After many years of sales decline there is a lot of good news around the Motor Industry in Ireland – 2015.
For those who are in the new Car and Van (LCV) business , there has been a marked increase in sales.
- New car sales were up 33% (19,046) in March compared to (14,297) in March 2014, and up 30% for the first 3 months on the same period last year.
- Light Commercial Vehicles (LCV) up 54 % (2,846) compared to March 2014 (1,852) and are up 59% for the first 3 months compared to 2014.
- Heavy Goods Vehicles (HGV) are up this month 5.5% (241) when compared with March 2014 (236) but are still down -15% year to date. (Source for all stats SIMI)
This is all good news and shows that consumer confidence is getting better, added to the availability of credit…. people are changing their vehicles.
Petrol and Diesel prices have also decreased over the past year which adds to the disposable income available to consumers. This feelgood factor is allowing people consider changing their vehicle and in turn giving a much needed boost to the Motor industry which has been in survival mode for the last 6/7 years. Nobody can begrudge anybody in the Motor Trade a change in fortune having hung on in business while sometimes losing money since 2008. Hopefully lessons will have been learned by all concerned Banks, Manufactures and Dealers. To stay in business you don’t just need sales, you also need profit. That profit should come from the core trading business and not be overly supplemented by interference from Manufacturers to gain market share at all costs and also from Banks pushing credit on Dealerships in return for the introduction of customer vehicle finance from them.
Pre 2007 the risk to reward in the Motor Industry was bordering on the ridiculous with few looking at ROI (Return on Investment), opting rather to look at ROS (Return on Sales). When the sales and availability of finance slowed, panic set in and used car prices tumbled which brought many good business down as they had invested in their premises to meet Manufacturer standards and the Banks wanted their money back both for stock and premises.
There are still some problems ahead for the Industry.
- There has been no recruitment in the Industry over the past number of years and there is now an acute shortage of trained personnel.This problem cannot be sorted out overnight as it takes 4 to 5 years to train a technician.
- Vehicles are now complex pieces of machinery and on going training is needed to keep the technical staff up to speed with the new models which are launched by all manufacturers on a very regular basis.
- Training is very costly on the dealerships as invariably the training is done away from the dealership which incurs extra expense and lost productivity.
- With the decrease in new vehicle sales over the years quality used cars were not being traded in and there will be a scarcity going forward.
- All Dealerships depend on getting a good supply of used cars to sell and make a contribution to profit.
- Traditionally some cars were imported from Britain to fill the void if necessary, but now as the Sterling/Euro exchange rate is very poor so there is no real value for either Dealer or Consumer.
While we are seeing a welcome respite for Dealers and the Motor Industry generally we must be acutely aware that it can change very quickly. It is important that the lessons learned are not forgotten and a balanced approach from all stakeholders involved in this very important business sector is adopted by all which also includes the Government to safeguard jobs and businesses into the future
The Industry employs about approximately 42,000 people in Ireland and collects almost €2bn in taxes for the exchequer annually.