Focus on New Zealand's car markets
New Zealand has been going quietly about its business over the past few years with strong economic growth and further growth predicted of 3% in 2016 and 2.7% in 2017.
The unemployment rate continues to fall and despite a challenging global market situation in the dairy industry (which New Zealand is heavily involved in), the New Zealand dollar is healthy and the economy looks stable.
New car buyers have taken this opportunity to start replacing their traditionally very old cars, with June 2016 representing the largest new car market in the month since 1982, at 13,699 units.
Record new car market
Year-to-date sales of new cars are up 5% to an all time high of 69,057 units alongside booming commercial vehicle sales, often the sign of a buoyant economy, which have beaten the 4,000 unit mark for only the third time in recorded history. This has been helped by consumers’ higher disposable incomes and the prices of new cars that are lower in real terms than 20 years ago.
Like the majority of new car markets, the SUV is king and accounted for one third of all new sales in June with Toyota, Ford and Mazda the best selling car brands, with the Korean brands of Kia and Hyundai continuing to grow their share of the NZ market.
The market is also showing the first signs of electric car growth. There are only 1,200 electric cars in New Zealand currently but the government has set a national target for adopting 64,000 electric vehicles by 2021. New Zealanders have started consulting with countries like the UK, USA and Norway about how to achieve this number, particularly when it comes to setting up public charging networks.
Autorola Australia exports used cars to New Zealand, which are predominantly ex two and three-year-old rental cars, but the continuing challenge of the market is the age and quality of used cars being imported on a regular basis, in particular from Japan. In just one year, 125,000 used cars were imported, which more than outweighs the 95,000 new cars that were sold in 2015.
And despite this surge in new car sales, they are still not reaching the levels of used car imports coming into the country, hence the average age of a used car in New Zealand has just broken the 14 year old barrier for the very first time.
David Crawford, the boss of the Motor Industry Association, summed up the situation as: “New Zealand is importing somebody else’s waste disposal problem”, meaning that the cars being imported are near the end of their life, and generally have no maintenance history and are in poor condition. That translates into used cars that have potential safety risks and that are not emission friendly.
In 2000 the average age of used cars was under 11.5 years but in just a decade and a half this has risen to over 14 years with cars on average being scrapped at 18 years of age. Only changes to import regulations will help change this situation. Ultimately, fewer old cars that are in a poor condition on New Zealand roads will help improve levels of road safety and many of the associations are in favour of a change to the import regulations for this very reason.
But the argument is that while consumers can buy a car for as little as $6,000 NZ (€3,870) they will always put good value for money ahead of improved safety or reduced emissions.