Huge Consumer Support for Motor Industry Swappage Scheme

  • Budget Proposal is a “Win-Win” and will “GUARANTEE” €126million for Exchequer

Consumer research has shown emphatic support for the Society of the Irish Motor Industry’s (SIMI)Budget submission scheme, Swappage, which proposes a reduction of €2,000 in VRT for any new car purchased in 2014 when a car aged 6 years or older is traded in.

The research, which was conducted by Ignite Research, shows that 78% of people would be likely to purchase a new car if a new scheme was introduced to reduce the cost. The average discount that would be expected by consumers is €3,087.

Alan Nolan, Director General of SIMI said; “There has been an extremely positive reaction since we proposed Swappage for this Budget. There is an overriding consensus that this works for everyone, the government, the industry and as this research shows, the consumer too.

“The proposal would reduce the VRT by €2,000 on a new car with a trade-in of six years or older. However, the feedback we have had from manufacturers and dealers is that they will really make this work and will further incentivise the cost of a new car at their end to make it an even better deal for the consumer with a bigger reduction in price. This would be similar to what we saw with the Scrappage scheme with some manufacturers more than doubling the Government discount.

“We see this as a guaranteed win for the Government. It will generate €126million for the Exchequer, it will create 2,200 jobs across the country and it will reduce CO2 emissions by 11,500 tonnes. If the government gives the go-ahead for this, then approximately 90,000 cars will be ordered before the end of this year. These cars will only be able to be sold in Ireland,so taxes for the Government are guaranteed, meaning Swappage will work. We told the Government that Scrappage would work and it was extremely successful and we predict the same for Swappage,” Nolan said.

Economist, Jim Power, said; “There are occasions when a market failure occurs that Government intervention is desirable. The car industry is experiencing market failure at the moment – sales are very weak and the market is becoming increasingly driven by second hand imports, which is not good from an Exchequer perspective, an employment perspective or indeed from a safety perspective.

Government intervention is now justified. A swappage scheme along the lines proposed would stimulate new car sales, thereby boosting employment and Exchequer revenues, and would enable potential car buyers to make the jump from an ageing car fleet to a new car. This scheme would deliver a win-win outcome and there is no obvious or real downside for Government.”

It is projected that if Swappage, or a similar scheme to incentivise the sale of new cars, is not introduced, then 5,000 jobs will be lost within the Motor Industry over the next five years. This would see the closure of 250 dealerships across the country.

There have already been 12,800 jobs lost in the industry since 2007 along with the closure of 150 garages. In 2007, €2billion in tax was generated from the sale of 186,000 new cars. This tax take for the Government has fallen by €1.4billion since then, as the Motor Industry in Ireland operates at 50% of its normal levels. For more information

Swappage Scheme Research

Q1. If a scheme was introduced to reduce the cost of a brand new car in 2014 would you consider purchasing a brand new car in 2014?

  • 41% – Very likely

  • 37% – Somewhat likely

  • 11% – Neither likely or unlikely

  • 7% – Unlikely

  • 5% – Very unlikely

Q2. How much of a discount would you expect to receive off a 2014 car if such a scheme was to be introduced?

  • 5% – Less than €500

  • 12% – Between €500 & €1,000

  • 24% – Between €1,001 & €2,000

  • 26% – Between €2,001 & €3,000

  • 9% – Between €3,001 & €4,000

  • 21% – Between €4,001 & €5,000

  • 4% – More than €5,000

  • Average discount expected – €3,087

Research Methodology –

  • Conducted by Ignite Research

  • 654 respondents online

  • 51% Female, 49% Male

  • 18 years of age and over

  • September 2013

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