Weekend Herald inquiry: Plunging used car prices

Linda Keown is delighted with her $3000 Ford Escort. Picture / Richard Robinson

It's a buyers' market when it comes to used cars, with 10,000 fewer sales last month than in May.

Over-supply, lack of demand because of the cost of petrol, the economic slowdown and winter weather keeping people inside are being blamed.

Patrick Gower talks to a disillusioned dealer, a desperate seller ... and a very happy buyer:

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THE BUYER

'A good deal and a nice surprise'

Linda Keown had $3000 and no more to spend on her new car.

So she was happy when she snapped up a 1998 Ford Escort two months ago for that sum.

She has no hesitation in describing the green hatchback with 125,000km on the clock, of which she is the third owner, as a bargain.

"I had looked at quite a few cars and then I saw this. I liked it, and so I went for it."

Ms Keown, 30, did not know she was in a buyers' market, and was expecting to get an older car that had done more kilometres.

"It is a good deal and a nice surprise."

The type of car she was after was not stocked by dealers and a visit to the auctions turned up only "dogs that barked".

By default, she turned to the internet and ended up buying the car through the Trade Me auction site.

Despite not knowing a lot about cars, she said, this helped her get a good feel for the market and feel confident.

"You get a much better sense of what is a good buy and what isn't."

There was still a lot of legwork required in getting out to look at and test-drive cars, but Ms Keown said she preferred to meet sellers.

"The only way I can buy something is if I trust the seller ...

"A car is a big decision. It is not just my biggest asset, it is my only asset. I think I have done all right."


THE DEALER

Goodbye, cowboys - you can have it

Steve Beston was at the vanguard of importing cars from Japan in the 1980s. But he has just wound up his Macau Motors car yard on Great South Rd in Otahuhu and is getting out of the business.

The trade is now full of "cowboys", he says.

Mr Beston said the deregulation of motor vehicle dealers in 2003 had eroded the standards of the industry.

The Independent Motor Vehicle Dealers Association says the number of active licensed dealers has doubled from about 1600 under tight controls to more than 3300 who need only pay a $580 registration fee.

Mr Beston said: "Deregulation meant there was a bunch of cowboys coming in and selling cars. Now the whole industry is full of them.

"No one has to meet any standards. And if you don't have standards, somewhere down the line you are going to reap what you sow - look at the building industry with leaky homes."

Mr Beston said more dealers did not mean a better deal for consumers.

"You are better off having the dealer making a decent profit and you get a decent car.

"You get a cheap car for the moment, but it is worth nothing when you come to sell it.

"The only way I could make a buck was to set up out of portacom and sell cars that might not go in a month - and I wasn't going to do that."


THE SELLER

'It is better to get a little money than none'

Charles has missed his church service five weeks in a row while he tries to sell his 1998 Volkswagen Polo at the Greenlane car fair.

"It is very discouraging," he told the Weekend Herald. "I should be in church but I am there every Sunday trying to sell this car."

Charles, who did not want to give his name or church, bought the car about three months ago for his German parents to drive around New Zealand.

Last Sunday, he again paid his $30 at the car fair. But over five hours, only four or five people showed interest and none wanted a test drive.

"The market is totally saturated," he said. "And nobody wants a 2-litre car like this one."

Charles had dropped the price from $10,900 to $8900 and was now considering dropping it to $6800. He said he had seen the same model for sale by dealers for $13,000.

"I am moving to Australia and must sell. It is better to get a little money than none."