Car industry stuck in reverse

Photo / AP

It was hardly a surprise to the car industry when Statistics New Zealand's latest retail figures showed motor vehicle sales were down 11.4 per cent in the first three months of the year.

It was the eighth successive quarterly fall in volumes.

Not only that but two weeks ago industry bodies had the unwelcome task of responding to monthly figures showing a colossal drop in new car sales - 36.5 per cent down on April 2008, the lowest April for 35 years.

Overall new car and commercial vehicle sales were down a third in the 12 months to April compared with the previous year.

"April was really quite a downer on everyone," Andy Cuming, communications manager for the Motor Trade Association, said.

He said the dismal state of vehicle retailing was due not only to tougher economic times but to a cumulative effect of factors.

The used car industry had been hit hard by the higher emissions standards brought in by the previous government, meaning it was not now possible to import the cheaper, older Japanese used cars that it once did, he said.

In addition importers had faced a lot of competition from countries such as Russia which had bought up a lot of the cheap Japanese stock, making it harder to come by.

He estimated the Japanese import industry was running at about 40 per cent lower volume than during the "halcyon" days of 2003 to 2005.

On top of that the collapse of the third tier finance industry had left dealers in the lower part of the market high and dry.

Graeme Macdonald, manager of Auckland importer and dealer Croydon Wholesalers, said the exchange rate had also hurt.

Eighteen months ago a New Zealand dollar was buying 95 against the yen, but the rate had since sunk as low as 44 to the dollar.

He said the higher emissions standards had virtually eliminated the trade in used commercial diesel vehicles from Japan. "You simply cannot find compliant vehicles to purchase.

"It cut off the availability for small contractors and companies here in New Zealand to update their equipment at a relatively low cost by buying used out of Japan."

The result was a cleanout of the New Zealand industry as dealers struggled to survive, Macdonald said. "The industry has been over-populated by dealers in the past anyway."