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Boost in consumer confidence causes house and car sales to increase

Date: 27 Apr 2010

Dublin, Tues, 27th April 2010: UCD Michael Smurfit Graduate Business School and the Marketing Institute of Ireland (MII) launched the Consumer Market Monitor Q1 results today which show that consumer confidence has doubled in March 2010 compared to March 2009. The monitor, which tracks key indicators of confidence and activity in the Irish consumer market, highlights that in the first three months of the year new car sales have risen by 31% and house sales have increased threefold on the same quarter in 2009. This hike in consumer confidence means Ireland is now back in line with the European average, and although it may still lag the UK by a hefty margin of 31%, the general trend appears to be upwards. To download the full report visit http://www.mii.ie/cmm/

The housing market has achieved a surge in sales. In January 2010, a total of 658 second hand residential properties were at sale agreed stage compared with just over 200 in the same month last year, this trend continued through February 2010 with twice as many ‘sale agreed’ properties in Dublin year on year.

Consumer spending overall is expected to decrease albeit at a slower rate of 2.6% this year, which indicates a positive upturn compared to the 10.3% overall drop in 2009. This modest shift in consumer spending is reflected in the motor trade industry which saw a 31% increase in new car sales, with sales in March up 77% on the same month last year. This 31% represents a total of 42,554 units sold for the first three months of 2010, of which it is estimated that 4,500 of these were as a result of the scrappage scheme.

Overall retail sales (excluding motor trade) have increased by 1.2% in value and 0.1% in volume. By comparison, retail sales in the UK have rebounded strongly in 2010, up 4.4% in volume and 6.6% in value year on year to March and US retail sales value for March increased by 7.6% from March 2009, proving that other economies are experiencing an upturn.

“The Consumer Market Monitor Q1 results have highlighted some interesting shifts in consumer spending. Consumers appear more willing to part with their disposable income as price reductions on houses and cars continue.” said Mary Lambkin, Professor of Marketing, UCD Smurfit School. “We are taking full advantage of price cuts, seeking out value for money and opting to save more for a rainy day, with the personal savings rate projected to stay above the 10% level until 2013.”

One consumer trend which has not changed from results seen in Q4 Consumer Market Monitor is the level of personal saving. Over the past three years this has increased dramatically from a low of 3% of disposable income in 2007, to a high of 11% in 2009. The monitor reveals that given the uncertainty in the jobs market, the personal savings rate is expected to stay above the 10% level until 2013.  

Overall personal sector credit has continued to decline in 2010 with the amount of credit outstanding down by 2.2% in January and by 2.4% in February.  Credit card debt has also experienced a similar fate as it continued to level off in 2010 with repayments €26m higher than spending on credit cards during the month of January. This pattern changed in February 2010, when the year on year change in personal credit card debt turned positive again by 0.5%.

Tom Trainor, Chief Executive of the Marketing Institute of Ireland said, “Q1 results clearly illustrate what an enormous impact the scrappage scheme has had on the motor trade industry in the first few months of the year and how innovative marketing solutions, such as competitive pricing strategies and promotions, are boosting consumer spend and, by association, the economic health of the country.”

Retail sectors that have experienced a growth in sales include: Department stores up (10.9%), Furniture and Lighting (4.7%), Electrical Goods up (3.5%), Clothing, Footwear & Textiles (1.8%), Pharmaceuticals and Medical and Cosmetics (1.2%).  Sectors experiencing a decline include: Books/newsagents down 15.3%, hardware/paints/glass down 13.2%, pubs down 10.9% and foods stores down 1.9%.

The Consumer Market Monitor uses quarterly data collected from sources including the Central Statistics Office (CSO), the Central Bank, the European Commission, and various other secondary sources. To download the full report visit http://www.mii.ie/cmm/