New car sales hit by shortages

By Jacqui Madelin

New Zealand's new car market has flatlined as post-tsunami production constraints hit vehicle distributors, causing shortages of some models and price rises.

But the pain may be short-lived as Japanese production is expected to approach normal levels earlier than initially forecast, carmakers say.

The shortages have affected some car companies more than others, a situation which may lead to price wars when supply eases and the brands battle to regain market share.

Sales of light commercial vehicles are propping up the local market at present.

Total new passenger and light commercial sales were 6563 last month - a rise of 2.3 per cent over May last year - but passenger car sales fell 1.7 per cent to 4535.

In comparison, sales of light commercial vehicles were up 12.6 per cent in the same period at 2028. New Zealand's two top-selling vehicles last month were utes - the Toyota Hilux (450 sales) and Nissan Navara (337).

Toyota chief executive Alistair Davis said the export-led recovery and more government business in the wake of the Christchurch earthquake were behind the trend.

"My perception is the market for new vehicles is growing because there's quite a lot of business being done, the export sector is booming and commodity prices are very high, plus there's been infrastructure spend," he said.

Traditionally the market leader, Toyota has been hardest hit by stock shortages. In May last year, it had more than 20 per cent of the market with 1294 new vehicle sales.

This May's tally was 963 sales and a market share of 14.67 per cent, narrowly keeping it ahead of Holden, which topped the passenger car tables for the first time as Toyota fell to an almost unheard-of sixth place.

"If there had been adequate supply, we would have seen a bigger passenger car market as well," Davis said.

Toyota sold 199 Corollas in May last year but just 88 last month. "We're stock-constrained on a lot of passenger cars [but] less so on commercials by an accident of ordering as they front-loaded some of our product."

However, the pain might pass faster than anyone thought, Davis said. "There's been a more rapid recovery of production than expected a month ago and, during the third and fourth quarters, we'll be back to normal volumes."

That was thanks, in part, to the manufacturers.

Honda New Zealand managing director Graeme Seymour said Honda had put its own staff into component factories and he understood Toyota had also. "Between us, 2500 engineers went into component suppliers to assist the recovery."

Companies were more clearly identifying the remaining problems and had more resources, Davis said.

"I don't know how it's being done but the production was looking like it would take until November. They're now talking 90 per cent by mid-year."

For the consumer, it means that initially prices will rise as stock shortages bite, although brands not affected may market aggressively to take advantage of their competitors' woes.

After that it depends on how badly traditional players have lost. Some estimates suggest Toyota will drop close to 900,000 sales worldwide before the situation returns to normal.

"Toyota holds a commanding market lead at present, but if that erodes to the point that its No1 [position] is threatened, it will certainly take an aggressive position in the marketplace to ensure it remains No 1," Motor Industry Association CEO Perry Kerr said.

This could start a price war that, in the short term, would benefit the Kiwi buyer.

- Herald on Sunday

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