For many years Ireland has supplemented used car demand, which considerably outstrips the supply from new vehicle trade-ins, by importing UK vehicles. In 2019 for example, the last year unaffected by the pandemic, 109,000 used cars were brought in from the UK. A combination of the effects of Covid -19 and Brexit, has seen this figure drop by almost a quarter, with used car imports for the first six months of 2021 just under 40,000, compared to 51,700 in the first half of 2019.

 

At the same time, demand for used cars in Ireland has risen dramatically, fuelled by people wishing to move away from public to personal transportation. This means upward price pressure.  

 

A study of DoneDeal data, by economist Tom Gillespie, shows used car prices have risen dramatically since late 2019 and are some 40% up in the year to the end of June. This increase is especially evident in the price of lower value “starter” cars. It means that even with depreciation and an extra 20,000km a used car bought last year is now worth more than the original price paid.

 

Luke Ferguson, of Ferguson Trade Sales, is a specialist in importing used UK vehicles for dealers and says that the complexity of the importation process is one reason why fewer cars are being brought in and prices are rising. He comments, “The first issue was the adoption of WLTP (Worldwide Harmonised Light Vehicle Test Procedure) rules, which increased many VRT and NOx charges late last year. The Brexit agreement was then implemented in January and from January 14th this put an added 10% tariff on most UK imported cars.”

 

However, Luke explains that the tariff situation is far from clear cut. Traditionally many imports were premium German manufactured cars such as, Audi, BMW, Mercedes and VW. As EU origin vehicles when leaving the UK for Ireland, these are subject to the tariff as are cars coming through the UK from the Far East. However, if a vehicle is produced and originated in the UK for example, Jaguar, Land-Rover and some Toyota and Nissan models, the 10% tariff does not apply. The caveat to this is that the vehicle must contain more than 45% UK origin parts, which rules out some Nissan and Toyota models which are effectively assembled in the UK from imported parts.

 

Luke comments, “The import administration process has become something of a complex web and you have to be experienced in origin of goods rules and the possibility of tariff free re-importation of vehicles under there years old, to make the most of the possibilities.” He adds, “There are also complex rules regards VAT claims and zero rating where inexperienced importers can come unstuck.”

 

As if this added complication driving up prices was not enough, the situation in the UK market is also adding to difficulties. Like Ireland, Covid has caused demand for used vehicles in the UK to rise at a time when the market is feeling the supply effects of last year’s lack of fleet purchases and a new car sales drop. As a further complication, the rise in high profile online used car retailers, such as Car Zone and Cinch, is also draining supply, meaning the last four months has seen a rise of approaching 17% in the UK used car price index. This in turn means that buying used cars in the UK is now far more difficult and more expensive even without the administration import difficulties.  

 

However, most believe that even with price and import issues, used car imports will continue, as the circulation of vehicles in the Irish market simply cannot meet driver demand. Luke comments, “Prices are likely to continue to rise. This will mean that customers will have to accept an older vehicle for their budget, so someone who may have got a 3 year old import for their money in 2019, could now be looking at a 4 or 5 year old vehicle.”

 

Luke also stresses the importance of making sure all the paper work is correct and all of the taxes and charges are paid. He comments, “My advice is that vehicle importing is now a very complex area and unless you have experience and are fully aware of the latest regulations, you should seek the help of a specialist.” He adds, “Our in-depth understanding of the process and network of UK contacts means we still have access to very good value UK imported vehicles and we can take care of the administration process so that a motor trader can sell on with complete confidence.”