2014 May be Bumper Year for Car Sales: Research Points to Two-Tier Auto Market
Vehicle data expert Cartell.ie reports today (02 October 2013) that 2014 may be a bumper year for new vehicle sales given the right incentives – due to an overhang of 42,000 vehicles which ordinarily would have traded-up in a pre-recessionary market environment.
In the biggest research sample of its kind Cartell.ie reports the recession has created a two-tier automotive market in Ireland:
1/ Vehicles purchased on or after 2009 (post-2009 vehicles) are changing hands at the rate ordinarily expected of motor vehicles in Ireland – where a first owner sells the vehicle between 3 to 5 years generally due to auto-finance terms.
2/ Vehicles registered between 2005 and 2008 (pre-2009 vehicles) are not changing hands as owners hold these vehicles longer. This is therefore increasing the average age of the fleet in Ireland and lowering the average number of owners for vehicles in these registration years.
Cartell.ie reports that owners of pre-2009 vehicles are finding it increasingly difficult to offload their vehicle and re-enter the market for a newer vehicle. This result is based on analysis of market transaction and ownership figures for used vehicles in Ireland. The company found that 34% of all indigenous 2008 vehicles (i.e. vehicles first registered in Ireland excluding imports) are still on their first owner. This is higher than the comparable figure for 2009 vehicles, which stands at 31%.
Simi “Swappage” Scheme – potential impact on market
The results of the Cartell.ie analysis show the market is ripe for the introduction of a VRT swappage scheme, or an equivalent scheme, as owners of pre-2009 vehicles struggle to purchase a new car. Cartell.ie welcomes the proposal to introduce a vehicle “swappage” incentive to market. A swappage scheme, whereby a VRT rebate of up to €2,000 would be given to the purchaser of a new vehicle where a vehicle 6-years or older is traded, would encourage owners of pre-2009 vehicles to trade-in their vehicles next year – in 2014.
The research also found that owners of vehicles first registered in Ireland in 2005 had no difficulty in offloading those vehicles and re-entering the market before the recession – just 14% of 2005 vehicles are still on their first owner.
Year | % First Owner |
2005 | 14 |
2006 | 20 |
2007 | 29 |
2008 | 34 |
2009 | 31 |
2010 | 49 |
Post-2009 vehicles in the market
There are several reasons why owners of post-2009 vehicles may have found it easier to offload their vehicle and re-enter the market:
2009 was a particularly tough year for vehicle sales when overall number of sales were markedly down and where finance was difficult to obtain, therefore those that managed to purchase a vehicle in that year often paid with cash, or had the means to obtain credit in a difficult market environment, consequently these owners had the means to re-sell those vehicles in subsequent years;
As overall numbers of new car sales were down in 2009 the owners of 2009 vehicles are finding the residual value of their vehicle is higher, in-line with diminished availability, and consequently making it more attractive for them to trade-up as the cost of change is less. Further there are many good deals on new vehicles.
Pre-2009 Vehicles in the Market
The converse is true for pre-2009 vehicle owners who are finding it difficult to offload their vehicles. This can be attributed to a number of factors:
While credit was widely available in the opening months of 2008, coinciding with the boom years, the credit bubble burst later in 2008 and the consequent knock-on effects on the economy left many 2008 owners “holding the baby” and finding it difficult to meet finance payments – most new vehicles were sold in the first half of 2008;
The change in motor taxation in July 2008 meant that vehicles taxed under the old regime have performed poorly in the secondary market where their values have fallen in-line with greater demand for CO2-regime-vehicles.