Should we ban Used Car imports from the UK?

brexit-car-imports
Posted by Michael Rochford on 22 January 2019 in Importing from the UK, News

 

Motorcheck examines how the prospect of banning Used Car imports from the UK might affect the market.

 

Well, should we? Some interesting, ‘terrifying’ if you’re looking at them from a certain perspective, figures came out of 2018. 120,000 new cars were sold, a 4.4% decline on the sales of 2017 (which were themselves down on 2016). It’s not a terrible figure, perhaps. Given that the Irish car market collapsed to fewer than half that number in the dark days of the recession, it’s actually not half bad, not least because a majority of those cars are of higher value than they would have been a decade ago.

Brexit

But more than 100,000 used cars were imported (127k if you count commercial vehicles), and that has seriously spooked the motor industry here. The reason is simple — Brexit. The UK’s decision to leave the EU, and the apparently rudderless manner in which that exit is being carried out, has driven the value of Sterling down and down. It only rarely pops above a level where one Euro will buy you 90p worth of Sterling. At that rate, buying second hand cars in the UK, and importing them to Ireland, achieves the status of a ‘no-brainer’. Even with the dreaded spectre of VRT waiting to ensnare the unwary or the careless, the fact is that the UK market for used cars currently offers exceptional value, far greater choice than you’ll find in Ireland, and often a higher grade or specification of car. No wonder we’ve all gone nuts for it.

That unleashes many problems, though. Clearly, it puts the pinch on Irish dealers (and therefore local employment) when they have to compete with cars coming in that can be as much as €5,000 cheaper, model-for-model. Of course much of that price is not down to the dealer, it’s down to the levels of tax we have to pay on cars here, but even so many sellers have cut their prices to try and match, and that hurts.

It’s also hurting new car sales, as buyers flock to bargain ‘nearly-new’ or lightly used, at any rate, UK cars.

Used Car Imports from the UK

Figures released by Motorcheck.ie show that of the 127k Total Used Vehicles imported into Ireland in 2018 more than 25k units (21%) of these vehicles were 2 years old or less. In fact, more than 3,000 of these vehicles were less than one year old. The drop in new car sales during 2018 can almost certainly be attributed to the influence of Brexit and the rise in the number of nearly new imports being brought in from the UK.

Diesel Emissions

There’s a third string to the concerns, though, and it’s to do with emissions. There are now worries that a significant number of the cars being imported, around 30 per cent of them, are older, more polluting models. Anything that was registered before 2014 isn’t under the latest Euro6 emissions regulations, so naturally comes with higher emissions of such things as (highly dangerous) nitrogen oxides, and that’s even just looking at the official figures, never mind the cheating that was — as we now know — rampant in the car industry when it came to emissions tests.

The imports are almost all also diesel-engined cars, and that has triggered Nissan Ireland to claim that we’re banjaxing ourselves into paying hefty fines for exceeding our Co2 emissions limits in the coming years, at a time when we should be encouraging buyers into hybrids and electric cars.

Now, cards on the table — Nissan is currently Ireland’s biggest seller of electric cars, with the well-known Leaf. It’s also the eighth-most imported brand by those shopping second hand in the UK, and the Nissan Qashqai is the fifth-most imported model. So, clearly, Nissan has some fat in the fire when it comes to the import game. Nevertheless, the company, and its chief executive James McCarthy, have been vocal in calling for ban on older imports, and more to be done to encourage the take-up of electric cars.

“The solution to addressing carbon emissions without hitting the pocket of every householder in the country is staring the Government in the face,” said Mr McCarthy. “It should be cleaning up the national car fleet rather than standing by as 100,755 polluting cars are imported from the U.K. and put onto Irish roads each year with an enormous loss in tax revenue. 1,937 polluting cars are being put onto Irish roads each week, on average. That is not helping Ireland to reduce carbon emissions and the tax take from a used car import is €6,000 less than from a new car sale.”

“This ban needs to be included among any package of new measures aimed at changing consumer behaviour to reduce carbon emissions and it is also essential if the Government is to ensure that the objectives of its electomobility strategy are not wholly undermined,” said Mr. McCarthy. “Such a move could also prevent the displacement of over 66,000 new car sales in 2019 at a time when new car sales and used car imports are moving closer to par and when the tax take from each new car sale is €8,500 compared to the €2,500 generated by each used car import.”

It’s a drastic idea, but potentially an interesting one. Presumably it would also gain support from the wider car sales industry as a whole, in Ireland.

Irish Motor Trade

Or would it? A significant number of those 100,000-odd imports last year were not brought in by private individuals, but by dealers themselves, looking to stock their forecourts with high-quality used cars at knock-down prices. So right off the bat, there could be a serious supply issue if the imports tap were to be turned off, which would skew second hand prices sharply upwards. A win for those selling, but less good for those buying. It might also be, potentially, an illegal move under either consumer or anti-trust law. While the Government might clothe such a ban in environmental terms, it’s equally likely that it could be slapped down as an effective subsidy to the car trade here, not to mention the fact that it would dramatically reduce consumer choice (at a time when we’re always being advised to shop around to cut our costs…).

There is, though, serious consideration of just such a ban at the highest levels of Government. Or at least there is a reluctance to rule out such a ban. A spokesperson for the Department of Finance told Motorcheck that: “The Department recognises that the large scale importation of used diesel cars from the UK over the past number of years is undesirable from a public health perspective and also an Exchequer perspective. We are examining options in this regard with a view to bringing forward options for the Tax Strategy Group.”

Will it happen? Only time will tell, but if it does expect to see yet more turmoil in the second-hand car market in Ireland.

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