SIMI Director General Alan Nolan commented: “We share the concerns of other business sectors that a 2% VAT increase in a depressed falling market, where consumers are very reluctant to spend, may not deliver the targeted revenue increase.”

He continued: “As already detailed in our Budget Submission to Minister Noonan, the Motor Industry has an even more serious concern at the timing of any such increase. We saw the impact of the VRT and Road Tax changeover in 2008 which saw car sales fall to a low of 57,000, resulting in some 150 companies closing and the loss of 14,300 jobs in the sector. Since 2010, with Scrappage, we have regained some of that employment with a 4,200 increase in jobs.”

“Since Scrappage ended sales have fallen by 20% compared to non-Scrappage sales last year and servicing business has also fallen as consumers are just not spending.  In this fragile market environment the Industry has been preparing for the vital first quarter, with orders already taken, and deals agreed based on current prices. We have always argued that we need stability and any increase, particularly in a falling market, at the start of our key peak sales period could be disastrous as we cannot recover from a bad start to the year.”

“Some €500 million in new cars has been ordered already by the Industry, representing over €200million in tax (VRT and VAT when these ordered cars are sold) for the State and if the timing of the VAT increase is such that the sale of these cars is very badly affected there will be no possibility of recovery due to the seasonal nature of car sales. Thus both this tax take and Motor Industry employment will be at serious risk if the VAT increase is implemented before the end of the first quarter.”

Unveiling SIMI’s pre-Budget submission in Dublin yesterday, SIMI President, Gerry Caffrey, outlined how our current registration plate causes serious problems in relation to the seasonality of car sales.

He said: “Nearly 50 per cent of new cars are sold in the first quarter of the year, which puts huge pressure on resources, from staff to cash flow. For those working in the industry, it is impossible to know if they will still be employed at the end of the year.”

“We’re proposing two changes to the current registration plate which can solve this problem and also generate significant revenue.”

SIMI is seeking the addition of a special ‘identifier’ such as an extra character on the registration plate for all vehicles registered after 1st July in 2012 to create a second new car sales peak. This could generate an extra €20 million in VAT and VRT each year and potentially a lot more in the first year of its introduction, according to SIMI.

Caffrey added: “This will create a far more stable environment in the Industry and will help spread sales more evenly through the year supporting employment and Exchequer revenues continually through the year.”

The second proposed change to the registration plate is to allow a consumer or Motor Retailer to get a used vehicle’s registration plate re-designated to the county of residence of its new owner. Based on a charge of €250 for this re-designation, it could deliver an additional €20million for the Exchequer in year one alone.

Caffrey noted: “Many cars cannot be sold outside of their county of registration because some customers may have a preference for driving a car with their own county number plate. I’ve no doubt that this option would be taken up by many consumers.”

A total of 125 HGVs were registered in April an increase of 62 per cent on the same month last year.

To date 475 HGVs have been registered an increase of 4 per cent on 2009.

SIMI Director General, Alan Nolan commented: “These commercial vehicle figures are a first tentative sign of stability beginning to return. This is the first month since 2008 that the HGVs have shown an increase and together with the increase in LCV registrations, this has to be welcomed.

Nolan continued: “These are not big numbers so statistics like this have to be viewed in context. That said, commercial vehicles are very often seen as a true barometer of economic activity and although we will need to watch future developments very carefully before drawing firm conclusions, this result has to be seen as a very welcome indicator.”

Since its introduction, a lot has changed, including a huge increase in the number of vehicles on the road, an improved road network and big changes in driver and buyer behaviour.

SIMI is now questioning whether the system was still delivering as it might for all of the key stakeholders, Gardaí, Local Authorities, motorists and the Motor Industry as well.

Some 54 per cent of new cars are sold within the first quarter of the year, 70% in the first six months and there is no doubt that the registration system plays a big part in this.

Eddie Murphy said, “The issue of seasonality causes problems for a number of the key stakeholders and particularly for us in the Motor Industry.

This all results in huge cost and staff pressures put on businesses in the first half of the year.”

Murphy acknowledged the positives in the current system and believes that we can hold on to these while seeking to implement some improvements.

“Our current system is easy to understand and is a big driver of sales; however, if there is a bad start to the year, it means that the State’s revenue will have no chance to recover, as sales in the second half are so low. It is a high-risk system.”

This seasonality of new car sales also has a knock-on effect on the NCT system. “The NCT testing system is also based on the date of first registration and suffers huge backlogs in the early part of the year with a very quiet final few months. There isn’t a quick fix solution but we need to open up the debate with all those involved to see if we can find a way to improve the system to benefit all of the key parties” he said.

The Irish Times reports that three VRT categories are under consideration – M1 or passenger car, N1 type commercial vehicle with a 13.3 per cent VRT rate and N2 type with VRT rate of €50.

“What we are concerned about is that certain types of commercial vehicles, such as small panel vans, which are essential to the small and medium enterprise sector may fall into the N1 category. These vehicles have always being in the €50 group,” SIMI Director General Alan Nolan is quoted as saying.

“We will have to wait for the Budget for confirmation but I think progress has been made on this and that some modifications may be introduced.”

The changes are planned to be introduced on January 1st.

The current situation, where two-thirds of new cars are sold in the first four months of the year, causes huge funding and staffing challenges for the industry.

Such a front-loaded new car selling season, also presents a high risk for the Government. A slow start to the year leaves little chance for recovery and will result in very poor exchequer returns in terms of VAT and VRT.

Speaking at the dinner, Finlay said, “We favour only a very slight change to the current system, simply the addition of an early or late identifier added to the current format to indicate the time of the year of first registration.

We would like to see the added possibility for car owners to be able to re-register a car in their own county of residence, in the event that they buy a used car previously registered in another county. Many car buyers like to have their own county registration on their cars.”

Mike Finlay also commented on pick-up in used car values since the start of the year.

He said, “the strengthening of used car values is good news for car owners. The value of trade-in cars is now actually increasing which means that for consumers the cost to change their car is reducing. This is good news all round.”

A total of 106 HGVs were registered in February, compared to 117 in February 2009

New HGV registrations for the first two months of the year are down almost 40 per cent (243 units) compared to the same period in 2009 (403 units).

DAF tops the sales charts with 22.63 per cent of the market (55 units) followed by Volvo on 14.83 per cent (36 units) and Mercedes-Benz on 13.99 per cent (34 units).

SIMI says the current system produces an extreme form of seasonality in car sales which damages the industry, government tax revenues and does not benefit the consumer.