New Zealand capital Wellington has the distinction of being the southern-most capital city in the world, located near the southern tip of the North Island on Cook Strait, which separates the two major islands of the country, the North and South Islands. Wellington might be the capital, but the largest city is Auckland in the northern region of the North Island with around 1,344,000 inhabitants, compared with 383,000 for Wellington, according to the CIA World Factbook. Christchurch in the South Island is the third largest city with a population of around 380,000. Overall, the population of the country is around 4.4 million.

New Zealand is also one of the more remote countries in the world, situated in the southern Pacific Ocean separated from Australia by the Tasman Sea. The Eastern Australian coastline is around 2,000km from New Zealand while its closest northern neighbours are New Caledonia, Fiji and Samoa. Cook Strait, which separates the North and South Island, is around 23km wide at its narrowest point and is considered to be one of the most dangerous and unpredictable stretches of water in the world.

The country is part of the British Commonwealth and still looks to the Queen of the United Kingdom as its head of state, represented by a Governor General, appointed by the British monarch. The Governor General in turn appoints the prime minister, usually the leader of the largest political party. New Zealand secured independence from the UK in 1907.

The population of New Zealand is highly urbanised, with around 86% living in towns and cities according to the CIA. The country has a strong reputation for agriculture, which is responsible for a large part of the country’s exported goods. Despite the urbanised nature of the population, the majority of the land is used for farming, which is not reflected in the country’s GDP. Agriculture accounts for around 4% of GDP, according to the CIA, while industry accounts for around 19% and the service sector around 74%.

The New Zealand economy seems to have made a swift recovery from the global financial crisis in 2008, pulling out of recession in 2009, according to the CIA. The economy grew at a rate of 2%-3% between 2011 and 2015.

Vehicle sales break records

Not surprisingly, vehicle sales have benefitted from this, with car sales growing year-on-year from 2010 onwards. In 2015, total New Zealand new car registrations reached 95,097. For the first half-year in 2016, registrations reached 47,759. 2016 is already setting records, according to David Crawford, CEO of the New Zealand Motor Industry Association (MIA), “The 2016 new vehicle market continues to perform beyond expectations with sales in June up 5.1% on June 2015 and delivering a steady 5.3% growth for the year to date. New registrations of 13,699 vehicles is the strongest month of June since 1982 and the second highest month of any ever on record. Year to date there have been 69,057 new vehicles registered in New Zealand compared to 65,653 this time last year, an increase of 3,404 vehicles.”

According to LeasePlan, “Key drivers of new vehicle registrations are record levels of net immigration, a healthy trade sector and strong business confidence. This has also been fuelled by the aftermath of the financial crisis, which had previously caused delays in new vehicle purchases.”

The MIA tends to list total vehicle sales and also separates cars and commercial vehicles. Crawford gives further details of the data, “There were 9,186 passenger vehicle registrations and 4,513 commercial vehicle registrations, which were once again the highest month of June on record for commercial vehicle registrations and only the third time more than 4,000 commercial vehicles were sold in a month. The previous two times were also in June off the back of field days (4,002 registrations in 2014 and 4,009 in 2015).”

‘Utes’ dominate the market

New Zealand has a relatively high proportion of unpaved roads and like Australia and the United States, this means there is strong demand for SUVs and pickup trucks, usually referred to as utility vehicles or ‘utes’. Looking at the MIA data for June sales, the top three best selling car models were all SUVs – The Toyota Highlander, followed by the Toyota RAV4, then the Kia Sportage. LeasePlan tells us that the top three best-selling commercial vehicles are all ‘utes’ and the MIA data bears this out. In fact the top five best-selling CVs are all pickup trucks. The Ford Ranger is the best seller, followed by the Toyota Hilux and Holden Colorado, with the Mitsubishi Triton and Nissan Navara close behind. Overall, the Ford Ranger is the best selling vehicle in New Zealand with H1 sales of 4,000, followed by the Toyota Hilux with 3,263, both selling in greater numbers than the best selling car, the Toyota Corolla.

Looking specifically at the fleet sector, LeasePlan reports that there has recently been an increase in demand for pickup trucks, driven by a boom in house building mainly around Auckland and Christchurch. For LeasePlan, double cab pickups with automatic transmission tend to be the most popular, while demand for both 4×2 and 4×4 models is strong.

Given the road network and the urban population, it’s not surprising to find that small cars and SUVs tend to dominate the passenger car sector.

LeasePlan describes the fleet sector in New Zealand as consisting predominantly of entry-level models in each category of vehicle type. The company has already stated the importance of the light CV sector and says that around 50% of the company’s leased vehicle portfolio is made up of LCV models.

Ownership preferred

New Zealanders still prefer to own vehicles and this is reflected in how business vehicles are acquired. Smaller businesses still prefer to own their cars, although as LeasePlan points out, “Leasing for businesses with an international ownership model is popular. New Zealand has a higher percentage of finance and Hire Purchase leases than it does operating leases. Otherwise this sector is similar to our European sister companies.”

The same patterns that have emerged in the European sector seem also to hold good in New Zealand too, certainly in LeasePlan’s experience: “We are an island nation which is becoming increasingly commoditised in the vehicle leasing sector. The supply chain is limited and there are a limited number of players so the same parties are using the same channels and targeting the same audiences. High levels of used vehicles are imported from Japan which often results in lower residual values. The supply/demand ratios are therefore not weighted in our favour but are beneficial to our consumers.”

New Zealand may be following established fleet trends from Europe, but the size of the business market is much smaller than it is in the more developed fleet markets of Europe, accounting for around 15% of the total passenger vehicle market, reckons LeasePlan.

Employers are subject to New Zealand Fringe Benefit Tax if they make a passenger carrying vehicle available to employees for use outside work and the tax is payable whether or not they choose to make private use of it. Different rules apply to sole traders and partnerships.

Funding choices

LeasePlan indicates that there is a wide range of funding available for business vehicles including hire purchase, mortgage funding, business loans, revolving credit facilities, overdraft facilities, novated leasing, operating leases and finance leases. The company has also seen a pattern of funding according to fleet size, suggesting that for small fleets of between 0-15 vehicles, around 20% use operating leases, 60% finance leases while the remainder chooses to own their vehicles. The pattern changes for larger fleets of 16 vehicles and more where 50% choose operating leases, 20% finance leases and the rest a mixed ownership model.

The New Zealand Ministry of Transport produces monthly statistics on the take-up of electric vehicles and the data indicates that registrations for EVs were 0.5% of total light vehicle registrations in Q2 2016. A total of 1,512 light EVs are on New Zealand roads. Not surprisingly, the EV fleet is concentrated in Auckland, Wellington and Christchurch. In addition to EVs, there are also 16,505 petrol/electric and diesel/electric hybrids in New Zealand. Take-up appears to be on the increase. Company ownership of EVs is running at 34%, but among new EVs, companies are buying more than private buyers.