Some car dealers in Ireland are now importing vehicles from Japan rather than Britain due to a VAT hike brought on by Brexit.

Three-out-of-four cars sold in Ireland are second hand, according to the Society of the Irish Motor Industry. The market is made up of Irish trade-ins and imported vehicles.

However, since Brexit you now have to pay the UK VAT rate of 20% on cars being imported from there, on top of the Irish VAT rate of 23%.

Car dealers here say it now works out cheaper to import European cars from Japan, who like Ireland have right-hand drive vehicles, as they are not subject to the 20% VAT charge, unlike the British cars.

Eric Ryan, managing director of Ryan and Brien Motors in Bray in Co Wicklow, says before Brexit 90% of his car stock would have come from the UK and would have been premium cars, such as BMWs, Audis and Volkswagens.

However, a lack of supply in that market and rising costs due to Brexit means he is now importing these European cars from Japan.

He said: "Bringing the BMW in from Japan compared to bringing one in from England at the moment is going to end up with a complete price at the end of the day on the forecourt retail of approximately about €2,000 dearer for the UK model because of the extra costs of Brexit."

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Director General of the Society of Irish Motor Industry Brian Cooke said Brexit has now resulted in a change in the secondhand car market in Ireland.

"Well, we've seen a reduction in the proportion of used cars coming in from the UK. It's gone from 91% to about 82%, at a corresponding increase from 5% to about 10% in Japanese, used imports. So there has been a change," he said.

Mr Cooke there were a number of reasons why it works out to be more economical to import a European car from Japan to Ireland compared to bringing one over from the UK.

"First, we've had Brexit, which has increased significantly. The price of particularly older used imports and we've had a NOx charge that was brought in in the Budget two years ago, again, which focused on older diesel cars.

"If you look at the profile of the Japanese used imports, they tend to be 6 or 7-year-old petrol cars, though they don't have a double VAT charge like those older cars from the UK coming in. And while they do have customs charge, the actual NOx charge is significantly lower than for a diesel import."

SIMI said savings of 20% can be made in some cases, and with a lack of supply in the current market, the number of vehicles being imported from Japan is likely to continue to increase.

"So, we've seen about 3,500 Japanese used imports this year, compared to 4,500 for the full year last year, so you would expect to see maybe double that amount, maybe 9,000 or 10,000 Japanese used imports coming into Ireland this year."

Car dealer Eric Ryan said it was is a bizarre situation having to go to the other side of the world rather than your nearest neighbour for cars, but it is something many dealers like him are now starting to do.

"I could see this coming myself and I started doing it earlier," he said.

"There's a lot of car garages around in the local area who have now also started doing it because it is their only source of a vehicle."