In view of a number of factors, not least the pre-tax price of new motor cars in Ireland it can very advantageous for foreign buyers from other EU Member States to source new motor cars in Ireland.

Although the recent EU report on intra-EU car price differentials shows a narrowing of the price ranges, there are huge differentials in pre-tax prices between the different EU member states. Partly, this is attributable to currency fluctuations, specifically the strength of the pound sterling against the Irish Pound and against the Euro. It is also attributable to the fact that many motor manufacturers consider the United Kingdom to be a captive market and pre-tax car prices are set at a very high level.

As a result of all of this, it will frequently be very economical for a buyer in the United Kingdom to buy a motor vehicle in certain other EU member states. Because of common language and because of the fact that right-hand drive vehicles are sold in both countries, Ireland is undoubtedly an attractive source of vehicles for UK resident buyers.

The European Commission has been very forceful and effective in its measures to ensure that manufacturers do not interfere with parallel trade and specifically, that buyers in one EU Member State are facilitated in buying new cars in other EU member states.

This freedom of movement of goods and the right to purchase anywhere in the EU is embodied both as a general principle in the Treaty of Rome and in EU Regulation EC 1475/95 dated 28th June 1995 (due to expire in the Year 2002). This is a Block Exemption Regulation that deals with the selective distribution system for the sale of new motor cars.

Basically, any new car manufacturer or any other party involved in the distribution chain that seeks to prevent or restrict the rights of a buyer resident in one EU country from purchasing a new car in another EU Country (thus obtaining substantial savings in appropriate cases) risks losing the benefits of the exemption granted by EU Regulation EC 1475/95.

This means that any arrangements between the manufacturer and the importer and the importer and the dealer may be regarded as anti-competitive and rendered ineffective. It also means that substantial fines can be imposed especially on the manufacturer and these can be up to 10% of annual turnover. The imposition of substantial penalties in excess of IR£70million by the EU Commission on Volkswagen, is a clear example of the determination of the EU Commission to take forceful action.

It is important to remember, however, that there are limitations on the right of a person in one EU Member State to purchase a car in another EU Member State. Dealers are subject to these rights limitations. Therefore, it is important that these limitations be fully understood by prospect buyers.

1. The right to purchase a new motor vehicle anywhere in the EU applies only to one of the following parties: -

• A dealer in the authorised dealer network for the particular make of motor vehicles. For example, a French motor dealer may purchase a motor vehicle from an Irish motor dealer in the same dealer network and vice versa. In other words, a Renault dealer in one EU Member State can buy from another Renault dealer in another EU Member State.

• An end user/customer. The protections granted are primarily directed at end users/customers who are purchasing the vehicle for their own benefit and use and not for the purpose of resale.

• A genuine intermediary acting as agent for a customer/end user. This is the category, which in practice causes the most difficulty. It does not include resellers or dealers outside a dealer network. A genuine intermediary is a person who is specifically authorised on behalf of an identified end user to purchase a particular make and model and has a written authority from the end user/customer to do so. The intermediary must act as a bona fide agent buying directly on behalf of a particular buyer. An intermediary who buys to sell to dealers is not a genuine intermediary.

Caution
Dealers outside the dealer network, or persons purchasing in their own name for immediate onward sale do not have the benefit of the right to purchase a vehicle anywhere in the EU that they wish.

Post Sales Servicing
Even though a buyer may purchase a new motor vehicle in one EU Member State, that buyer is fully entitled to have full after sales service and support from dealers within the same network in the other EU Member State. This right is enshrined in EU law.

Supply difficulties
It is important to remember that, even though you approach a dealer in another EU Member State to gain the price advantage, supply difficulties may arise. It has been alleged that certain motor manufacturers have been controlling supplies of motor vehicles in order to ensure that dealers will only have sufficient motor vehicles for their own domestic markets. Such a restriction or limitation is in contravention of EU law but there are occasions where there may be genuine difficulties in obtaining supply of sufficient motor vehicles to meet conditions of unanticipated demand.

Certainly, the relative strength of the Pound Sterling against the Irish Pound has made it attractive for UK buyers to purchase motor vehicles in Ireland. The EU Commission itself has a help line to facilitate this process. If delays are encountered in obtaining vehicles, this will either be because of genuine supply problems or because the end user/customer or the intermediary have provided insufficient documentation to show that this is a genuine export inquiry. Therefore, the end user or, the intermediary, should prepare in advance and have ready the necessary documentation to show that this is a bona fide enquiry from an end user and is not an attempt by a dealer or reseller outside the dealer network in another country, to obtain supplies of motor vehicles at cheaper cost.

There are various reasons for the car price differentials in various EU countries. Lack of harmonisation of taxation is one factor and of course currency fluctuations are the primary factor. It is possible that difficulties may continue to arise if and for so long as the United Kingdom does not join the Euro Zone.

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