New car registration stats show that the dual registration system has done little but shift sales from Q2 into Q3
When the first two-stage registration system was introduced last year, it was all too tempting to assume that it was being done to avoid having the number 13 on number plates. The spectre of having an ‘Unlucky 13’ on the front and rear of your new car was certainly raised as an issue by some of the more publicity seeking politicians, and it is true that around ten% of the population does suffer from a genuine phobia of the number 13.
However, the real reason for the introduction of a two-stage registration period was far more to do with the decades of lobbying by Ireland’s car importers and dealers – the arrival of unlucky 13 merely gave events an extra impetus.
When, in 1987, the first year-county-number ‘plates were introduced, they did at least have the benefit of being remarkably simple and immediately explicable. Certainly, compared to the systems used in, for instance, the UK, the plates were easy to read and decipher and useful to such as second hand buyers, who could immediately see the age of the vehicle.
For the industry though, they were more problematic. With new car buyers keen to both be seen early with the new reg plate and also to get a full year’s ‘worth’ out of it, car sales began to cluster into the first quarter of the year, leaving the remaining months relatively barren of sales. Indeed, from summer onward, many dealerships would remain effectively empty. The system played merry hell with ordering new models, with calculating cash-flow and overhead costs and it needed to be changed.
The introduction of the 131 and 132 plates was supposed to put a stop to that, to spread sales out more evenly and allow the industry and its dealers to better plan, budget and sell throughout the year.
According to research carried out by Motorcheck.ie however, the plan is may not be working as effectively as was hoped originally. Motorcheck compared quarterly new car registrations for the past 2 years (2013-2014) since the dual registration system was introduced against the quarterly averages for the previous 5 years (2008-2012). The results show that the bulk of new car sales remain stuck, stubbornly, in the first quarter of the year, and while the July plate change does indeed cause a dramatic uptick in sales in what was once a fallow summer month, it has essentially cannibalised sales that would otherwise have happened in the second, third and fourth quarters of the year.
Whilst the news that new car registrations are on up is very positive for the Motor Trade, the new dual registration system has turned the sales calendar for Motor Dealers into a dual hump year with sales peaking in Jan and July. Unfortunately it has done little to ease the logistical burden in Q1 and has introduced some similar problems for July. Having said that, you won’t hear many complaints from the Motor Trade, given the lean sales experienced in recent years.
Commentators predict new vehicle registrations of approximately 93,000 for the full year 2014. The last six years averaged at 7% of sales in the last four months of the year, including the last year before the recession hit of 2008 with over 142,000 registrations. So if we increase the August year to date figures by 7% we would predict nearly 93,000 registrations (or upwards of 92,840). The forecasted total in 2014 for motorcycles based on the last six year averages is 18% or 919 new registrations. For commercial vehicles the forecasted total in 2014 based on the last six year averages is 15% or 18,800 new registrations
First quarter figures remain the same
Looking closely at the figures for 2014 to date we can confidently estimate that the industry will finish the year selling in excess of 93,000 new cars. This allows us to compare quarterly figures under the dual reg system against quarterly figures before the dual reg system.
In the first three months of 2013 53% of the new car registrations for the year were made. In 2014 this figures increased and 54% of all new passenger registrations were in the first quarter. So taking the previous five years, since the heady days of 2008, the average in the first quarter of new car registrations was 56% of the yearly total. So there has been very little change in first quarter registrations.
Second and third quarter impact
So what has happened to the second and third quarters? The effect of the dual registration system has effectively transferred sales directly from Q2 to Q3. The average Q2 and Q3 Sales for the 5 year period 2008-2012 was 26% and 15% of the annual total respectively. Since the dual reg system was introduce this trend and the average Q2 and Q3 sales are now 17% and 26% of the annual total respectively. The most worrying aspect of this is that rather than creating a smoothing effect on sales the dual registration system has created a new “peak” in July with sales tailing off drastically immediately before and after July.
Paltry sales in the fourth quarter
The final month of the year, December, is a telling one though. Back in 2008, the Irish car industry sold 226 cars in December. Then, oddly, during the years of harsh recession and austerity budgets, that figure actually rose, reaching a high of 409 in 2010. In 2013 it had dropped to a paltry 179. That’s 179 new cars registered, in the busiest consumer period of the year, when dealers are at their keenest to strike sharp deals on new cars.
Clearly, something needs to be done, lest the Irish motor industry allow itself to become a seasonal one, with knock-on effects for employment. Irish consumers are a tricky group of people to read, and trickier still to convince of a change of habit but the motor industry in this country cannot surely continue with this lop-sided sales trend. It adds needless cost and uncertainty to car sales costs which are then passed on to the customer both in terms of new car prices and their subsequent residual values. A more stable, more predictable sales trend would benefit us all.