‘Budget 2016 & the Outlook for the Motor Industry in

2016’SIMI Annual Conference

November 10th 2015

JimPower

To Be Discussed

• Global Economic Background & Outlook• Where is the Irish Economy Today?• Economic prospects post-Budget 2016• Trends in the Auto Market• Prospects for 2016

The Global Background• Global economy still striving to emerge from 2007

crisis• US economy doing reasonably well • UK economy has surprised on the upside• Euro Zone growing, but at modest pace • Emerging market growth pressurised• China a significant risk factor • Some pressure on US & UK interest rates – no

pressure on ECB – China leading to caution

USD v EURO

1/2/2012

2/5/2012

3/10/2012

4/13/2

012

5/17/2012

6/20/2012

7/24/2

012

8/27/2

012

9/30/2

012

11/3/2012

12/7/2012

1/10/2013

2/13/2

013

3/19/2013

4/22/2013

5/26/2

013

6/29/2013

8/2/2013

9/5/2013

10/9/2013

11/12/2013

12/16/2013

1/19/2

014

2/22/2

014

3/28/2

014

5/1/2014

6/4/2014

7/8/2014

8/11/2014

9/14/2014

10/18/2014

11/21/2014

12/25/2014

1/28/2

015

3/3/2015

4/6/2015

5/10/2

015

6/13/2

015

7/17/2

015

8/20/2

015

9/23/2

015

10/27/20150.9

1

1.1

1.2

1.3

1.4

1.5

Sterling v Euro

1/2/2012

2/5/2012

3/10/2012

4/13/2

012

5/17/2012

6/20/2012

7/24/2

012

8/27/2

012

9/30/2

012

11/3/2012

12/7/2012

1/10/2013

2/13/2

013

3/19/2013

4/22/2013

5/26/2

013

6/29/2013

8/2/2013

9/5/2013

10/9/2013

11/12/2013

12/16/2013

1/19/2

014

2/22/2

014

3/28/2

014

5/1/2014

6/4/2014

7/8/2014

8/11/2014

9/14/2014

10/18/2014

11/21/2014

12/25/2014

1/28/2

015

3/3/2015

4/6/2015

5/10/2

015

6/13/2

015

7/17/2

015

8/20/2

015

9/23/2

015

10/27/20150.6

0.65

0.7

0.75

0.8

0.85

0.9

Brent Crude Oil Price

1/3/2012

2/8/2012

3/15/2

012

4/20/2

012

5/26/2

012

7/1/2012

8/6/2012

9/11/2

012

10/17/2012

11/22/2012

12/28/2012

2/2/2013

3/10/2013

4/15/2

013

5/21/2013

6/26/2

013

8/1/2013

9/6/2013

10/12/2013

11/17/2013

12/23/2013

1/28/2014

3/5/2014

4/10/2014

5/16/2

014

6/21/2014

7/27/2

014

9/1/2014

10/7/2014

11/12/2014

12/18/2014

1/23/2015

2/28/2

015

4/5/2015

5/11/2

015

6/16/2

015

7/22/2

015

8/27/2

015

10/2/2015

0

20

40

60

80

100

120

$

PwC

Irish GDP & GNP (S/A)

1997Q1

1997Q3

1998Q1

1998Q3

1999Q1

1999Q3

2000Q1

2000Q3

2001Q1

2001Q3

2002Q1

2002Q3

2003Q1

2003Q3

2004Q1

2004Q3

2005Q1

2005Q3

2006Q1

2006Q3

2007Q1

2007Q3

2008Q1

2008Q3

2009Q1

2009Q3

2010Q1

2010Q3

2011Q1

2011Q3

2012Q1

2012Q3

2013Q1

2013Q3

2014Q1

2014Q3

2015Q10

10,000

20,000

30,000

40,000

50,000

60,000

GDP at Constant (Chain linked annually ref to 2013) Market Prices (Euro Million)GNP at Constant (Chain linked annually ref to 2013) Market Prices (Euro Million)

€m

The Irish Economy so far in 2015• Economy has built on 2014 recovery• H1 GDP + 6.9 (YoY)• Retail Sales growing strongly – car sales exaggerate strength &

gap between Volume & Value suggests personal sector pressures – but getting better

• Merchandise Exports +19.3% • Unemployment Rate 9.3%• Consumer confidence at 9-year high• Tax Revenues +9.6%• House price inflation easing, but housing issues abound• Construction activity improving

Employment

2007Q1

2007Q2

2007Q3

2007Q4

2008Q1

2008Q2

2008Q3

2008Q4

2009Q1

2009Q2

2009Q3

2009Q4

2010Q1

2010Q2

2010Q3

2010Q4

2011Q1

2011Q2

2011Q3

2011Q4

2012Q1

2012Q2

2012Q3

2012Q4

2013Q1

2013Q2

2013Q3

2013Q4

2014Q1

2014Q2

2014Q3

2014Q4

2015Q1

2015Q21600

1700

1800

1900

2000

2100

2200

(000

s)

PwC

Consumer Confidence

Mar-97Sep

-97

Mar-98Sep

-98

Mar-99Sep

-99

Mar-00Sep

-00

Mar-01Sep

-01

Mar-02Sep

-02

Mar-03Sep

-03

Mar-04Sep

-04

Mar-05Sep

-05

Mar-06Sep

-06

Mar-07Sep

-07

Mar-08Sep

-08

Mar-09Sep

-09

Mar-10Sep

-10

Mar-11Sep

-11

Mar-12Sep

-12

Mar-13Sep

-13

Mar-14Sep

-14

Mar-15Sep

-150

20

40

60

80

100

120

140

Dept of Finance Economic Forecasts for Budget 2016

(% Change) 2014 2015f 2016f

GDP 5.2% 6.2% 4.3%

GNP 6.9% 5.5% 3.9%

Consumption 2.0% 3.5% 3.5%

Investment 14.3% 13.0% 12.5%

Exports 12.1% 11.9% 6.9%

Unemployment 11.3% 9.5% 8.3%

Employment 1.8% 2.8% 2.4%

Inflation (HICP) +0.3% +0.1% +1.2%

Key Economic Risks/Challenges• Oil, € weakness, Interest Rates, US & UK growth all good for Ireland• Chinese situation very uncertain• UK & the EU• The Housing Market• Wage pressures need to be controlled• Quality of public services• FDI issues• Credit availability – SME sector in particular• Sovereign & Personal Debt• Political situation potentially problematical -Populist politics/political

instability big risks• Economy is moving in right direction, but careful management needed

Budget 2016

• Public finances much better• A pre-election budget• €1.5 billion stimulus package split 50/50• No strategy – scatter gun approach – totally political• Tax focus on reducing USC• Will boost disposable incomes in 2016• Package just 0.67% of 2016 GDP• No damage to motor trade

Explained

SIMI Q3 Motor Industry ReviewIn association with DoneDeal

The Motor Industry in 2015

• New car registrations Jan-Oct 123,670 +30%• Q3 registrations +41.1% • Q1-Q3 LCVs +48.6%; HCVs +6.7%• Imported Cars -12.2%• Costs of motoring variable > Petrol, Diesel, Car

Prices down; Insurance Costs +26.7%• Second hand market quite vibrant• Solid economic fundamentals driving sales

The Economic & Financial Contribution

• VAT & VRT €1.12 bln (Q1-Q3) +23.9%• Motor Taxation €692 m• Motor Fuel Taxation €2.24 bln (Jan-Aug)• Employment 44,700 (2.3% total) +9,500 since

2009• DoneDeal seen very strong growth in motor

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Prospects for 2016

• 150,000 new car registrations (125,000 in 2015)• Solid economic growth• Personal Disposable Incomes will be boosted by

employment growth, higher earnings & Budget 2016 tax changes

• Consumer confidence set to improve further• Interest rates will remain low, credit will improve• Solid year in prospect

New Car Registrations

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

50,000

100,000

150,000

200,000

250,000

Thank You!