MIA's Crawford said he expected car sales to dip in the months to come. Photo / 123rf
Demand for new cars in Whanganui appears to have waned, according to dealers after two years of strong sales.
Motor Industry Association (MIA) chief executive David Crawford said the production of new cars had been disrupted since 2020 due to the pandemic but that was starting to correct itself.
During that time there was a surge in new car sales, with long wait lists for vehicles.
But David Jones Motors' dealer principal Gareth Jones said there had been a notable downturn in demand for cars in the last two months.
He said that was likely to be down to a combination of people getting used to higher interest rates, inflation and the Government's Clean Car Discount scheme putting a fee on high emission vehicles from April 1 this year.
Wanganui Motors' dealer principal Mark Quirk said the car sales business had changed considerably, with new car sales getting tougher, since April.
"With the clean car rebate coming into force on April 1, with the petrol price going up horrendously and interest rates climbing, that leads to a bit of uncertainty for our customer base," he said.
Quirk said the disruptions in vehicle orders of the last couple of years appeared to be easing.
TRC Toyota Whanganui owner Fraser Hart said he had seen order rates for new cars come down slightly.
"Definitely order rates have slightly come back from where they were in 2020 and 2021.
"I don't know what's driving that but ... they have come back for us."
MIA said new passenger car and SUV registrations were down 19.4 per cent on the same month last year.
It was even worse for new commercial vehicles, with registrations down 39.8 per cent on July last year.
Overall, registrations of new vehicles were down 26.3 per cent on July last year.
Crawford said 'substitution spending' had increased demand for cars in the last couple of years.
That was where New Zealanders who usually took $7 billion out of the country every year travelling spent their money on cars, boats or home renovations.
That also led to a situation where near-new cars increased in value, Crawford said.
Jones said six months to a year ago car yards were buying near new cars off customers, but that was happening less so now.
"Most car dealerships' used stock was really down.
"But in the last three months stock levels have risen with a bit of a downturn (in demand) so your turnover's not as strong."
Quirk said he had been buying low mileage, new cars - simply because stock was hard to come by.
"Absolutely.
"At the moment I'm OK with stock ... which is really good."
About a year ago Quirk said the business was probably down on stock by about 50 per cent - with both used and new cars.
Hart did not want to say whether his company had been buying near new cars in the last couple of years.
"The values of late-model, low-mileage vehicles was definitely strong.
"That was really just a result ... of demand versus supply at the time."
MIA's Crawford said he expected car sales to dip in the months to come.
"Now that NZ is opening up and with a slowing economy, sales of new vehicles are expected to weaken as the year progresses.
"I expect the prices of near new vehicles to come off the boil as the market becomes increasingly more normal."
The Government's Clean Car Discount scheme also subsidises electric vehicles (EVs), hybrids and other low-pollution cars and Jones said those had become very popular.
"The demand for electric and hybrid vehicles is very strong but trying to get them is still hard."
Jones said his car yard had vehicles - mainly plug-in hybrids - sold out until April next year.
Quirk said it was clear that hybrids and electric cars were the future, but he expected them to be more popular in bigger cities.
In a place like Whanganui people needed to drive longer distances in their everyday commutes, he said, and that would make electric and hybrid cars less viable for them.
There was a waiting list for most of the electric, hybrid and commercial vehicles at Wanganui Motors at the moment, Quirk said.
Hart said he had also seen an increased demand for low-emission hybrid cars.
"The value for money, the ride, the handling, the low emissions, low fuel has definitely made these vehicles very, very popular."
And despite the clean car tax, vehicles like the Toyota Hilux were still selling well this year, he said.
Wanganui Car Centre owner Liam Graham said the used car market was buoyant at the moment.
"We're in a good little market segment.
"We've got a massive repeat client base, which is outstanding."
Graham said the industry was resilient and had been through many peaks and troughs.
He said demand for bigger engine vehicles was easing while hybrid and plug-in hybrid vehicles were proving to be more popular.
A lot of that was due to the clean car tax brought in by the Government on April 1, Graham said.
MTF Finance Whanganui co-owner Dave Miller said loans for vehicle finance had been steady of late.
He said the average loan size had increased, with second-hand utes the most common vehicle they financed.