asked the Minister for Industry and Commerce why imported motor vehicles are retailed at vastly higher prices than their retail value in the countries of origin; and why this gap has widened in the past year.

22.

asked the Minister for Industry and Commerce if he will give the reasons for the widening gap between the price of motor vehicles in the United Kingdom and this country.

With the permission of the Ceann Comhairle I propose to take Question Nos. 21 and 22 together.

I am not in a position to comment in any detail on the retail price of motor vehicles in other countries. However, relative prices of vehicles in different countries are affected by a number of factors, mainly:

(a) the existence or otherwise of full manufacturing facilities within the country;

(b) the extent to which a country's needs are met through local assembly of motor vehicles from imported completely knocked down parts;

(c) import duties and VAT on fully built up vehicles and on parts:

(d) dealer margins; and

(e) currency exchange rates and variations therein.

In so far as there has been in the past year an increase in the margin between prices of vehicles in this country and in the countries of origin other than the United Kingdom a major influencing factor would be changes in currency exchange rates.

Retail prices in this country are very largely affected by the existence of a motor assembly industry established originally in conditions of industrial protection. A recent study undertaken by consultants on behalf of the National Prices Commission and commented on in the commission's monthly report—No. 56—for November, 1976, has shown that where companies are distributing motor vehicles imported both in "fully built-up"— FBU—and in "completely knocked down"—CKD—conditions the companies in question are in fact incurring financial penalties through assembly here and that it would be more advantageous for them to concentrate on the importation of vehicles fully assembled. If permitted this would of course result in the disemployment of the workers engaged in the assembly industry.

The study referred to was the third examination of motor vehicle prices undertaken by the National Prices Commission since December, 1975. In their November, 1976, report the commission have also expressed the view that detailed price control is inappropriate for the motor vehicle assembly industry at this time.

Did the Parliamentary Secretary say that there is an increase in the number assembled?

I did not say that, I made no statement on that matter.

I want to ask the Parliamentary Secretary if he is aware of the great concern about the price of imported vehicles in this country as compared with the price in the country of origin. The import price is vastly different from the price of those assembled here but yet, when retailed, the imported cars are sold at the same price as the locally assembled ones. A tremendous profit is made and nobody has attempted to explain where it goes.

I can tell the Deputy that the NPC has investigated on three occasions the situation in relation to motor cars and they have satisfied themselves that excessive profits are not being made in the manner in which the Deputy feels that they are. Obviously, there are other factors at work here in relation to the price of motor cars, apart from any profit that might be made by the importer.

I am trying to find out what the other factors are and the Parliamentary Secretary has not enlightened us. Is the Parliamentary Secretary aware of the fact that those of us who are frequently in the North of Ireland can see cars there which cost £2,000 less than the same model here? What the Parliamentary Secretary has said in his waffling reply does not explain away that huge margin. Unit costs have dropped in the United Kingdom and other countries and they have risen proportionately here. The gap is widening seriously and a huge profit is being made somewhere by somebody.

By the Minister for Finance.

If I put down a question asking the Minister to state the amount being taken by the State in the form of tax, would he be able to give me that information?

That information can certainly be given and is undoubtedly true that the rates of excise duty are a factor in determining the price here. It is a question of priorities as to whether one is to have a low rate of VAT on motor cars and, consequently, higher rates on essential items such as food or, alternatively, to do as the Government have done, to reduce the rates of VAT on essential items and in consequence maintain revenue and place higher rates on items such as motor cars. It is a question of priorities.

The Deputy will appreciate also that the existence of an assembly industry here does add significantly to the cost of cars.

Is the VAT rate on imported cars higher than that on locally assembled cars?

It is the same.

Therefore, why should that affect the gap in price?

As the Deputy will appreciate, the same firms are retailing both assembled and imported cars. In fact, one cannot import fully assembled cars without having an assembly operation here. Obviously, there is a certain amount of intermingling between the prices of the different models. It is possible that losses made on an assembly operation could be recouped on the sale of the fully built-up model. I cannot say if this is actually occurring but it is a possibility.

I would ask the Parliamentary Secretary to comment on a situation which is causing grave disquiet among hauliers on account of this gap between the price of motor vehicles here and in the United Kingdom. They are now placed at a very distinct disadvantage as compared with hauliers from the United Kingdom who have free access to carry out work here now and in the future. Would he care to comment on that?

I realise that a higher price does create problems for an industry such as the Deputy has referred to. It is a question of deciding whether one wants to maintain the assembly industry here or whether one wishes to maintain a particular level of indirect taxation on motor vehicles. If one were to depart from the present policy in relation to those two items, there would be other possibly more undesirable consequences than those to which the Deputy has referred.

Surely the Parliamentary Secretary appreciates that the tax elements which his government are imposing on hauliers here is a contributory factor in placing Irish people at a disadvantage in relation to their English counterparts. There should be no doubt where his sympathy lies.

The situation is quite clear. If one were to reduce indirect taxation on motor vehicles, one would have to find the revenue somewhere else, perhaps on more essential items in the household budget. The consequences of that would be far more serious in regard to inflation.

There are two things I want to ask the Parliamentary Secretary. I would ask him to get the NPC to give us a break-down of the cost of motor vehicles and parts and to explain the huge gap. Nothing the Parliamentary Secretary has said does that. I was quoted £37 as the price of a tyre in Dublin which I could buy for £15 in Enniskillen. This is the type of thing which we want explained. I would ask the Parliamentary Secretary to ensure that the excessive profits being made on imported fully assembled vehicles will be used to subsidise the local assembly of cars and to bring down the price.

It is long since past the time for questions.

The NPC has carried out a detailed study on this matter, the latest of which was published in the November 1976 report of the commission which was circulated to Deputies. I would be happy to get an abstract of all passages in recent reports of the NPC related to this matter and forward them to the Deputy so that he can see the exact position.

Will the Parliamentary Secretary have this circulated to all Members of the House?

Order, order. The remaining questions will appear on the Order Paper for the next sitting day.