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08 Nov 2019

Consolidation in Irish motor industry expected as the New Car Sales Market Suffers Globally

Current Pent-up Irish demand likely to result in a second-hand car bounce

Ireland’s Motor Industry – Driving forward!

Read our full report here

Ireland’s Motor Industry – Driving forward!

Deloitte Ireland has today published Ireland’s Motor Industry – Driving Forward, a report examining the challenges facing the motor industry in the wake of COVID-19 and the likely impact of the crisis on the future of car sales and aftersales services over the next 24 months.

Andrew Byrne, Director, Financial Advisory at Deloitte said:

While the scale of the Covid-19 pandemic has yet to fully materialise, what is known with certainty is that new car sales in Ireland were down 96% in April, 72% in May and 28.4% in June when compared year-on-year with 2019. As economies slowly emerge from lockdown, and manufacturing production is slowly grinding up through the gears, we expect significantly slower rates of production, with social distancing measures being introduced in plants all over the world.

Consolidation

Our review of the market reveals that some redundancies in the sector will be unavoidable and expected in Q4 of 2020 and into 2021,” said Byrne. “Any dealer who was struggling pre-pandemic may trade through 2020, possibly utilising the Revenue debt warehouse scheme, but with 2021 expected to be as challenging as this year, there will be casualties arising. As it is perceived there are too many independent dealers to service the current levels of demand, there will likely be some consolidation of dealerships in the medium term.


Proactive

New car sales are reducing globally and Ireland is no exception. There will be significant reduction in new car sales this year – for the fourth consecutive year – coupled with a possible slowdown in the second-hand market over the coming 12 months. Considering the level of overall economic uncertainty over and above this, it is difficult to see that that there won’t be casualties in this sector emerging in late 2020 or 2021. This will likely result in an overall reduction in the numbers of branded and independent motor dealers.
Deloitte would urge business leaders in the sector to continually monitor their financial performance, document the rationale for taking decisions at Board level and seek to avail of the appropriate professional and financial advice should they encounter difficulties. Acting early in times of crisis – which may involve some form of restructure – may lead to a leaner, more efficient organisation with increased chances of survival.

Second-hand bounce

Pent-up demand, coupled with the additional savings many families have garnered while working from home and a likely reduction in consumers travelling abroad, may lead to many customers seeking higher-spec, second-hand vehicles rather than opting for new vehicles, according to the report.
According to Deloitte’s latest State of the Consumer Tracker, in the first week of July 22% of Irish consumers reported being concerned about making upcoming payments and 37% were delaying making large purchases; 52% of Irish consumers indicated they were planning to keep their current vehicle longer than originally expected.

Daniel Murray, Partner and Head of Consumer Industry at Deloitte said:

It remains to be seen whether the public will be ready to continue to make these significant purchases – usually second in size only to a house purchase – in the current environment. Many factors are presently at play which affect these larger purchase decisions: job security; economic indicators; falling GDP; ability to secure finance; conflicting messages about Electric Vehicles, to name a few.

For Further Information Please Contact

Aoibheann O’Sullivan

Murray

01 498 0300

087 6291453

aosullivan@murraygroup.ie

 

Fiona MacCarthy

Deloitte

01 417 2542

086 8250027

fmaccarthy@deloitte.ie

About Deloitte

At Deloitte, we make an impact that matters for our clients, our people, our profession, and in the wider society by delivering the solutions and insights they need to address their most complex business challenges.

As the largest global professional services and consulting network, with approximately 286,000 professionals in more than 150 countries, we bring world-class capabilities and high-quality services to our clients.

In Ireland, Deloitte has approximately 3,000 people providing audit, tax, consulting, and financial advisory services to public and private clients spanning multiple industries. Our people have the leadership capabilities, experience and insight to collaborate with clients so they can move forward with confidence.

In this press release references to Deloitte are references to Deloitte Ireland LLP. The information contained in this press release is correct at the time of going to press. Deloitte Ireland LLP is the Ireland affiliate of Deloitte NSE LLP, a member firm of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee (“DTTL”). DTTL and each of its member firms are legally separate and independent entities. DTTL and Deloitte NSE LLP do not provide services to clients. Please see www.deloitte.com/about to learn more about our global network of member firms.

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Get in touch

Andrew Byrne

Director, Financial Advisory, Turnaround & Restructuring
+353 1 4178866

Daniel Murray

Partner, Audit & Assurance | Head of Consumer
+353 1 417 2974

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