Tuesday, February 9, 2010

Car Sales Speeding Up?

We have been hearing positive vibes from the motor industry with sales figures for January released last week.  RTE tell us that there are more people buying new cars
The number of new cars registered last month is up 5% on January 2009, according to new figures from the Society of the Irish Motor Industry.  16,595 new cars were registered in January 2010, compared to 15,799 in January last year. This is the second consecutive month showing an increase.
See also reports in The Irish Times and The Irish Independent.  But as with so much economic commentary (spin?) things are not always as they appear to be.

It is true that 5% or 796 additional new cars were registered in January 2010 compared to Januray 2009, the total amount of cars registered in the month actually fell by 1,905 or 9%.  Registered cars includes new cars and the import of second hand cars.

The number of second hand cars imported in January 2010 was down 46% on the figure for Januray 2009, a drop from 5,889 to 3,188.  This means that the total number of car registration was 19,783 down from 21,688 -  a drop of 9%.  The data are provided by the Society of the Irish Motor Industry (SIMI) and can be accessed here.

To know the total number of car sales we would have to know the number of second hand sales but SIMI do not provide this information.  Without this figure it is hard to know what the outturn of total car sales figures was, but for the two figures we do know (new and second hand imports) car sales are down 9% on the same month last year.

And even for new cars the recovery isn't that impressive when we look at the data for a  few years.

Figures for the registrations of second hand imports are only available for Januray 2010 so we cannot include them. However, with car registrations down (new plus second hand imports) we can safely say that Vehicle Registration Tax (VRT) and VAT income for the Exchequer will be down. And with the government offering €1,500 scrappage for cars ten years or older to buyers of "low emissions" cars, there is no gain for the Exchequer from the motor trade. Indeed with reports that 71% of the new cars sold in January were in the "low emissions" category (less than 141g/km) these will be subject to lower VRT and Road Tax rates.

Still, it is likely that the "Big Freeze" had a negative impact on many retailers with test drives likely to be heavily hit. Therefore it is probably better to wait until the February figures to make a full pronouncement of the health or otherwise or motor sales.

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