Historic Hawke's Bay: Buying new cars was no easy feat

General Motors factory, Petone, around 1935. Note the wooden crates in which the car parts were shipped to New Zealand. Credit: Alexander Turnbull Library 1/2-036820-F

A limited supply of some new vehicles has driven up the price of second-hand ones, in some cases to more than the cost of new ones. Supply chain issues due to the pandemic have created market conditions that are largely unknown to New Zealanders.

But being able to sell a second-hand car for more than a new one has happened before in New Zealand.

A balance of payments crisis caused by the outflow of foreign exchange for imports being greater than funds received for our exports led the Labour Government in December 1938 to implement import licensing and take control of foreign exchange. The controls continued during and after World War II (1939–1945).

A relaxation of sorts occurred in May 1950 when Prime Minister Sidney Holland announced a "no remittance" system in relation to the importation of motor cars. At that time New Zealand – with a population approaching two million – was short 35,000 new cars, as not enough cars could be assembled to meet demand.

In 1950 cars were shipped in parts in boxes, in what was called "completed knocked down" (CKD) state. They were then assembled in plants here in New Zealand. In order to avoid import fees, components such as car radios were made locally if possible.

The no remittance scheme worked like this. Anyone who held sterling funds in the United Kingdom in a business, personal or their lawyer's bank account could use this to purchase an assembled new vehicle and bring it into the country through a car dealership.

This scheme appealed to farmers, especially when wool prices went through the "shearing shed roof" because of the 1950 Korean War, when the United States, anticipating a long war, began stockpiling wool. Farmers who sold wool to the London market would leave some of their payment in sterling funds in order to purchase a vehicle.

Because of the shortage of cars, the older ones needed maintenance for longer. Pete Kidd, who started with Hawke's Bay Farmers' Motors (HBF Motors) in Queen Street, Hastings, in 1954 as an apprentice mechanic, recalls the brisk trade in keeping the older cars roadworthy.

Stuart Cheyne recalls the allocation of new cars from General Motors in the 1960s was still tight, with just 50 arriving in 1964.

Peter McNab, who was with HBF Motors, said company salesman Eric Wells would visit farmers who held sterling funds to try and secure a no remittance sale.

The scheme was a winner for both the importer of the new vehicle and the dealership. Due to the ongoing shortage, the car could be sold back to the dealer for more money than the owner had paid for it, and the dealer could then sell it for more again. Using more foreign funds, the owner could order another car from overseas, and the process continued.

The Government eventually woke up to the fact that some were making good money out of bringing in the cars. So legislation was brought in to stop resales of cars until after 18 months of ownership and to allow only selling back to the original dealer to stop exorbitant profiteering.

There was another incentive for the dealers – for every no remittance car brought in, they would be allocated another car assembled in New Zealand to sell.

There was a waiting list for New Zealand assembled cars – some 600 people at each Hawke's Bay dealership (although this was mostly the same names at each one). Cars weren't necessarily allocated in the order of the list, which often created tension in the community.

Mark and Paul Jones took over their father Jack's Ford dealership Monarch Motors, in 1967, which became Hastings Motors Ford.

Mark recalls that his father got himself into some strife at times with the waiting lists for a car assembled in New Zealand (not received under the no remittance scheme). It was not uncommon for a farmer to turn up and say: "Jack, I'll buy a new Fordson tractor from you if you also get me a new car."

Jack would then bump the farmer up the waiting list. When others on the list saw the farmer driving around in a new Ford, they would ask Jack why he had got a car ahead of them.

The same thing occurred at HBF Motors, with some pressure by the mercantile division, recalls Stuart Cheyne, to allocate a New Zealand assembled General Motors car to "a good client" even if they were further down the list. The elevation of this particular person up the list was noted and communicated to the manager of HBF Motors.

If a person wanted a new car and had no trade-in, this was not as attractive, as the dealer would part with one of their scarce New Zealand assembled cars and have no traded vehicle to sell. These people found themselves leapfrogged by someone lower down the list with a trade.

Mark Jones was in charge of the no remittance car sales at Hastings Motors Ford. By the late 1960s, the scheme had reduced to just paying a deposit in overseas funds and then the balance in New Zealand funds.

"Every day for years, I would drive to Napier to get approval from New Zealand Customs that a client had legitimate overseas funds to make a deposit on a new car."

When this was approved, they would send the Customs office licence to Ford in Wellington, which would import the car for the customer.

The no remittance scheme ended on February 28, 1972.

The Minister of Customs, Lance Adams-Schneider, announced in October 1971 that for the 1971/72 year 85,000 cars would be imported during the licensing year, plus an additional 5000 if the Cabinet's economic committee approved them.

According to the Minister, this would mean everyone who wanted a new car could have one, and result in "sharply reducing prices for second-hand cars, particularly near-new cars, early next year".

Michael Fowler (mfhistory@gmail.com) is a contract researcher and takes commissions to write business history in Hawke's Bay. Follow him on facebook.com/michaelfowlerhistory