Cars make up 3.2%
of Ireland's overall imports ($2.31B of $72.6B total imports).
Alan Nolan, Director General of the Society of the Irish Motor Industry (SIMI)
, believes that the main challenge to the Irish Motor Industry if the Brexit occurs will be in the short term due to currency fluctuations. Nolan notes that, "the value of Sterling could fall by as much as 20% to virtual parity with the Euro, if the UK votes in favour of exiting the EU
," according to UBS AG, a Swiss global financial services company.
Nolan further notes, "A UK used car priced at £10,000 Sterling last July, would have cost €14,400 whereas it might currently stand at around €12,900 but at parity it would equate to €10,000. And the key issue here is not the potential for higher volumes of imports so much as the potential impact that it might have on used car values in Ireland, and this could very well slow down new vehicle sales, if the cost for a consumer to change their car increases as a result
." He suggests that the medium and longer-term concerns may involve potential tariffs and quotas, but he believes that will get hashed out through EU negotiations. One article
in the Irish Times written by Neil Briscoe
encourages car buyers who are interested in purchasing a British import to do so now, before the the June 23rd referendum occurs, in case the changes that come with Brexit make importing cars more difficult or costly. A decline in sterling could be beneficial to buyers, unless the process of importing cars becomes more difficult or comes with additional fees.
In an article on LinkedIn
about the Irish car dealership model, Blackwater Motors Managing Director Denis Murphy states that "the value of used cars in the Irish market is completely dependent on the value of sterling. We have to be currency traders as well as car dealers, a complex mix. We have benefited from the strength of sterling over the last two years and used car values have been strong. As sterling has weakened, we can expect the values of used cars to decline and expect a surge in the importation of used cars from the UK
In another LinkedIn article
, Murphy discusses the weakening of sterling in relation to used car sales and the role that Brexit could play in lowering used car values. His commentary in both articles alludes to the flaws in Ireland's car dealership model and questions its dependency on UK imports.
In addition, the used car trade between Ireland and Northern Ireland
could be affected because Brexit could create border controls between the two regions, affecting both economies.