The Irish Motor Industry - an Economic review Q2 2014
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WELCOME SIMI MOTOR industry review IN ASSOCIATION WITH DONEDEAL #MotorIndustryReview
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19-Oct-2014 -
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An economic review of the Irish Motor Industry Q2. Author: Economist, Jim Power
Transcript of The Irish Motor Industry - an Economic review Q2 2014
WELCOME SIMI MOTOR industry reviewIN ASSOCIATION WITH DONEDEAL
#MotorIndustryReview
James BrookS
SIMI PRESIDENT md of kia motors ireland
industry in recovery
First president to preside over a car market of 90,000 since 2008.
Car Safety
‣ 1.2m cars tested last yr ‣ out of car parc of 1.9m ‣ 53% failed - 621,000 ‣ 4,300 failed ‘dangerously’
HOW MANY WERE NOT TESTED?
increase in tests‣ 754,000 cars tested so far this yr ‣ out of car parc of 1.9m ‣ 51% failed - 382,000 ‣ 2,700 failed ‘dangerously
Why are there more cars being tested?
Continuous Road Tax
Increased NCT capacity
New 5 Penalty points offence
Why is this relevant to this morning?
alan nolan
director general SIMI
2014 significant year for the motor industry
‣ First significant upward trend since ’08 ‣ Suggests upward trend going forward ‣ 2nd yr of dual reg system ‣ july 1st best since 2nd jan ’08
‣ month may be best since ’08 ‣ may be best july ever ‣ if trend continues ’14 best yr
since ’08?
But industry cautious
‣ cautious even talking about progress ‣ & potential to grow to 100k next yr ‣ conscious of fragility of recovery
conscious of potential for any negative factor to set us back
SIMI Member Survey q2 (june)
over 60% confident about: ‣ outlook for own business ‣ outlook for industry ‣ positive but less than March (70%)
moving toward budget time - impacting? !
potential for any increase in motoring taxes to derail recovery
state gains from recovery in industry
‣ increased tax income ‣ gains in job creation - thousands of extra jobs in 400 towns - increase in apprentices
confidence tax rev. & employment growth next yr. if no negative impact in budget
focus on fleet renewal may be necessary
‣ next yr average car will be +10 yrs ‣ long argued for well focused
incentives to renew ageing fleet ‣ Environmental, safety, exchequer +
employment benefits
far more creative & rewarding way to seek increased tax rev…. but that’s for another day…
q2 review - what’s new?
‣ new data streams added ‣ interesting data on used car volumes - through garages - sales & trade-ins - by county - for first 6 months - growth of 17%
survey - topics important to members - condition of ageing fleet - activities of black economy
Cathal creman
commercial manager Donedeal
Jim Power
report author Jim power economics limited
Economic & Motor Industry Update Q2
2014
Jim
Power July 15th 2014
KEY ECONOMIC DEVELOPMENTS IN 2014
• International recovery better – but fragile
• Significant growth in Q1 GDP +4.1%
• Retail Sales Volume +7% Value +4.8% (J-May)
• Retail Sales Ex-Cars Volume +3.3% Value +1.4%
• Merchandise Exports (J-M) +0.3% Food +10.7% Chemicals -1%
• Live Register <400K Unemployment 11.6%
• Exchequer finances improving
• Credit conditions still challenging
• Housing market improving
• Consumer confidence stronger
• Successful exit from Troika
Q1 ECONOMIC ACTIVITY
% QoQ % YoY
GDP +2.7% +4.1%
GNP +0.5% +3.1%
Consumption -0.1% +0.2%
Gov. Expenditure -2.1% +2.6%
Investment -8.1% +2.9%
Exports Goods & Services
+1.8% +7.4%
Imports Goods & Services
+0.8% +5.9%
HOW REAL IS THE RECOVERY? THE EVIDENCE• Modest recovery in retail sales, car sales very strong • Labour market improving • Exports still very volatile – patent issue very distorting • Manufacturing output strong • Housing market improving • Exchequer deficit falling– tax revenues rising • Troika exit and bond sales • Business insolvencies declining • Business & consumer confidence very strong • External view very positive • Many indicators moving in right direction • Many challenges to work through
EMPLOYMENT (S/A 000’S)
(000
s)
1800
1900
2000
2100
2200
2004Q1 2004Q4 2005Q3 2006Q2 2007Q1 2007Q4 2008Q3 2009Q2 2010Q1 2010Q4 2011Q3 2012Q2 2013Q1 2013Q4
CONSUMER CONFIDENCE
0
27.5
55
82.5
110
Mar-‐05 Jul-‐05 Nov-‐05 Mar-‐06 Jul-‐06 Nov-‐06 Mar-‐07 Jul-‐07 Nov-‐07 Mar-‐08 Jul-‐08 Nov-‐08 Mar-‐09 Jul-‐09 Nov-‐09 Mar-‐10 Jul-‐10 Nov-‐10 Mar-‐11 Jul-‐11 Nov-‐11 Mar-‐12 Jul-‐12 Nov-‐12 Mar-‐13 Jul-‐13 Nov-‐13 Mar-‐14
PERSONAL DISPOSABLE INCOME
€bln
60
72.5
85
97.5
110
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
THE MOTOR INDUSTRY H1 2014
• New private cars registered +23.4% • Light Commercial Vehicles +36.3% • Heavy Commercial Vehicles +45% • Every county reported good growth in new car registrations • Imported Cars +16.5% (30.7% of Total Cars Licensed) • CO2 Emissions continue to fall • SIMI member confidence survey positive– enforcement an issue • Costs of motoring : Year to June: Petrol -1.4%, Diesel -0.7%, Insurance +6.8%,
Average New Car price -3.1% • Making stronger contribution to Exchequer
EMPLOYMENT IN THE MOTOR TRADE
(000
s)
20.0
27.5
35.0
42.5
50.0
Q3 98 Q1 99 Q3 99 Q1 00 Q3 00 Q1 01 Q3 01 Q1 02 Q3 02 Q1 03 Q3 03 Q1 04 Q3 04 Q1 05 Q3 05 Q1 06 Q3 06 Q1 07 Q3 07 Q1 08 Q3 08 Q1 09 Q3 09 Q1 10 Q3 10 Q1 11 Q3 11 Q1 12 Q3 12 Q1 13 Q3 13 Q1 14
CAR REGISTRATIONS
0.0
25.0
50.0
75.0
100.0
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014(H1)
NEW CARS (%) IMPORTED CARS (%)
NEW CAR REGISTRATION AVERAGE CO2 EMISSIONS
100
115
130
145
160
2008 2009 2010 2011 2012 2013 2014 (H1)
MONTHLY REGISTRATIONS
0
7,500
15,000
22,500
30,000
Jan Feb March April May June July Aug Sept Oct Nov Dec
2012 2013 2014
MARKET ISSUES
• Consumer demand & fragility • Credit conditions – positive for motor trade, but
difficult elsewhere • Imported vehicles – growing part of the market • Age of car fleet : 77.8% 5 years or older Average age
>10y in 2015 • Impact of dual plates – strong story in July • Important that Minister for Finance does not do
anything to derail fragile market recovery
BUDGET 2015
• €2 bln adjustment not necessary, very risky • Recovery in motor industry having very
positive employment & Exchequer impact – should not be de-railed
• Age of the fleet – safety & environment • Enforcement a big issue for the Motor
Industry • Maintaining current trend very important
EXCHEQUER REVENUES FROM MOTOR INDUSTRY H1 2014
NEW CAR REGISTRATIONS
(€mln) % GROWTH
VRT 289 +21.9%
VAT 252 +26.4%
Total 541 +24.0%
USED CAR REGISTRATIONS
(€ mln) % GROWTH
VRT 77 +15.8%
VAT 11 +15.0%
Total 88 +15.7%
GRAND TOTAL 629 +22.7%
DONEDEAL ADVERTISING MARKET
0
20,000
40,000
60,000
80,000
Jan-‐12 Feb-‐12 Mar-‐12 Apr-‐12 May-‐12 Jun-‐12 Jul-‐12 Aug-‐12 Sept-‐12 Oct-‐12 Nov-‐12 Dec-‐12 Jan-‐13 Feb-‐13 Mar-‐13 Apr-‐13 May-‐13 Jun-‐13 Jul-‐13 Aug-‐13 Sept-‐13 Oct-‐13 Nov-‐13 Dec-‐13 Jan-‐14 Feb-‐14 Mar-‐14 Apr-‐14 May-‐14 Jun-‐14
CARS MOTOR-‐EXCL. CARS
ECONOMIC IMPACT & POTENTIAL OF INDUSTRY
• Contributed €629 mln to Exchequer in H1 2014 (€1.8 billion in 2007)
• Every 10,000 extra new cars +€82 million to Exchequer • Q1 2014: 39,100 employed in industry • 130 new jobs for every 1,000 extra cars sold • Market of 95,000 in 2014 possible • 105,000 in 2015, 115,000 in 2016 and 120,000 in 2017? • Makes strong contribution to national and local economies
