News: Busted by the Budget?

Well, the dust is settling and Michael Noonan and Brendan Howlin have sat down, having delivered Budget 2013. For the Irish car industry, the shock is pretty real, even if all the major changes had been telegraphed well enough in advance to cushion the effect somewhat. 


“It is a shame that the motor business here in Ireland again appears to be seen as something of a cash cow and that the Government is again seeking to drain more revenue from the beleaguered motorist,” said Volkswagen Group Ireland Managing Director Simon Elliott. “While any increase in VRT and motor tax might worry consumers we must welcome the news that there will be a second registration plate in 2013 which is something that we in particular in Volkswagen Group Ireland lobbied hard to achieve. We also welcome the decision not to increase duty on petrol or diesel. I am also delighted that in terms of our retail offers that they are stronger than they have ever been which will give some comfort to those new car buyers for the New Year.”

The headlines for motorists are these: An average 19% rise in the cost of annual motor tax, with the most popular Bands A and B split into multiple sub-brands, with rises of as much as €55 a year depending on your car’s Co2 emissions. Pre-2008 cars, still taxed on the size of their engines, will see the price of annual road tax go up by around 7.5%, adding €44 to the cost of taxing a 1.8-litre family saloon.

Vehicle Registration Tax is going up by between 2-3% depending on the band your chosen new car falls into. The top band, Band G, sees no increase at all, so anyone planning to buy a V8 Range Rover in 2013 can breathe a sigh of relief. The rest of the increases vary from 2-3% jumps. Obviously, at the higher price tag end of things, a 2% jump is a significant increase in price, but for Ireland’s best-selling car, the Ford Focus, the increase in price should be limited to around €450 – not exactly a small sum of cash, but you’ll probably be able to claw at least some of that back with some sharp negotiation tactics.

For a BMW 520d, the car that, publicly at least, did more than anything else to drive the change in the car tax regime, that figure amounts to around €960 (assuming you’re going for the 130g/km M-Sport spec) – again, hardly a deal-breaker when you’re already dropping €48k on the purchase price.

The biggest issue, though, facing the motor trade in Ireland in 2013 is not the rate of VRT or the shifting of the motor tax bands nor even the price of petrol. The bald fact is that sales of cars in this country, which directly and indirectly contribute many billions to the Government coffers and directly employes more than 35,000 people, are inextricably linked to financial prosperity.

Those families facing cuts in child benefit, having to fork out for the property tax, absorbing the changes to  PRSI and the Universal Social Charge, are they seriously going to be considering a new car purchase next year? Will the change in the numberplate system, the set of new tax bands or a relatively mild increase in VRT be of any interest to them? Doubtful. This semi-fictional They, like the very real rest of us, will simply continue to struggle along as we have done, trying to work our way through the appalling fallout of the financial crisis that struck in 2008  and the legacy of which will afflict us for many years to come.