the older the stock, the more di#cult it is for
an owner to trade up to a new car or a young second-hand car.
Source: Department of Transport
33
-
8/12/2019 SIMI Motor Industry Review With DoneDeal
34/47
The introduction of the split number plates in 2013 is generally believed to have had
a positive impact on the car market, but it is still too early to gauge the longer term
lasting impact.
Figure 16 shows the trend in car sales in 2012, 2013 and the first quarter of 2014.
The seasonal patterns are always similar regardless of market condition as the
year progresses, sales gradually taper o&. In 2013, this trend was evident up to
June there was a spike in July and August, and then sales tapered o&again. There
is a fear in the market that sales in the second quarter will weaken as potential
purchasers put o&buying a new car until the new plates (142) are introduced.
However, the split plates have spread activity %&'()*+, '&-( (.(/01 &.(- ,*( 1(+- +/2
,*3% 3% 4&&2 5&- ('60&1'(/,! ('60&1'(/,!
Source: SIMI, statistics available on the Societys used car website BeepBeep.ie
All in all, having experienced a dramatic decline in its fortunes, the motor industry is
back in growth mode again and confidence within the industry is currently stronger
than it has been for some time. This is important for national and regional economic
activity, employment and Exchequer receipts.
201220132014
34
-
8/12/2019 SIMI Motor Industry Review With DoneDeal
35/47
DoneDeal Motor Report Q1 2014
DoneDeal is Irelands largest motoring website and accepts motor advertisements
from both personal sellers and the trade, where it is strongly active through its
partnership with Beepbeep.ie, the SIMI member Used Car Website.
Source: DoneDeal
Figure 17 shows the total volume of classified advertisements for the motor trade by
DoneDeal on a monthly basis since the beginning of 2012. It is broken down into
cars and other motors.
In March 2014, there was a total of 74,194 classified advertisements for the motor
trade published. Cars accounted for 65.2 per cent of the total. 28.4 per cent of totalclassifieds were Trader, with private classifieds accounting for 71.6 per cent of the
total.
In the first quarter of 2014, there were 208,759 motor ads published on the
DoneDeal website. Private ads accounted for 72 per cent of the total, with the trade
accounting for 28 per cent.
CARS MOTOR-EXCL. CARS
35
-
8/12/2019 SIMI Motor Industry Review With DoneDeal
36/47
In the year to Q1 2014:
There was an increase of 4 per cent increase in motor ads published on the
website. Ads from traders increased by 12.7 per cent and ads from private
advertisers increased by 0.9 per cent;
There was an increase of 4.7 per cent in total motor ads excluding cars, with
the volume of private ads remaining constant;
There was an increase of 3.6 per cent in all car ads, with an increase of 1.9
per cent in private car ads and a 6.9 per cent increase in trader car ads;
The total volume of sales increased by 14.2 per cent, with trade sales up by
25.5 per cent and private sales up by 9.1 per cent;
Motor sales excluding cars increased by 18.9 per cent, with private sales up
by 10.3 per cent and trade sales up by 86 per cent; and
Car sales increased by 12.4 per cent, with private sales up by 8.5 per cent
and trade sales up by 18.5 per cent.
It is very clear that web-based sales are becoming an increasingly important part of
the second-hand car market, just as web-based sales are becoming an increasingly
important part of many other aspects of the consumer market.
36
-
8/12/2019 SIMI Motor Industry Review With DoneDeal
37/47
37
!"# %&'(" )*+*& %,-.(+&/0 12 3425A survey of SIMI Members
-
8/12/2019 SIMI Motor Industry Review With DoneDeal
38/47
New vehicles
38
Q QWhat was the volume of
new vehicle sales in Q1
2014 Vs Q1 2013?
What was the profitability
of new vehicle sales in Q1
2014 Vs Q1 2013?
25% significantly up50% slightly up12% no change8% slightly down7% significantly down
20% significantly up52% slightly up14% no change5% slightly down5% significantly down
41% significantly up45% slightly up5% no change5% slightly down2% significantly down
QWhat is the level of interest
for new vehicles (footfall,
prospects, forward orders)
for Q1 2014 Vs Q1 2013?
-
8/12/2019 SIMI Motor Industry Review With DoneDeal
39/47
Used vehicles
39
Q QWhat was the volume of
used vehicle sales in
Q12014Vs Q12013?
13% significantly up49% slightly up22% no change15% slightly down2% significantly down
What was the profitability of
used vehicle sales in Q1 2014
Vs 1 2013?
What was the level of interest
for used vehicles (footfall,
prospects, forward orders) for
25% significantly up50% slightly up17% no change8% slightly down1% significantly down
Q
19% significantly up47% slightly up20% no change10% slightly down5% significantly down
-
8/12/2019 SIMI Motor Industry Review With DoneDeal
40/47
Vehicle servicing
40
Q QWhat was the volume ofvehicle servicing in
Q12014Vs Q12013?
What was the profitabilityof vehicle servicing in Q1
2014 Vs Q1 2013?
46% significantly up2% slightly up37% no change13% slightly down
2% significantly down
50% significantly up6% slightly up31% no change13% slightly down
1% significantly down
-
8/12/2019 SIMI Motor Industry Review With DoneDeal
41/47
Vehicle parts
41
Q QWhat was the volume ofvehicle parts sales in
Q12014Vs Q12013?
What was the profitabilityof vehicle parts in Q1 2014 Vs
1 2013?
52% significantly up9% slightly up34% no change13% slightly down
3% significantly down
4% significantly up43% slightly up39% no change11% slightly down
3% significantly down
-
8/12/2019 SIMI Motor Industry Review With DoneDeal
42/47
Vehicle body repair
42
Q QWhat was the volume of
vehicle body repairs in Q1
2014 Vs Q1 2013?
What was the profitability
of vehicle body repair work
in Q1 2014 Vs Q1 2013?
4% significantly up16% slightly up54% no change12% slightly down13% significantly down
10% significantly up19% slightly up46% no change13% slightly down10% significantly down
-
8/12/2019 SIMI Motor Industry Review With DoneDeal
43/47
Finance
43
QQ What was the availability
of retail finance in Q1
2014Vs Q12013?
What was the availability of
business finance facilities in
Q1 2014 Vs Q1 2013?
4% significantly up16% slightly up54% no change12% slightly down13% significantly down
50% significantly up31% slightly up13% no change4% slightly down2% significantly down
-
8/12/2019 SIMI Motor Industry Review With DoneDeal
44/47
Employment
44
QWhat were your employee
salary levels in Q1 2014 VQ1 2013?
QWhat was your level of
sta"nginQ12014V
Q12013?
6% significantly up45% slightly up80% no change6% slightly down2% significantly down
2% increase by 20% or more1% increase of between 10% & 15%
11% increase of between 5% & 10%65% increase less than 5%
14% increase by repaying previous reduction
22% reduced
Q Q
2% significantly increase39% slightly increase
52% no change4% slightly decrease3% significantly decrease
12% significantly di"culty
22% slight di"
culty30% no di"culty32% not ben seeking new employees
Do you intend to increase/
decrease sta"ng levels
during 2014?
Have you had di"culty
finding suitable new sta#for
Q1 2014?
-
8/12/2019 SIMI Motor Industry Review With DoneDeal
45/47
Apprentices
45
Q Do you intend to take on
any apprentices/trainees
during 2014?
34% yes 111% yes 20% yes 30% yes 45% yes 52% yes more than 5
-
8/12/2019 SIMI Motor Industry Review With DoneDeal
46/47
Outlook for year ahead
Survey Date 24th March 2014
46
Q QHow positive are you
about the outlook for
improvement/growth in
business during the rest
of 2014 and for 2015?
How positive are you
about the outlook for
business growth and
improved profitability
during 2014 and 2015?
9% very confident67% fairly confident13% neutral11% slightly negative1% very negative
70% fairly positive2% very positive
17% neutral/don't know9% slightly negative1% very negative
-
8/12/2019 SIMI Motor Industry Review With DoneDeal
47/47
Appendix
top related