Hi Caroline,

Some updated info. on the European car market. We have commissioned our own study on the economic effects of a vrt reduction and the introduction of a scrappage scheme in Ireland in 2010. The initial results of this economic review suggests that a vrt reduction and a replacement with a carbon tax will generate significant incremental revenue for the exchequer in 2010. It also suggests that the new car market will remain static in 2010 and 2011 unless something is done about the excessive rates of VRT/VAT on both new and used cars in Ireland. This study will also calculate the sustainable new car market in Ireland and initial results suggest that it is in the 150,000 units per annum which is approximately 100,000 units more than what will be achieved in 2010. The scrappage incentives have worked across Europe, see below. There is no reason why it can’t work in the Irish Markey.

Unfortunately, I won’t have the results of this economic review until the second week in September which will be post the publication of your report. I am taking the opportunity to inform you that we will publish the results of this economic study ( which is independent) which will call for the elimination of VRT on new and used cars. It will also calculate the best means of making this change so as to not cripple the industry in the same way as the previous VRT change did.

You will have seen that the retail motor industry is in crisis with dealerships closing on a weekly basis. We are also heading into what we believe will be the hardest six months of this recession. More dealerships will close between now and Christmas and if something is not done about excessive taxation on new cars in December’ s budget, the vast majority of dealerships will not survive 2010.

This is a really serious and critical time for our industry and the people we employ. I trust that the people with influence within the commission for taxation are aware of this.

Regards,

Denis

UK: Western Europe car sales up 4.1% in June

6 July 2009 | Source: just-auto.com editorial team

According to data released by JD Power Automotive Forecasting, car sales in Western Europe grew by 4.1% over last year in June, the first positive year-on-year result for over a year.

The result reflects the continued impact of incentives, especially in Germany where the gain on last year was 40.5%. JD Power said that the German car market is up 26.1% so far this year and may hit 4m units for the whole of the year.

Car markets in France and Italy also continued to benefit from incentives and, in both cases, positive gains were achieved in June. The French market rose by 7% while car sales in Italy were up by almost 12%.

However, the UK and Spanish markets remained in strongly negative territory, though it is clear that incentive schemes in both countries are having a positive impact and helping to moderate the rate of decline.

Scrappage incentive schemes, combined with significant discounts from vehicle manufacturers, are producing a total Western European car market which could be on a par with or close to that of 2008.

JD Power said that the incentives have had the effect of stabilising the market and preventing what would otherwise have become a collapse.

However, the firm cautioned that the post-incentive environment is likely to present a major challenge to the industry in 2010.

The key market in this respect, it said, is Germany. When the incentive scheme expires at the end of 2009 as planned, the negative impact 'will be large'.

Past incentive schemes in France, Italy and Spain have been renewed once it has become clear that a given market will suffer upon the incentive expiry, it said, so nobody can say with confidence which schemes will be renewed in 2010.

JD Power warned that a negative German market correction from this year's expected near 4m unit market could send 2010's German car market as low as 2.6m units.

JD Power forecasts a West European car market of 13.33m units in 2009, which compares with 13.56m units in 2008 and 14.8m in 2007.

Article tags: JD Power