Luxury cars go from vroom to bust in sales meltdown

By Paul Melia

Monday June 15 2009

EVEN the super-wealthy are feeling the pinch.

Sales of luxury high-performance cars costing over €200,000 have dropped to single figures, with just five sold so far this year compared with over 81 in 2007, the height of the boom.

And new figures from the Revenue Commissioners reveal that the fall-off in car sales across all price ranges is set to cost the exchequer hundreds of millions of euro in lost revenue.

Just over €240m has been collected in Vehicle Registration Tax (VRT) in the first five months of the year -- an average of €48m each month.

If current trends continue, just half of last year's total of €1.12bn will be collected over the year.

This compares with the €1.4bn collected in 2007.

The slowdown in sales has affected all makes and models, with luxury marques such as BMWs, Mercedes and high-performance sports cars being particularly affected.

The ubiquitous BMW five-series costs almost €60,000 for the most basic model, and the figures show that just 147 cars costing between €60-70,000 have been sold in the first five months of the year.

Moving up the scale, a Mercedes S350 costs just over €120,000 -- just 80 cars have been sold in the €100,000-€150,000 bracket this year, compared to 891 in 2008.

The new Ferrari 599 HGTE costs just over €243,000 but even the super-wealthy are choosing not to buy high-performance sports cars.

Just five costing over €200,000 have been sold so far this year, a significant drop from 61 last year and 81 in 2007.

The figures also show:

Horrible

The Society of the Irish Motor Industry (SIMI) said that the figures come in the middle of "horrible" year for car sales and that even the super-wealthy were choosing not to buy.

"Some of the overall fall-off [at the luxury end] is due to the general decline in business," director general Alan Nolan said.

"People at the top end during the Celtic Tiger years would also have been impacted most by the downturn. People aren't borrowing and banks aren't lending. There's a psychological issue as well. People don't feel comfortable changing their car when their suppliers might be in financial difficulty."

He added that it had been a "pretty horrible" year for car sales, with sales down 66pc on 2008.

The new motor tax regime, with cars now classed on the basis of emissions, had also slowed sales because high-end vehicles could cost up to €2,100 to tax compared with as little as €156 for a new family car.

"Changes in motor tax have also made a difference. It has had a very negative impact right across the sector, particularly in SUVs, 4x4s and high-performance vehicles," he added.

"I think we're going to see much more efficient SUVs to avoid the €2,100 annual road tax."

- Paul Melia

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