Boost as car sales on upturn

David Wills says there are positive signs in the market. Photo / Sarah Ivey

Car sales are the highest they have been in the past year, prompting yet more hope the recession may be on its last legs.

But car dealers and economists aren't getting their hopes up just yet, saying that any optimism of an upturn should be viewed with caution.

Statistics New Zealand yesterday released its monthly Retail Trade Survey for July which shows most areas of retail spending - including sales in department stores, supermarkets, restaurants and vehicle-related spending - are down by $25 million.

However, vehicle sales showed what one economist has called healthy growth, with sales up $11million.

Vehicle sales for July totalled $542 million - the most since July last year, when sales were $584 million.

But figures are still about $170 million down on spending in June 2007, when a 21-month sales decline began hampering the industry.

BNZ chief economist Tony Alexander said the latest leap in sales was "a healthy increase" but said it should be viewed with caution.

"There is definitely evidence that consumers are starting to spend a wee bit more on some of those larger items, but of course part of that could just be a catch up after having not bought many cars or other big things for a couple of years.

"You might get a string of a few months where the numbers look strong but it's just effectively restocking."

Mr Alexander said the spending categories economists looked at to see if an upturn was occurring included motor vehicles, but also included furnishings and hardware store purchases and appliances - and of these only hardware retailing showed a rise in July and it was marginal.

David Wills, dealer principal at John Andrew Ford and Mazda in Auckland city, said there had been a slight upturn in the sale of used vehicles in recent months but he was viewing it with cautious optimism.

"Considering the market has been down about one-third on last year, yes, there is [an upturn, but] I wouldn't suggest that there's been a dramatic increase."

Mr Wills said the traditionally busy months from October to December could provide a better insight on whether the market was heading towards its previous form.

"As far as any upturn goes, in the last quarter there have been some positive signs but I wouldn't yet be spending the cash."

Mr Wills said he also had noticed a "significant" upturn in the service side of the business as people kept cars for longer instead of buying new ones.

"At the moment they're not necessarily going out and buying a car if they don't need to, whereas they used to go out and go 'oh yeah, it would be nice to have a new car - whack it on hire purchase'."

Mike Kelly, sales manager for Auckland's Carson Wholesale, has also noticed a slight upturn.

"It's getting slightly better but not really," he said. "I would like to think that things are getting better.

"We've had a pretty hard year and a half. In the last couple of months it's sort of picked up a bit better, but it's not back to it's normal spot."