Brexit: For the day that’s in it we are re-publishing these study findings from last year
Vehicle history expert CARTELL.IE reports on the results of analysis matching the fluctuating value of GBP (“sterling”) and the numbers of vehicle imports into Ireland.
Cartell tracked monthly vehicle imports for a 90-month-period from January 2008 to June 2015. At the same time Cartell cross-referenced closing prices for sterling on each given month to observe whether there is a connection between the price of the currency and the appetite of Irish vehicle buyers to import vehicles when sterling is pitched at various prices.
Cartell found that in a more normalised market, where volumes are indicative of normal trading conditions, the price of sterling can impact on the volumes of vehicles imported but this was more noticeable on the strong side than on the weak side. The mean, or average, value of sterling based on the data considered was €1.20 and the average number of imports per month was 4,908.
Cartell considered whether sterling prices below the mean value in a given month tended to push the numbers of imports above 4,908 in that month.
Graph 1: Value of Sterling vs. Number of Imports (Source: Cartell.ie Carstat)
The results showed there were 45 months out of 90 where sterling was lower than €1.20 yet of those months only 20 showed a monthly figure above the average of 4,908 – less than 50% – tending to show there was no rush by Irish buyers to import vehicles when sterling was low.
In 2009 sterling prices dropped significantly from their 2008 value – the currency was priced at €1.26 in October 2008 and fell to €1.10 in October 2009 – yet there was no evidence of Irish buyers rushing to import vehicles with overall numbers down 18% year-on-year. However, 2009 is an extraordinary year as the economy entered recession, and imports, relative to new cars purchased that year, held up well: the ratio of imports to new cars purchased in 2009 was 1 to 1.1 while it stood at 1 to 2.43 in 2008. At the same time the numbers of new cars purchased fell catastrophically from 146,470 to 54,432 over that period. This tends to show there is a core market in Ireland for vehicle imports irrespective of prevailing market conditions.
In the first half of 2010, when sterling prices were still generally below average, there was evidence of an increase in imports. This may be attributed to buyers availing of old VRT rules before a change in the law in September 2010 distributed responsibility for VRT issuance to National Car Test Centres.
Cartell next considered the impact of higher sterling prices. There were 38 months where sterling was priced higher than €1.20 and of those months 24 months recorded imports above the mean figure of 4,908. This tends to show Irish buyers are relatively insensitive to higher than average sterling prices and continue to import vehicles even when sterling is stronger. There is, however, a limit to this insensitivity: between June 2014 and June 2015 sterling moved from €1.25 to €1.39 and imports dropped by 11% in what may be considered a relatively normalised market.
John Byrne, Legal and Public Relations Manager, Cartell.ie says:
The results are interesting and tend to show there is a core market in Ireland for vehicle imports which is relatively insensitive to fluctuations in sterling value – even when it moves quite a bit from its average of €1.20. There is a limit though and our analysis tends to show the limit is pitched around €1.30. At that price the value of sterling appears to be a factor in a normalised trading environment: potential importers often find any “profit” from purchasing abroad is wiped out by the prevailing exchange rate. On the other side of the coin the results show there is no strong evidence of a rush to imports when sterling prices are below average. Consumers are also advised to check the history of the vehicle before importing.”
Cartell.ie was set up in 2006 to help buyers make an informed choice when buying a used vehicle – including imported vehicles – by providing a user-friendly and cost-effective vehicle data checking service. Cartell.ie is a totally independent company and fully Irish owned.