Why This Luxurious BMW M5 Costs Less Than an M3 in Ireland

Unbelievable But True: The M5's Shocking Price Advantage

Imagine getting behind the wheel of a high-performance BMW M5, knowing it cost you less than an M3. Yes, you read that right. In Ireland, the new 2025 BMW M5 is cheaper than the smaller and less powerful M3, flipping conventional wisdom on its head. How can a larger, more luxurious, and markedly more powerful car cost less? The answer lies in Ireland's taxing laws and their effect on vehicle pricing.

The Numbers Game: Power and Price

Let's start with the basics: the new BMW M5 boasts a colossal 717 horsepower, courtesy of a 4.4-liter twin-turbo V8, which is now a plug-in hybrid, giving it an additional edge in performance and emissions. Weighing in at 5,390 lbs, this car is indeed a heavyweight champion. Despite its impressive specs, in the U.S., the M5 carries a hefty price tag of $119,500, substantially higher than the more compact M3.

However, cross the Atlantic to Ireland, and things take an unexpected turn. The M5 is priced at €137,035 ($147,254), while the M3 Sedan, even with its 523 horsepower update for MY2025, commands a steeper price of €151,665 ($163,000). This anomaly isn’t due to a marketing hiccup but a carefully calculated outcome of Ireland's Vehicle Registration Tax (VRT).

Understanding the Vehicle Registration Tax

The VRT in Ireland hinges on CO2 emissions. Cars emitting lower amounts of CO2 fall into lower tax brackets, receiving financial advantages that heavily influence their retail prices. Specifically, VRT factors in a vehicle's Open Market Selling Price, its carbon emissions, and a nitrogen oxide levy, ranging from 7% to 37% of the vehicle’s value. The M5, with its electrified engine, only emits 37g/km of CO2, placing it comfortably in the lowest tax band.

The M3, on the other hand, relies on a conventional combustion engine with its 3.0-liter inline-six, producing significantly more emissions at 228 g/km. This places it well within the highest tax bracket (190 g/km and above), significantly inflating its cost. Essentially, the size and power of the M3's engine make it a costly option when it comes to emission taxes.

Performance PHEVs: The Trend Is Rising

This pricing peculiarity highlights a broader trend in the automotive industry. Plug-in hybrid electric vehicles (PHEVs), especially performance models, are growing in popularity. Manufacturers see these hybrids as a way to enhance performance while simultaneously reducing emissions, thus avoiding hefty environmental taxes. This strategy is evident in models like the BMW M5, which is seen as not just an option but a smart financial choice.

But not all performance PHEVs benefit from favorable tax treatments. Take, for instance, the newly revealed Mercedes-AMG C63 with its 2.0-liter hybrid setup. At a starting price of €164,240 ($176,700) in Ireland, it far exceeds the M3 and M5 prices, illustrating that not all hybrids are created equal in the eyes of the taxman.

The Price of Performance in Ireland

The disparity in vehicle pricing doesn't stop with BMW. Many other performance vehicles and even family cars are subject to Ireland’s taxing structures, making them significantly more expensive than what American buyers would expect. For instance, the BMW M760e xDrive is cheaper than the M3, with a starting price of €148,965 ($160,235). Ireland's gearheads face jaw-dropping prices for performance cars like the BMW M8 Competition Convertible, which costs a staggering €266,835 ($287,000).

The bottom line? If you're shopping for a new car in Ireland, understanding the tax implications is crucial. The Vehicle Registration Tax has an immense impact on car prices, making some luxury high-performance cars surprisingly affordable.