One in every two cars for sale on second-hand car lots were repossessed by banks from their customers, Ireland's largest car auction company has revealed.
David Byrne, managing director of Merlin Car Auctions, said about half the 400 cars sold last Wednesday on Merlin's 16-acre auction site at Naas, Co Kildare, had been sold on behalf of banks, who had repossessed the vehicles from people who could no longer afford to pay their car loans.
The startling figures give an insight into the write-off losses facing Irish-based banks, including the main car-finance banks
here such as Permanent TSB, AIB, GE Money, and Bank of Scotland Ireland, as the shockwaves of the recession spread well beyond the construction industry into the wider economy.
Banks have to write off about a third of the value of the cars they repossess to account for the losses they make on the loans, lower secondhand trade prices and the losses on commissions they paid to garage owners who sold the finance, Byrne said.
In a single auction last Wednesday, Merlin said it raised about €1.4m by selling about 200 almost-new cars, parked across almost eight acres, for banks that needed to recover some value from the seized cars.
"The banks need to liquidate the money. They need to dispose of the vehicle as quickly as they can," said Byrne.
The cars are repossessed at night or, less frequently, voluntarily surrendered by customers who have given the keys back to the banks.
Byrne said there had been "a huge influx" of corporate cars, such as Audis and top-of-the-range chief executive vehicles, including Lexus cars, coming up for auction in recent weeks, as companies have gone bust. Many of the cars, with 08 registrations, had been repossessed within weeks of the loans being written this spring and summer.
"There has been a huge change. Half of the auction is repossessions," Byrne said.
The largest car-finance banks in the country, Permanent TSB and AIB, sell repossessed cars from their own sites, respectively, in Carlow, and Milltown, in south Dublin, he said.
"The bank will do as much as it takes to write a new agreement with the customer. It is in their interests not to take back the vehicle. Every time they take back the vehicle there is a substantial loss," said Merlin O'Reilly of Merlin Motor Group.
"They will then ask the person to hand back the car. Or, where people refuse, they assign third-party agents to go and get it."