SIMIQ2 Motor Industry ReviewIn association with DoneDeal

21st July 2016

WelcomeAddress

Alan Nolan Director General SIMI

SIMI/DoneDeal Motor Industry Review Q2 2016

Jim Power Author & Economist

The Irish Economy in 2016

• GDP +26.3% 2015!!!!!!!2016

• Q1 GDP +2.3% (YoY): Consumption +5%; Exports +1.3%

• Retail Sales (Jan-May) Volume +7.9%; Value +5.6%• Tax Revenues +9.2% (YoY) €742 m ahead of profile• Unemployment Rate 7.8%• Good solid momentum

Consumer Confidence

Feb-96

Aug-96

Feb-97

Aug-97

Feb-98

Aug-98

Feb-99

Aug-99

Feb-00

Aug-00

Feb-01

Aug-01

Feb-02

Aug-02

Feb-03

Aug-03

Feb-04

Aug-04

Feb-05

Aug-05

Feb-06

Aug-06

Feb-07

Aug-07

Feb-08

Aug-08

Feb-09

Aug-09

Feb-10

Aug-10

Feb-11

Aug-11

Feb-12

Aug-12

Feb-13

Aug-13

Feb-14

Aug-14

Feb-15

Aug-15

Feb-160.0

20.0

40.0

60.0

80.0

100.0

120.0

140.0

Motor Trade H1

• New Car Registrations 101,335: +23.07%• Roscommon +37.9%; Leitrim +14.5%• Used Car Imports 32,285; +27.7%• Light Commercial Vehicles 18,409; +25.6%• Heavy Commercial Vehicles 1,789; +42%

Car Sales in 20162015 2016 % CHANGE

Jan 29,808 39,722 +33.3%

Feb 15,778 21,574 +36.7%

March 18,933 21,531 +13.7%

Q1 64,519 82,827 +28.4%

April 9,451 10,382 +9.85%

May 6,919 6,502 -6.03%

June 1,448 1,624 +12.2%

Q2 17,818 18,508 +3.88%

Jan-June 82,337 101,335 +23.07%

Monthly Trend

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

2013201420152016

Imported Used Cars

2007 2008 2009 2010 2011 2012 2013 2014 2015 H1 20160

10,000

20,000

30,000

40,000

50,000

60,000

70,000

Costs of Motoring

Jan-05

May-05

Sep-05Jan-06

May-06

Sep-06Jan-07

May-07

Sep-07Jan-08

May-08

Sep-08Jan-09

May-09

Sep-09Jan-10

May-10

Sep-10Jan-11

May-11

Sep-11Jan-12

May-12

Sep-12Jan-13

May-13

Sep-13Jan-14

May-14

Sep-14Jan-15

May-15

Sep-15Jan-16

May-16

60.0

80.0

100.0

120.0

140.0

160.0

180.0

200.0

Motor cars Petrol Diesel Motor Insurance

(Jan

2005

=100

)

Costs of Motoring

• New Car Price -3% (YoY); -25% since 2008• Petrol -8.4% (YoY); +9.9% March to June• Diesel -12.4% (YoY); +10.9% Jan to June• Motor Insurance +38.6%; +71.3% since June

2013

Brexit -What Happens Next?

• Only UK can decide when to trigger Article 50• Once Article 50 triggered, negotiation power shifts to

EU-27• What sort of deal if UK exits?• Norway has access to EU through EEA – but pays 90% of

UK contribution per capita• Switzerland – bilateral trade deals, pays 50% of EU

contribution• Have to sign up to rules & regulations of SEM• Negotiations would take at least 2 years

Economic Impact on UK

• 47% UK exports go to EU, 7% of EU exports to UK• UK pays £20 bln gross, but net <£10 bln• Lower budget contribution?• Impact on inward investment• Lower regulations- spurious argument• Migration – loss of EU migrants not good• Short-term exit would be bad for UK economy• Longer-term the UK economy would have to adjust• Exit does not make sense

Brexit & Ireland

• Impact on sterling?• Impact on UK economy?• FDI – possible opportunity• UK to cut CT rate to 15%?• Northern Ireland border• Impact on EU?• Many ‘unknown unknowns’• Difficult to see too many positives

GBP v Euro

1/1/2

010

2/26/2010

4/23/2010

6/18/2

010

8/13/2010

10/8/2010

12/3/2010

1/28/2

011

3/25/2

011

5/20/2

011

7/15/2

011

9/9/2

011

11/4/2

011

12/30/2

011

2/24/2

012

4/20/2

012

6/15/2

012

8/10/2

012

10/5/2012

11/30/2

012

1/25/2

013

3/22/2013

5/17/2013

7/12/2

013

9/6/2

013

11/1/2013

12/27/2

013

2/21/2014

4/18/2

014

6/13/2

014

8/8/2

014

10/3/2

014

11/28/2

014

1/23/2

015

3/20/2

015

5/15/2

015

7/10/2

015

9/4/2

015

10/30/2

015

12/25/2

015

2/19/2016

4/15/2

016

6/10/2

0160.6

0.65

0.7

0.75

0.8

0.85

0.9

0.95

Brexit & the Motor Trade

• Impact of weaker UK economy on Irish activity & hence car sales

• Weaker sterling will make imports more attractive, but car imports into UK more expensive

• Impact of trade restrictions?• Logistics of trade through UK?• Uncertainty is the big enemy of confidence

New Car Registrations

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016f 2017f0

50,000

100,000

150,000

200,000

250,000

The Industry 2016 & 2017

• 152,000 in 2016; +21.7%• Pretty flat in 2017• Brexit concerns, but key economic factors such

as employment, disposable incomes will continue to exert positive influence

• Rapid growth of recent years running out of steam – market approaching natural state

DoneDeal Advertising Volumes

Volkswage

FordToyo

taBMW

Audi

Nissan

Opel

Peugeot

Hyundai

Mercedes-B

enzSko

daOther

RenaultHonda

Citroen

Mazda Kia

Volvo Fiat

Vauxhall

Mitsubish

iMini

Land Rover

Lexus

SaabJaguar

Chevrolet

Alfa Romeo

Daihatsu

Daewoo

Porsche

Isuzu

Rolls Royce

0

5,000

10,000

15,000

20,000

25,000

THAN ANSWERS!

July Registrations

Alan Greene President SIMI

20 Day July Registrations

New Cars Total Year to Date2016 (21525) v 2015 (19,335) = +11% 122,860+21%

New Light Commercial Vehicles Total Year to Date2016 (2,657) v 2015 (2,126)= +25% 21,064 +25% New Heavy Commercial Vehicles Total Year to Date 2016 (304) v 2015 (234) =+30% 2,093 +40%

Thank You

• Quarter 2 Motor Industry Review available at www.simi.ie/quarterlyreport