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

SIMI CONTACT US

simi.ie/quarterlyreview suzanne@simi.ie dlee@ohpr.ie