Ireland’s Motor Sector

Head of Motor Sector at Bank of Ireland Stephen Healy provides an overview of Ireland’s Motor Sector.

The motor sector employs c. 47,000 people in Ireland across 400 towns in Ireland and is a significant contributor to the exchequer as Revenue collects c. €1.6 billion annually from vehicle sales alone.

At Bank of Ireland, we are partnered with 14 motor franchises accounting for c. 43pc of the market and provide wholesale and retail funding to support our customers to thrive.

We also have a specialist sectoral team in place to support our local business Relationship Managers nationwide.

Market drivers

car market sales in Ireland.
Demand
  • Vehicle demand can be cyclical and linked to macro factors along with consumer confidence. Following the global financial crisis, new vehicle sales were depressed from 2009-2012 before materially improving from 2013 – 2016
  • In 2016, the Brexit referendum was the catalyst for a substantial increase in used import volumes coming to the Republic of Ireland from the UK due to a fall in the value of sterling. This impacted new car demand due to a decline in residual values and an increase in the cost to change for consumers
  • Motor dealers are “not just about new car sales”, and dealers adapted to the new environment by focusing on used car and workshop sales channels. Aftersales incomes generates c. 40% of overall income and used car margins are generally stronger than new car margins.
  • The motor sector has been particularly resilient in the face of the health crisis. Motor dealers have reported reduced turnover in 2020, due to various restrictions, but also report higher margins and lower costs leading to improved profitability. This trend of improved financial performance carried over into 2021 with pent up demand evident in the market.
  • Hire Drive companies are actively replacing fleets as international travel resumed (c. 8% of sales in 2021 vs. 15% historical annual trend). This will be supportive to the overall new car market, and we expect increased volumes through this channel in 2022. Sales of battery electric vehicles (BEV’s) represent c. 8% of the market in 2021 with an acceleration in demand expected over the coming years
  • Looking forward, noting some supply challenges, we expect that new vehicle sales will trend back to pre-pandemic levels. In the near term, the Society of the Irish Motor Industry (SIMI) predict new car sales will return to 2019 levels in 2022.
Supply
  • Bank of Ireland Finance (BIF) is partnered with 14 motor franchises, accounting for c. 43% of new car sales by brand market share. There are over 30 car brands now operating in the Irish market.
  • New car supply has been impacted due to Covid restrictions and a used car shortage has developed due to Brexit (less used imports) and lower new car sales in 2020 and 2021
  • Manufacturers are not running at full capacity due to social distancing measures on vehicle production lines. Global demand for new vehicles is strong and this is putting pressure on the supply chain with lead times lengthening as a result.
  • Quarter 1 accounts for c. 60% of annualised new sales (July c. 20%). 2022 seasonality may be impacted, potentially leading to a stronger second half than seen in recent years.

Sources: Society of the Irish Motor Industry (SIMI) 

Stephen Healy
Stephen Healy is head of Motoring at Bank of Ireland.

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