Irish boom and tougher laws drive old vehicles to the wreckers' yards

By ALASTAIR SLOANE

Ireland's booming economy, and moves prompted by the motor industry and the European Union to rid the roads of old and derelict vehicles, have helped to kill off the country's second-hand and used import industry.

Independent Motor Vehicle Dealers Association consultant David Burke-Kennedy says the moves have spurred phenomenal growth for new-vehicle sales in Ireland.

"Used imports have fallen to around 20,000 this year but new-vehicle sales have rocketed from around 65,000 in 1993 to 176,000 last year and a projected 240,000 this year," he says.

"A significant factor is the Government's vehicle-scrappage scheme, introduced largely as a result of motor industry lobbying in 1993-94.

"It rewards vehicle owners with a tax rebate of one thousand Irish pounds when they sell their 10-years-or-older vehicles for wrecking. Early last decade the average age of vehicles on Irish roads was 12.5 years. Now it's six years."

About 200,000 vehicles are likely to be scrapped this year, reflecting a much tougher stance on vehicle checking.

Also driving industry growth is a higher-paid labour force, an increasing population and lower interest rates, says Burke-Kennedy.

"Ten years ago, when interest rates averaged 12 per cent, the Irish were loath to borrow. So they bought older, cheaper vehicles - contributing to optimistic outlooks for the used-import industry.

"But with interest rates now around 4 per cent, buyers want new, not used, vehicles to reflect their new affluence."

Burke-Kennedy says the boom is accompanied by labour shortages, with the industry now looking to former Eastern bloc countries to recruit technicians.

"Adding further pressure on the used-vehicle industry is a new EU direction, effective in 2003, that will require a minimum 12-month guarantee on all used vehicles, with the likelihood of two years becoming the norm.

"Dealers are increasingly reluctant to take trades, especially older ones, so depreciation is savage."