Home > Venture > Motor industry warns of effect of new taxes on sales

Motor industry warns of effect of new taxes on sales

Proposals to increase the tax paid on new cars could hit consumers hard, the motor industry has warned.

The proposed increased were made by the Government’s Tax Strategy Group and could see the price of some cars increase by as much as €6,000 because of changes to VRT (Vehicle Registration Tax).

The car industry is warning any such move would cripple the sector and cost thousands of jobs.

The Tax Strategy Group says the measures are about putting disincentives in place for people buying more polluting diesel and petrol cars.

There are incentives in place to buy greener electric cars, but targets for the sale of green cars are way behind.

The industry is nervous of any increase in VRT, sales virtually stalled earlier this year, they have recovered somewhat in September, but new car sales are down almost 26% year on year.

Frank Kelly dealer principal at Sheehy Motors in Naas, Co Kildare, says a reduction rather than an increase in VRT is needed.

“VRT is a regressive tax, it has held us back. Every time VRT goes up, the market goes down,” he said.

“In the UK and in Northern Ireland the average tax on a car is just £5,000 Sterling, it is around €15,000 here.

“We need to encourage people into cleaner cars, the average car today is 28% cleaner than three to four year old cars.”

In 2008, a plan published by the then-government aimed to have 250,000 electric cars on the road by 2020, currently electric cars account for just 5% of that.

The car industry globally has been slow to move away from petrol and diesel, the EU has addressed the issue and now targets are in place to make electric more main stream.

But Frank Kelly says increasing VRT now is moving too fast, adding: “It is going to take another decade or so for us to have a full choice and range of electric cars.

“The Climate Action Plan aims to have 84,000 on the road by 2026, we are way behind we need to keep realistic about where we are going with electric cars”.

Under these proposals, the price of some of the most popular models could jump significantly.

Government to publish Climate Action Bill

Kia Sportage + €933

Peugeot 3008 + €1,415

Nissan Qashqai + €1,457

Hyundai Tucson + €1,498

Skoda Karoq + €2,175

The car industry is warning that a VRT hike could cost jobs.

Emma Mitchell of the Society of the Irish Motor Industry (SIMI) says that the last big VRT change in 2008 coincided with the recession and caused widespread loss of jobs and the closure of many dealerships.

She said: “The industry has had falling car sales this year, we are dealing with Brexit, with Covid, given all of that we do not think a new model of VRT should be introduced.

“We could see car sales fall even more dramatically, we are currently at recession levels, we expect to finish this year at about 840,000 new car registrations, which is below what is needed, we are trying to hold on to jobs as it is and we would be really fearful.”

Despite the somewhat limited number of electric car models available, there are incentives in place to buy electric.

Motorists can avail of grants of up to €10,000, as well as help to install electric charging points at home.

So far this year, nearly 3,000 electric cars were sold in Ireland, an increase of almost 22%.

In September alone 664 electric cars were sold, which is a 477% increase on September last year.


Notify of
Inline Feedbacks
View all comments
Would love your thoughts, please comment.x