Diesel imports are only part of the problem
There is a glut of older vehicles on our roads and it’s not just as a result of imports, writes contributing editor Geraldine Herbert
WITH only weeks to go to the Budget, there have been calls from within the motor industry to ban the importation of some used cars from the UK. James McCarthy, CEO of Nissan Ireland, said that unless a ban is introduced on cars imported from the UK that do not meet the current Euro 6 emissions standard, it will be impossible for the Government to meet its target of reducing carbon emissions. The State is facing significant fines from the EU for exceeding our expected emission levels.
Ford Ireland chairman and managing director Ciarán McMahon echoed similar sentiments earlier this week, but fell short of calling for an outright ban. It is clear, however, that the motor industry feels the time has come for the Government to act.
Since 1992, European Union regulations with the aim of improving air quality have imposed strict limits concerning pollutant emissions on new cars.
The EU’s latest and stricter Euro 6 emissions standards require diesel cars to be fitted with emissions control technology to reduce and control their tailpipe NOx emissions.
Three years ago, 70pc of new cars sold in Ireland were diesel, today diesel accounts for just over 50pc of new car sales. This trend is seen clearly across all European countries and even the bullish diesel SUV market is moving towards petrol and hybrid power. Sales of petrol cars grew this year and plug-in hybrids and hybrids now account for almost 9pc of the market. The demand for electric cars is up 42pc this year, albeit from a very small base of 622 sold in 2017.
But the number of diesel cars on our roads continues to rise due to the scale of monthly used imports from the UK. These numbers have been steadily rising since June 2016 when the UK voted to leave the EU.
The decline of sterling and the uncertainty created by Brexit has resulted in month-on-month increases. Imports from the UK, however, are not a new development — there has always been a clear correlation between a drop in sterling and an increase in used car imports. The figures from the past decade suggest there is always a core market in Ireland for UK used cars irrespective of prevailing market conditions or the price of sterling.
Imports reached a peak in 2008 when more than 64,000 used cars were imported. By 2010 the figure had dropped to 40,000 and it remained at this level over the next five years.
This year, on average, 8,000 cars are imported into Ireland each month and 79pc of these are diesel.
Diesel car sales in the UK have been hit hard and suffered a 30pc drop this year. The drop in sales has weakened resale values and this has resulted in an increase of cheap diesel cars being offloaded here.
It’s not so long ago that diesel was the green fuel, promoted and incentivised by governments as a way to save the planet. European governments viewed diesel cars as a fast and effective means to hit their CO2 reduction targets, and spent billions boosting diesel by making it cheaper to buy at the pumps than petrol and taxing new diesel registrations at lower rates than petrol cars. In Ireland, the Fianna Fail-Green Party coalition changed the VRT and motor tax system in 2008, from one based on engine capacity to the current one based on CO2 emissions. The result was that sales dramatically shifted in favour of diesel and consequently, the resale value of older cars with the old, higher tax rates fell.
But the VW diesel scandal that unfolded in 2015 undermined the entire car industry and highlighted the unfit for purpose car testing regime that was in place across the EU. For decades, car makers have been legally exploiting EU loopholes to achieve the best possible score for emissions and fuel economy. A new test, the Worldwide Harmonised Light Vehicle Test Procedure (WLTP), is now in place. And while it will shed no light on the cars currently on our roads, it will increase the price of many new cars as the test is more accurate and will reflect higher CO2 emission figures. This will only further compound the problem of imports, as new cars will cost more and face higher motor taxes while used imports will be subject to the old arrangements.
The car industry reassures us that today’s range of Euro 6 emission diesel cars are the ‘cleanest’ in history. The real issue is not the diesels of the future, it is the diesels currently on our roads regardless of where they originated, either as imports or bought new here. More than 70pc of these cars now on our roads are emitting unquantified levels of pollution. In the meantime, the Taoiseach has signalled his intention to increase carbon tax in the Budget next month which would see fuel price rises, but the impact would be equally felt by both petrol and diesel owners. It also seems likely that no change will be made to the current motor tax system, thereby penalising those who buy new cars with higher prices and higher taxes while indirectly making imports more attractive.