Car sales hit eight-year low in February

A difficult year for car dealers has been reflected in new figures showing their sales hit an eight-year low in February.

Retail sales figures released by Statistics New Zealand yesterday showed the value of motor vehicle sales - including cars, parts, motorbikes and trailers - fell 3.2 per cent (or $17 million) in February to its lowest level since January 2001.

In the same month, the number of new and used imports registered for the first time in New Zealand fell 21.5 per cent to the lowest number since April 1994.

Motor Industry Association chief executive Perry Kerr said sales figures for the first three months of this year looked "awful" compared with the same three months last year. Dealers had been cutting back on stock for months in preparation for tough times.

"It's certainly going to be a long year for the motor vehicle industry."

David Vinsen, of the Independent Motor Vehicle Dealers Association, said unofficial figures suggested there had been a small improvement in used vehicle sales between February and March. In February, used car industry groups said dealer closures and cutbacks at surviving dealerships had wiped out at least 10,000 of the 50,000 jobs in the used-car business. The Statistics NZ figures show the motor vehicle industry is not alone in losing sales. Businesses selling recreational goods lost 4.9 per cent, or $10 million, of sales in February, after increases of 2.7 per cent and 6 per cent in December and January. Accommodation fell 4.2 per cent, or $9 million. Overall, seasonally adjusted total retail sales rose 0.2 per cent, or $10 million, in February from January. That followed a fall of 1.2 per cent in January.

ASB economist Jane Turner said that, in the face of recession, households were changing their spending patterns and looking for cheaper entertainment options.

"Supermarket spending remains strong, with spending growth outpacing the monthly increase in food prices," she said. "The trend in liquor retailing has been flat while spending at restaurants and bars is down.

"Meanwhile, personal and household goods hiring, of which video hire is a key component, has been growing strongly, up 9.5 per cent (month-on-month) in January followed up by a 9.3 per cent increase in February, suggesting DVD stores have been reasonably busy over the past few months."

The figures show fuel sales went up 6.7 per cent, or $34 million, in February, seasonally adjusted, the largest rise since November 2007.

The trend in total retail sales had been in decline or flat since December 2007, falling 3.4 per cent since then, Statistics NZ said.

Goldman Sachs JBWere analyst Shamubeel Eaqub said the figures were dated, with more up-to-date electronic card transactions suggesting core spending improved in March.

Tax cuts from the start of April and lower mortgage rates should provide some near-term support, but he said the outlook hinged on job losses.

VEHICLE SLIDE

* Down 3.2 per cent ($17 million).
* Lowest level since January 2001.

- additional reporting by NZPA