1 I r e l a n d Bernard Feeney, Managing Director, Goodbody Economic Consultants Tel: 353 1 641 0482 Fax:353 1 668 2388 www.goodbody.ie/consultants/ 2011 and Beyond – an Economist’s view of the Car Market 16 November 2010
Nov 12, 2014
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Bernard Feeney, Managing Director,
Goodbody Economic ConsultantsTel: 353 1 641 0482 Fax:353 1 668 2388
www.goodbody.ie/consultants/
2011 and Beyond – an Economist’s view of the Car
Market
16 November 2010
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Purpose of the Presentation
To provide an outline of economic growth trends and prospects
To set out what is happening to car ownership, traffic volumes and new car sales
To provide a perspective on when a recovery in these markets might be expected
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Trends in GDP & GNP 2006-2011
Source: CSO & Central Bank
-12%
-10%
-8%
-6%
-4%
-2%
0%
2%
4%
6%
8%
2006 2007 2008 2009 2010*
% Change in GDP % Change in GNP
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Economic Performance
After ten years of unprecedented growth, Ireland’s economic fortunes changed dramatically in 2008
GNP fell by 2.8 per cent in 2008 and by a further 11.3 per cent in 2009
2010 forecasts estimate a decline of over 1 per cent, so that GNP will have fallen a total of approximately 15 per cent from its peak
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By 2010, consumer expenditure will have fallen 10 per cent from its peak
Source: CSO & Central Bank
-8.0%
-6.0%
-4.0%
-2.0%
0.0%
2.0%
4.0%
6.0%
8.0%
2006 2007 2008 2009 2010*
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Household Savings Ratio Rising Rapidly
0%
2%
4%
6%
8%
10%
12%
2007 2008 2009 2010
Source: Bank of Ireland
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Consumer Confidence has Collapsed
Source: ESRI
0
20
40
60
80
100
120
Jan
-01
Ap
r-0
1
Jul-
01
Oct
-01
Jan
-02
Ap
r-0
2
Jul-
02
Oct
-02
Jan
-03
Ap
r-0
3
Jul-
03
Oct
-03
Jan
-04
Ap
r-0
4
Jul-
04
Oct
-04
Jan
-05
Ap
r-0
5
Jul-
05
Oct
-05
Jan
-06
Ap
r-0
6
Jul-
06
Oct
-06
Jan
-07
Ap
r-0
7
Jul-
07
Oct
-07
Jan
-08
Ap
r-0
8
Jul-
08
Oct
-08
Jan
-09
Ap
r-0
9
Jul-
09
Oct
-09
Jan
-10
Ap
r-1
0
Jul-
10
Oct
-10
Consumer Confidence
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Government’s Four Year Plan
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
2011 2012 2013 2014
(%) Change in GDP
Source: Department of Finance
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Implication for Consumer Spend
0.00.20.40.60.81.01.21.41.61.82.0
2011 2012 2013 2014
(%) Change in Consumption
Source: Goodbody Estimate
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Future Prospects
Major fiscal tightening up to 2015
Growth in consumer spending will be modest
Recovery will be export led
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Vehicle Ownership 1999-2009
Source: Department of Transport
0
500,000
1,000,000
1,500,000
2,000,000
2,500,000
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Good Vehicles Cars
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Vehicle Ownership
In 2009, the national car parc stood at 1,902,429 ( down 1.1% on 2008)
Good Vehicles declined by 2.1 per cent in 2009
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Total National Road Traffic Volumes 2007-2010
Source: NRA
02,0004,0006,0008,000
10,00012,00014,00016,00018,00020,000
2007 2008 2009 2010
AADT
-4.6%-2.0%0.9%6.6%
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HCV National Road Traffic Volumes 2007-2010
Source: NRA
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2007 2008 2009 2010
AADT HCV
5.9% -5.3%
-13.1%-4.3%
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Freight Vehicle Km 1999-2009
0
500
1,000
1,500
2,000
2,500
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Yr
Million
Vehicle Kilometres
Source: CSO
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Forecast Vehicle Kilometres 2009-2025
0
10,000
20,000
30,000
40,000
50,000
60,000
Cars VKM Goods Vehicles VKM Total VKM
Source: Goodbody Economic Consultants
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Performance of New Cars Sales
Source: CSO
0
50,000
100,000
150,000
200,000
250,000
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
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Trend in Premium New Car Sales 2000-2010
Source: SIMI
*2010 Year to September
0
5,000
10,000
15,000
20,000
25,000
30,000
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
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Proportion of Premium New Car Sales
(%)
2000 7.52001 11.32002 11.42003 12.22004 12.62005 13.22006 13.52007 14.22008 14.42009 11.72010 10.7
Source: Goodbody Estimate
*2010 Year to September
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Ratio of Car Sales to Car Parc 1986-2009
0.000.020.040.060.080.100.120.140.160.18
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
Ratio of NCS: Car Parc
Source: Department of Transport & CSO
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Future New Car Market Scale
Goodbody modelling predicts a car parc of 2m by 2020
If the ratio of new car sales to the car parc stabilises at 9 per cent, then…….
The “target” level of new car sales is c. 180,000 units
When will this be reached?
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Goodbody Model Predictions Based on 4 year Plan
Source: Goodbody Economic Consultants New Car Sales Modelling
20,000
70,000
120,000
170,000
220,000
270,000
1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018
Ca
r S
ale
s
Actual New Car Sales Predicted New Car Sales (per cap)
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Conclusions
The economic crisis is reducing ownership and vehicle traffic and it will take at least five years for car traffic volumes to recover and much longer for freight traffic volumes
Despite the resurgence in the new car market in 2010, a sustained and substantial recovery of the market will be slow to emerge
In more normal economic conditions, a target market of 180,000 units per annum could be expected
This is unlikely to be achieved any time soon, although unravelling of the high savings ratio could lead to an unexpected good market performance on occasion over the medium term.
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Additional Slides
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% Change in Exports 2006-2011
Source: CSO & Central Bank
-6.0%
-4.0%
-2.0%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
2006 2007 2008 2009 2010*
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Freight Traffic
Freight Vehicle Kilometres declined 32% from its peak in 2007
The largest decline in freight vehicle km occurred in the building and construction sector - down 63% on 2007
Excluding construction related activities the remaining freight vehicle kilometres only declined 29% between 2007 and 2009
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Goodbody Modelling of the Geographic Distribution of Expenditure on New Cars Sales by
DED
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Fuel Split of New Car Sales
The proportion of new diesel vehicles has been increasing over time
In 2009 56.3 per cent of new car sales were diesel
As of July 2010, the proportion of new diesel cars stood at 63.5 per cent
Fuel Split in New Car Sales 1998-2009
0.010.020.030.040.050.060.070.080.090.0
100.0
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
% Diesel % Petrol % Other
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Emissions
The move to diesel vehicles has contributed to reduced levels of CO2 emissions
In the 2005-2009 period CO2 emissions from passenger cars declined for the first time in 15 years
Should 2010 car sales continue and emulate the car fleet, there would be a 24 per cent reduction on current CO2 emission levels
Aggregate passenger car fleet Dec 2009
New cars registered in first half of 2010
CO2 emissions per vehicle/km (g/km)
178
134
Emissions per Passenger Car Km for Aggregate Car Fleet and New Car Fleet