The Republic of Ireland is one of the smaller nations in the European Union, with a population of around 4.6 million recorded in the last national census in 2011. The Republic forms the larger part of the island of Ireland, which lies immediately west of the British mainland. Northern Ireland remains part of the United Kingdom and has a population of some 1.8 million. The two Irish countries have separate governments and administration, the Republic having been formed in 1921, following a period of unrest resisting British rule, which ended in armed conflict between 1918 and 1921. Despite that and the previous difficult relationship with Britain during the years of British rule, there is considerable co-operation between Northern Ireland and the Republic and also with Britain.

The Irish economy expanded greatly between the late 1990s and 2007, a period that became known as the Celtic Tiger, which saw a high rate of GDP growth. The country became visibly more prosperous. Dublin was re-generated, construction projects were under way across the country, roads improved and property prices soared.

A notable proportion of that growth was based on the construction sector and the Irish banks became heavily involved in the property sector. This over-exposure was a significant factor in the Irish financial crisis, which hit the country, as it did across Europe, in 2008.

Ireland was the first country in the EU to officially enter recession in 2008 and the financial crisis has had a significant impact on the Irish economy, not least because the economy has been affected by a series of banking crises. Property prices, which had become significantly overvalued, came crashing down and construction projects were abandoned. Not surprisingly, the motor trade has been significantly affected by the crisis too.

Ireland has no domestic motor manufacturing sector. The only significant assembly in the country was of Ford vehicles at a plant in Cork, established in 1917. Henry Ford’s family originated from County Cork and the Irish business was established by him, originally as a private venture before being incorporated into the Ford Motor Company. The plant continued assembling Ford products until 1984 when it closed.

From the peak year of 2007 to the low point in 2009, car registrations fell 69% and light CV registrations by 79%.

Not surprisingly, given the depth of the country’s financial crisis, the recovery has been patchy. Gerry Madden is general manager of Johnson Perrott Fleet in Ireland and a member of the Council of the Vehicle Leasing Association Ireland and puts the overall market into context.

‘In Ireland, we have been witness to a motor industry in very considerable distress. The economic recession with the accompanying credit crunch has resulted in low consumer confidence. The net affect of this had been dismal new vehicle sales.

‘Passenger car sales hit an all time peak back in the year 2000 at 230,800 units. Many motorists held off changing their cars to await the novelty value of a year 2000 plate. By 2003 new car sales had dropped back to 145,300 before growing each consecutive year to reach 186,500 units in 2007– the year immediately prior to the recession. In 2008 they dropped to 151,722 as the recession began and by 2009 new car sales had reached a catastrophic low of 57,460.

‘The news since then has been mixed with only 88,846 new units in 2010, 89,896 in 2011, 79,574 in 2012 and 74,303 in 2013 and forecast of 85,000 for 2014. 2014 year-to-date figures are now at 24,882 as opposed to 19,051 last year – an increase of over 30%.

‘Over 10,000 jobs were lost in the motor industry. In 2008 there were almost 700 motor dealerships trading in Ireland and such has been the carnage within the industry that the forecast for trading dealerships for 2016 is 300–350.’

The signs are looking good at the moment although there are other factors to consider. Ireland changes vehicle registration plates twice a year, and January is one of the changeover months, which means there will have been some delayed purchasing from December.

SIMI director general, Alan Nolan, gives his view of the current market conditions; ‘It was clear in December that there was a strong demand for new ‘141 plate’ cars with dealers reporting far better levels of activity in the lead-up to January. Feedback from dealers suggests that consumer interest is continuing with a noticeable increase in showroom footfall and there certainly is a sense of optimism in dealerships that hasn't been apparent for many years.

‘There may have been some built-up demand from last year and the earlier Budget may also have helped people to make the decision to buy. There is also a greater availability of affordable finance and an overall improvement in the confidence among Irish consumers.

‘It is very early days so we are still cautious in relation to where the market might end up this year but there is a strong sense that we’re now above the bottom and beginning to move upwards. It's nice to be able to say that for the first time since 2008.

‘Demand for used cars in dealerships has also been strong, while the supply of locally sourced cars remains limited. This is reflected in the increase in imported used cars, which show an increase of 35% on 2013 and 39% over 2012. Around 50% of imported used cars are recorded as being registered by motor dealers.

‘Commercial vehicles have also seen improved levels of activity in January with sales of LCVs (vans) up 42% on 2013 and 29% on 2012, while HGVs (trucks) are 31% up on 2013 and 19% better than in 2012.

‘Whereas the new car market tends to be a sign of consumer confidence, the commercial vehicle market is more of an indication of what is happening in the Irish economy, confirming a noticeable increase in activity among small and medium businesses.’

To say that there may have been some built up demand from last year is probably an understatement. No fewer than 13 brands registered no cars at all in December 2013 and there was a similar trend among light and heavy commercial vehicles. Just 212 cars were registered during December compared with almost 23,000 in January 2014.

Finding accurate data on the size of the business car market in Ireland is not easy, as Gerry Madden told IFW; ‘According to the SIMI it is estimated to be about 20% of the total passenger car market. There is no reliable source of data on what percentage is contract hire or outright purchase.’ So if new car registrations are forecast to be around 85,000 to 90,000 in 2014, that should mean that around 17,000 to 18,000 of those new cars will be used for business.

The favoured brands for business follow the 10 best selling brands quite closely, including Volkswagen, Ford, Audi, Hyundai, Opel, BMW and Skoda. Ireland, unlike many other European markets still favours four door saloons over hatchbacks, although hatchback models have gained market share, as have SUVs. Favoured models include the Ford Mondeo, Volkswagen Passat and Opel Insignia, while small premium saloons are also popular including the Audi A4 and BMW 3 Series. At the Executive end of the sector, the BMW 5 Series, Audi A6 and Jaguar XF are popular choices.

It is difficult to interpret January 2013 light CV sales as indicative of improving business fortunes in Ireland, because of the registration plate change in January. Light CV registrations were up by 42% compared with January 2013.

The standard rate of VAT is currently running at 23% in Ireland and is generally chargeable on the sale or leasing of motor vehicles. There is also a vehicle registration tax based on CO2 emissions from the vehicle, payable once only at the time or first registration. This can be up to 36% of the open market selling price of the car. An annual motor tax is also levied on each car and this is also based on CO2 emissions, with a top rate of €2,350 for cars emitting more than 225g/km CO2.

Gerry Madden reckons that operational leasing is the most popular financing method for business cars with some finance leasing and outright purchase too. ‘The main source of vehicle funding are the two main pillar Banks – Bank of Ireland and Allied Irish Bank. Finance is also available through finance companies, while two manufacturers are currently providing funding – Volkswagen and BMW.’ He also indicated that well resourced leasing companies such as his own provide competitive funding.

So what of the future? Is Ireland and its fleet sector really on the road to recovery? ‘The recent improvement in sales of passenger vehicles and LCVs is a very positive development,’ says Mr. Madden. ‘There is a real sense that Ireland is now on the road to economic recovery and that business vehicle sales forecasts for 2014 will be surpassed.

‘If this happens it would be reasonable to assume that the positive trend will continue as the economy recovers. There is no doubt that there was considerable contraction in the fleet market.

‘There have been so many companies that went into receivership, downsized considerably or just went out of business and were closed by their owners. The companies that are left are now leaner and have control of their costs.

‘We would anticipate that as the recovery gets more fully under way, they will grow again in line with consumer demand and that both passenger cars and LCV sales will see growth as a result.’

Fleet focus – Ireland

Is Ireland on the road to recovery?

Ireland was one of the worst affected in the 2008 European financial crisis, but the sector is showing signs of recovery, reports John Kendall.

The Republic of Ireland is one of the smaller nations in the European Union, with a population of around 4.6 million recorded in the last national census in 2011. The Republic forms the larger part of the island of Ireland, which lies immediately west of the British mainland. Northern Ireland remains part of the United Kingdom and has a population of some 1.8 million. The two Irish countries have separate governments and administration, the Republic having been formed in 1921, following a period of unrest resisting British rule, which ended in armed conflict between 1918 and 1921. Despite that and the previous difficult relationship with Britain during the years of British rule, there is considerable co-operation between Northern Ireland and the Republic and also with Britain.

The Irish economy expanded greatly between the late 1990s and 2007, a period that became known as the Celtic Tiger, which saw a high rate of GDP growth. The country became visibly more prosperous. Dublin was re-generated, construction projects were under way across the country, roads improved and property prices soared.

A notable proportion of that growth was based on the construction sector and the Irish banks became heavily involved in the property sector. This over-exposure was a significant factor in the Irish financial crisis, which hit the country, as it did across Europe, in 2008.

Ireland was the first country in the EU to officially enter recession in 2008 and the financial crisis has had a significant impact on the Irish economy, not least because the economy has been affected by a series of banking crises. Property prices, which had become significantly overvalued, came crashing down and construction projects were abandoned. Not surprisingly, the motor trade has been significantly affected by the crisis too.

Ireland has no domestic motor manufacturing sector. The only significant assembly in the country was of Ford vehicles at a plant in Cork, established in 1917. Henry Ford’s family originated from County Cork and the Irish business was established by him, originally as a private venture before being incorporated into the Ford Motor Company. The plant continued assembling Ford products until 1984 when it closed.

From the peak year of 2007 to the low point in 2009, car registrations fell 69% and light CV registrations by 79%.

Not surprisingly, given the depth of the country’s financial crisis, the recovery has been patchy. Gerry Madden is general manager of Johnson Perrott Fleet in Ireland and a member of the Council of the Vehicle Leasing Association Ireland and puts the overall market into context.

“In Ireland, we have been witness to a motor industry in very considerable distress. The economic recession with the accompanying credit crunch has resulted in low consumer confidence. The net affect of this had been dismal new vehicle sales.

“Passenger car sales hit an all time peak back in the year 2000 at 230,800 units. Many motorists held off changing their cars to await the novelty value of a year 2000 plate. By 2003 new car sales had dropped back to 145,300 before growing each consecutive year to reach 186,500 units in 2007– the year immediately prior to the recession. In 2008 they dropped to 151,722 as the recession began and by 2009 new car sales had reached a catastrophic low of 57,460.

“The news since then has been mixed with only 88,846 new units in 2010, 89,896 in 2011, 79,574 in 2012 and 74,303 in 2013 and forecast of 85,000 for 2014. 2014 year-to-date figures are now at 24,882 as opposed to 19,051 last year – an increase of over 30%.

“Over 10,000 jobs were lost in the motor industry. In 2008 there were almost 700 motor dealerships trading in Ireland and such has been the carnage within the industry that the forecast for trading dealerships for 2016 is 300–350.”

The signs are looking good at the moment although there are other factors to consider. Ireland changes vehicle registration plates twice a year, and January is one of the changeover months, which means there will have been some delayed purchasing from December.

SIMI director general, Alan Nolan, gives his view of the current market conditions; “It was clear in December that there was a strong demand for new ‘141 plate’ cars with dealers reporting far better levels of activity in the lead-up to January. Feedback from dealers suggests that consumer interest is continuing with a noticeable increase in showroom footfall and there certainly is a sense of optimism in dealerships that hasn't been apparent for many years.

“There may have been some built-up demand from last year and the earlier Budget may also have helped people to make the decision to buy. There is also a greater availability of affordable finance and an overall improvement in the confidence among Irish consumers.

“It is very early days so we are still cautious in relation to where the market might end up this year but there is a strong sense that we’re now above the bottom and beginning to move upwards. It's nice to be able to say that for the first time since 2008.

“Demand for used cars in dealerships has also been strong, while the supply of locally sourced cars remains limited. This is reflected in the increase in imported used cars, which show an increase of 35% on 2013 and 39% over 2012. Around 50% of imported used cars are recorded as being registered by motor dealers.

“Commercial vehicles have also seen improved levels of activity in January with sales of LCVs (vans) up 42% on 2013 and 29% on 2012, while HGVs (trucks) are 31% up on 2013 and 19% better than in 2012.

“Whereas the new car market tends to be a sign of consumer confidence, the commercial vehicle market is more of an indication of what is happening in the Irish economy, confirming a noticeable increase in activity among small and medium businesses.”

To say that there may have been some built up demand from last year is probably an understatement. No fewer than 13 brands registered no cars at all in December 2013 and there was a similar trend among light and heavy commercial vehicles. Just 212 cars were registered during December compared with almost 23,000 in January 2014.

Finding accurate data on the size of the business car market in Ireland is not easy, as Gerry Madden told IFW; “According to the SIMI it is estimated to be about 20% of the total passenger car market. There is no reliable source of data on what percentage is contract hire or outright purchase.” So if new car registrations are forecast to be around 85,000 to 90,000 in 2014, that should mean that around 17,000 to 18,000 of those new cars will be used for business.

The favoured brands for business follow the 10 best selling brands quite closely, including Volkswagen, Ford, Audi, Hyundai, Opel, BMW and Skoda. Ireland, unlike many other European markets still favours four door saloons over hatchbacks, although hatchback models have gained market share, as have SUVs. Favoured models include the Ford Mondeo, Volkswagen Passat and Opel Insignia, while small premium saloons are also popular including the Audi A4 and BMW 3 Series. At the Executive end of the sector, the BMW 5 Series, Audi A6 and Jaguar XF are popular choices.

It is difficult to interpret January 2013 light CV sales as indicative of improving business fortunes in Ireland, because of the registration plate change in January. Light CV registrations were up by 42% compared with January 2013.

The standard rate of VAT is currently running at 23% in Ireland and is generally chargeable on the sale or leasing of motor vehicles. There is also a vehicle registration tax based on CO2 emissions from the vehicle, payable once only at the time or first registration. This can be up to 36% of the open market selling price of the car. An annual motor tax is also levied on each car and this is also based on CO2 emissions, with a top rate of €2,350 for cars emitting more than 225g/km CO2.

Gerry Madden reckons that operational leasing is the most popular financing method for business cars with some finance leasing and outright purchase too. “The main source of vehicle funding are the two main pillar Banks – Bank of Ireland and Allied Irish Bank. Finance is also available through finance companies, while two manufacturers are currently providing funding – Volkswagen and BMW.” He also indicated that well resourced leasing companies such as his own provide competitive funding.

So what of the future? Is Ireland and its fleet sector really on the road to recovery? “The recent improvement in sales of passenger vehicles and LCVs is a very positive development,” says Mr. Madden. “There is a real sense that Ireland is now on the road to economic recovery and that business vehicle sales forecasts for 2014 will be surpassed.

“If this happens it would be reasonable to assume that the positive trend will continue as the economy recovers. There is no doubt that there was considerable contraction in the fleet market.

“There have been so many companies that went into receivership, downsized considerably or just went out of business and were closed by their owners. The companies that are left are now leaner and have control of their costs.

“We would anticipate that as the recovery gets more fully under way, they will grow again in line with consumer demand and that both passenger cars and LCV sales will see growth as a result.”

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