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Volkswagen calls for VAT cut extension

Volkswagen calls for VAT cut extension

Volkswagen MD says VAT cut should be extended to June.

Volkswagen Group Ireland is calling on the Irish Government to extend the current cut in the VAT rate in order to help struggling car dealers.

Keep the VAT cut till June

With sales in freefall, thanks to the current COVID lockdown (following a 2020 where new sales fell by 24 per cent) Volkswagen reckons that the temporary cut in VAT from 23 to 21 per cent should be kept going until June. As of right now, it's due to revert to 23 per cent at the end of February.

Normally, January, February, and March are when Irish car dealers make the metaphorical hay on which they'll live for the rest of the year. More than half of all new sales usually take place in the first three months of the year, a peak which the second registration period in July has only partly dampened.

Limited collection and delivery available

"It is essential that staff and customers alike, heed the advice of government and stay home where possible to prevent the transmission of COVID-19, which has now reached unprecedented levels," said Volkswagen Group Ireland Managing Director Carla Wentzel. "Limited collection and delivery of cars will continue within Government guidelines at retailers, that elect to do so, and our retailers can now do the majority of the sales process, from ordering a vehicle to finance approval remotely, but restrictions will still mean a greatly reduced market, and consequently a reduction in essential tax take from our industry. The continuation of the VAT reduction will go some way to incentivising new car sales beyond the traditional January rush."

One in four new cars

The Volkswagen Group, which includes brands such as Volkswagen itself along with Skoda, Audi, and SEAT, currently accounts for more than a quarter of all new cars sold in Ireland - the group held a cumulative 28 per cent of the Irish new car market last year.

Published on January 11, 2021
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