Ireland’s vehicle fleet is getting older, and dirtier, at a time when cleaner transport is more urgent than ever. The CEO of Close Brothers Motor Finance Ireland argues that with the right finance tools and industry collaboration, Ireland can upgrade its roads without breaking the bank.
As the world works collectively to meet the challenge of climate change, motorists too are doing their part. The International Energy Agency estimates that sales of newer, zero emissions vehicles exceeded 17 million in 2024, more than a fifth of global car sales.
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The picture isn’t uniform however and some countries are doing better than others.
While the average age of motor vehicles in Ireland compares well to EU averages, the average age of cars on Irish roads has increased from 5.8 years at the start of 2008, to 9.9 years now according to the Society of Irish Motor Industry .
SIMI also estimates that nearly half the cars on Irish roads are 10 years old or more. We recently crunched the latest data from the Irish statistics office (the CSO) meanwhile and discovered that nearly 20% of Irish cars were registered in 2010 or before.
There are any number of reasons for this. The boom years of the Celtic Tiger for example were a time of great prosperity in Ireland. Since then, incomes and spending power have been hit by factors ranging from Covid to the cost of living and, latterly, nervousness around American tariffs. And with inflation in Ireland having increased again in the spring, consumer sentiment remains muted.
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Driving up emissions
With consumers less willing to spend on newer vehicles, Ireland could find itself beginning to lag when it comes to the twin challenges of tackling climate change and improving air quality.
Older vehicles are less efficient than newer models with the UN Environment Programme arguing that “ageing cars are bogging down the battle against climate change”. Not only this, older cars also have more of an impact on air quality. Ireland’s Environment Protection Agency warned only last year that Ireland might fall short of WHO air quality targets.
So, Ireland’s ageing vehicles are not only more prone to breakdown, but could be impacting health and the environment.
With the Irish buying on average 2.5 used cars for every new car sold, it’s vital that newer and more efficient second hand vehicles start replacing Ireland’s older vehicles. This could have an immediate impact on safety and air quality and also help Ireland deliver on sustainability. The cost of living however continues to put pressure on household budgets, and car prices in Ireland remain stubbornly high.
So upgrading Ireland’s car isn’t easy.
Financing the future
As lenders, we can’t alleviate the cost of living or apply cost controls to the car market. There are levers we can pull however, which can help Ireland upgrade its ageing fleet and clean up her roads.
As an example, we recently launched an innovative PCP product that attaches a minimum future value to the vehicles we lend against. A recurring conversation I have with dealers in Ireland is about the risk of second-hand vehicle depreciation. At the end of a PCP contract a vehicle is often returned to the dealer. But what if since selling the vehicle an economic shock has impacted used car prices? This could leave a dealer out of pocket so dealers are disincentivised from offering PCP deals.
This is despite widespread consumer demand due to the lower repayments PCP deals typically come with and therefore the greater range of newer – and crucially cleaner – vehicles they make available.
A future minimum value guarantee on the vehicle makes things far more predictable for motor dealers, meaning offering PCP and upgrading Ireland’s fleet is more achievable. Our product demonstrates what an innovative approach to motor finance can achieve when it comes to ensuring cleaner and safer roads. All of which means that Ireland can hopefully get a new set of wheels as we drive for greater sustainability in the used car market.
