New car sales driven up but dent from raised VAT feared

NEW CAR sales bounced back last month but dealers fear the end of the reduced VAT rate will see orders slump again, a report by the car industry has said.

Registrations on new models last month were up almost 900, or 7%, to 13,834 when compared with February last year.

However, numbers were down 11% to 38,986 in the first two months of the year, compared to 43,587 in the same period last year, and down 18% on 2019.

New electric car registrations bucked the trend and were up sharply from 336 in February last year to 813 in February this year. So far this year, 1,791 new electric cars have been registered, in comparison to 1,227 for the same period last year – a rise of 46%. Both hybrid and plug-in hybrid vehicles continue to increase their market share.

VAT was reduced to 21% as part of a Covid stimulus package last September but went back up to 23% yesterday.

Brian Cooke, director general of the Society of the Irish Motor Industry, yesterday called on car showrooms to be allowed to reopen as they are at ‘low risk’ of spreading Covid.

‘Strong pre-orders at the end of last year, along with the ability to offer a click-and-deliver service, have helped the industry, as has the reduced VAT rate during the first two months of the year, which has brought some March sales forward,’ he said. ‘Looking ahead to March, with most year-end preorders having been fulfilled, the increased VAT rate and with the absence of car hire, it’s anticipated the month ahead will be a challenging one.’

Calling for showrooms to be able to reopen, he said: ‘The large size of dealerships, the low average footfall, the ability to do business on a strict appointment-only basis and the option of displaying cars outside lends itself to social distancing and safe retailing.’

Used-car imports fell 5% last month to 5,757 from 6,076 in February 2020, but year-to-date imports are down just 119 – less than 1% annually – to 12,579.