20 DAYS IN MAY; A MARKET 39% DOWN

I have been crunching some numbers around the registrations in the last 10 days of the month in Ireland. The following are the numbers to the 21st May 2012 (the May month end estimate is 5630 in the table below)

The 20 day figures in 2012 are 2682. This is down 39.15% on 2011 (4408) and the lowest since 2009 which were 2690. If the month tracks at the same as last year (by the end of May 2011, 73% of the total registrations for the full year were complete) the end of month figures for May 2012 should be around 5630, this would be 40% down on May 2011 (with the last 10 days coming in at around 2900) and would bring the likely year end numbers to 79779 (SARS rate, seasonally adjusted annualised sales rate).

The actual last 10 day figures for 2011 were 5068 of a total 9476 for the month of May 2011 (53%). If the 53% remains the same this year it would bring the likely number of the last 10 day registrations to 2960; therefore any registrations over and above this number will most likely be the number of “distressed or panic ” pre-registrations over and above any actual pre-registrations last year.

Year	Jan	Feb	Mar	Apr	May
2012	21305	11488	13046	6770	5630
First 20 days 2012	14329	5770	4309	2905	2682
First 20 days as a % 2012	67.26%	50.23%	33.03%	42.91%	47.64%
Last 10 days 2012	6976	5718	8737	3865	2948
last 10 days % 2012	32.74%	49.77%	66.97%	57.09%	52.36%
2011	20998	12570	14395	8685	9476
First 20 days 2011	12623	7204	6275	5133	4408
First 20 days as a % 2011	60.12%	57.31%	43.59%	59.10%	46.52%
last 10 days 2011	8375	5366	8120	3552	5068
last 10 days % 2011	39.88%	42.69%	56.41%	40.90%	53.48%
2010	16595	12306	13813	8544	8580
First 20 days 2010	9915	7976	6248	3931	4243
First 20 days as a % 2010	59.75%	64.81%	45.23%	46.01%	49.45%
last 10 days 2010	6680	4330	7565	4613	4337
last 10 days % 2010	40.25%	35.19%	54.77%	53.99%	50.55%
2009	15799	8883	7764	4373	5129
First 20 days 2009	11231	5967	4245	2168	2690
First 20 days as a % 2009	71.09%	67.17%	54.68%	49.58%	52.45%
last 10 days 2009	4568	2916	3519	2205	2439
last 10 days % 2009	28.91%	32.83%	45.32%	50.42%	47.55%

My thoughts are that the pre-registrations in the last 10 days will be high and probably around the 3000-4000 mark. I have double-checked my figures and if you took an average of the years 2009 through 2011 to the end of June as a % of the total market it would be 81.5% (2009 was 81%, 2010 was 77% and 2011 was 85% as scappage came to an end) then 2012 would still come in at between 77800 and 79600.  If this year the market to the end of June was 85% of the years total with registrations in month of June being around 6650 then the passenger car registrations for the full year will be around that 76000. 

Whichever way you skin it there will be a lot more casualties as new and used car throughputs of around 160 units per dealer is not sustainable when most dealers have overheads geared to double that number.

It’s this question of sustainability that is the real issue for me. In 2009 through 2011 there was some sort of government support alongside a lower vat rate. The 23% VAT rate is slowly nibbling into profits, as is the increasing cost of doing business. There are hidden losses (the cost of pre-regs on the reducing values on late plate cars) and  dealers are operating with a much smaller vehicle park for aftersales work that has not been replaced.

Look at the whole and the market really needs around 270-300 dealers to support the annual sales volumes which means that the dealer networks are over subscribed by 150 dealers or so.

I hope the numbers make some sort of sense because the market in Ireland is certainly getting tougher and its likely that more dealerships will fail in the short to medium term without some breaks.

Dealers and consumers need credit lines

A key issue that is limiting sales is the availability of business and consumer finance. Its an area that the government could help with. Ireland might be the austerity poster-boy for the Euro-zone but whats needed for the industry is the exact opposite.

The starting point is to encourage the banks to lend again, this alone could be the lifeline the industry needs because if the lines of credit are not opened up then the numbers of dealers that survive the next 18 months will continue to fall.

For me 2012 is going to be as tough a year as 2009; that year the government stepped up to the plate, its time to do so again.