Irish motor industry in a dramatic nose dive

The bankruptcy of General Motors and Chrysler and the avoidance of bankruptcy by Opel through a proposed sale of Opel and Vauxhall to the Canadian corporation Magna International, one of the world’s largest car component companies, prompts me to reflect on the ups and downs of the Irish private car sector. When I lived in Massachusetts in the late 1960’s the output of Detroit defined American values and GM had a 50%+ market share. I returned to live in Boston in 2000 for five years and not a single sedan made by the ‘Big 3’ manufacturers featured in the ten best sellers; although the steady loyalty of my best friend to Saab bucked this trend. But the recession has killed these companies who were incapable of producing cars that consumers wanted. The worldwide production capacity is 86 million vehicles per year but demand has dropped by 70 million to 56 million in 2007, with further declines subsequently.

Both Ford and Opel have been consistent top sellers in Ireland. However, a decade of exuberance in the Irish private car sector has come to a very abrupt halt. This is what has happened:

Pre 2009 Trends

There were 1.88 million private cars registered in Ireland at 31 December 2007. Our population expanded by 16.8% between 1996 and 2006 but the number of private cars registered for the first time increased by 43.6% during this decade. The number of helicopters registered in Ireland increased from 34 to 146, many of them worth €10 million, or more. These were typically owned by the property development caste, a ruthlessly ambitious, rough-hewn cohort almost totally devoid of a classical education.

Our motoring tastes also became more sophisticated and more expensive during this decade as illustrated in the following analysis of engine cubic capacity and the breakdown of new registrations:

YEAR	Up to 1300 cc	1301 - 1500 cc	1501 - 2400 cc	2400 cc+
1997	33.0%	31.7%	33.0%	1.9%
2007	15.0%	31.0%	47.6%	5.7%

We drove larger and more expensive cars and the era of multiple cars per household arrived.

It is also interesting to compare the dispersal of the country’s population and car ownership

	Dublin	Rest of Leinster	Munster	Connaught	Ulster (Part)	TOTAL
2006	1,186,159	1,106,780	1,172,170	503,083	266,733	4,234,925
	28%	26%	28%	12%	6%
Private Cars	498,839	501,633	555,497	219,035	107,657	1,882,661
	26%	27%	30%	12%	6%
Cars to PopulationRatio	2.4	2.2	2.1	2.3	2.5	2.2
Persons / Kilometre2	100	48	28	33

Connaught and Ulster car ownership exactly matched population dispersal.

One third of the increase in the country’s population between 1996 and 2006 settled in the rest of Leinster, mainly in the dormitory towns within a 80-kilometre radius of Dublin and the more rigorous commuting pattern associated with this is reflected in car ownership trends. The residential element of Dublin city expanded which eliminated a requirement for a car to commute.

The most popular brands in Ireland at the end of 2008 were Toyota (13.9%), Ford (12.5%), Volkswagen (10.7%), Opel (8.4%) and Nissan (7.6%). 65% of all new cars purchased were in the €15k to €30k price range.

The market shares of the larger (2400 cc+) luxury cars in 2008 were:

Segment Market Share	New	Used Imported
Total Volume	6,379 units	5,308 units
BMW	17.7%	24.9%
Land Rover	16.2%	5.9%
Mercedes Benz	12.6%	13.8%
Lexus	10.0%	2.07%
Audi	9.6%	5.1%

The registration of used imported private cars increased from 41,554 units in 1997 to 58,719 units in 2007 (43.3%). The downturn in the top end of the private car sector is especially clear in the case of Land Rover sales - 928 new vehicles registered in first four months of 2008; 79 registered in the first four months of 2009. 175 used imported cars were registered in the first four months of 2008 and 110 imported used cars were registered in the first four months of 2009.

Trade in used cars originally registered in Ireland also increased through this decade. Approximately 27% of all registered vehicles changed owners in 2001 and this figure increased to 39% in 2007.

2009 Trends

There has been, according to data issued by the CSO, a decrease of 68.4% in new private cars registered so far in 2009

	New Private Cars	% Change
April 2009	5,558	-68.5%
April 2008	17,587	-46%
April 2007	21,427
Jan – Apr 2009	32,692	-65.5%
Jan – Apr 2008	95,028	-7.9%
Jan – Apr 2007	103,177	Source: CSO

This coincides with a 21% drop in Irish retail sales and an overall increase in the 12 months to April 2009 in the Live Register of 104%, which measures short-time working as well as unemployment.

The impact of this in Dublin and each of the provinces is as follows in the case of private cars in the categories of 1501 – 2400 cc range:

	Dublin	Leinster (rest of)	Munster	Connaught	Ulster (part of)
Live Register Increase	+100%	+98%	+104%	+110%	+111%
1501 – 2400 cc sales decline	-100%	-98%	-104%	-110%	-111%
Jan – Apr 2008 Ratio of car buyers to indigenous population	1/91	1/92	1/103	1/117	1/134
Jan – Apr 2009 Ratio of car buyers to indigenous population	1/240	1/247	1/280	1//316	1/325

The foregoing illustrates the scale of the downturn in rather stark terms.

Last year, I in every 91 of the population of Dublin bought a new car. This year, 1 in every 325 of the population of Ulster bought a new car in that range whose share of the overall marker had grown from 33% in 1997 to over 47% in 2007.

This represents a volume downturn nationally from 42,413 units in this category in the first four months of 2008 to 15,904 units in the first four months of 2009.

The downturn has been especially severe in Carlow, Cavan, Clare, Donegal,Galway Laois, and Offaly

The impact of this trend has contributed to a decline in Value Added Tax receipts of €1.04 billion (27%) between April 2008 and April 2009 as well as the closure and rationalisation of many dealerships. There has also been a €2 billion drop in personal credit in Ireland.