Market accelerates

Car sales are picking up, says ALASTAIR SLOANE, but the falling dollar is worrying importers.

The New Zealand new-car market, stunted in recent years, is enjoying a growth spurt. Sales across the board so far this year are up 15 per cent over the first two months of 1999.

And the luxury sector is carrying on from a buoyant 1999 when it grew by 35 per cent.

The luxury category is exclusively European, with the exception of the American Chrysler Grand Cherokee and Japanese Lexus.

After the first two months of last year, BMW and Mercedes-Benz are running neck-and-neck on the charts, BMW with 165 sales and Mercedes-Benz with 167, according to Land Transport Safety Authority figures.

"Retail was strong across most sectors last year and we were pleased to see a similar pattern at the top end of the market," said BMW and Rover New Zealand managing director Geoff Fletcher.

"We are now seeing a return to the level of demand that existed before the uncertainty in the lead-up to the removal of tariffs in 1998.

"The loss of residual value at that time is now very much in the rear-view mirror, and New Zealand luxury-car buyers have become comfortable with the tariff-free environment."

The total passenger car market last year was up 8 per cent over 1998. But 1998 sales were down 8 per cent on 1997, so the increase last year only clawed back what had been lost.

The BMW group - BMW, Rover, Land Rover, MG and Mini - lifted its share of the market from 3.1 per cent to 3.4 per cent.

Total sales were up 28 per cent, but its dominant share of the luxury market dropped from 45 per cent to 42.7 per cent, mainly because of the overall growth and aggressive competition from Volvo, Jaguar, Audi, Lexus and Mercedes-Benz.

Mercedes-Benz sales were up 40 per cent last year and it had 20 per cent of the luxury market. Jaguar was also a big mover.

Said Fletcher: "While our result and those of our competitors should mean we can all look forward to an equally encouraging outcome this year, robust trading in the longer term will depend on continuing confidence in the new Government's economic stewardship.

"The dollar's rapid decline is a growing concern to importers. It will only be addressed in the longer term by credible action to both grow exports and refocus them into the high-value end of New Zealand's markets overseas.

"Unless there is some recovery in the New Zealand dollar, the price increases already coming through for many brands will continue, and the strength of the yen means used import prices are also continuing to rise."

The luxury segment doesn't use a common yardstick to measure sales.

For example, Audi calls its $41,900 A3 a luxury vehicle. Volvo, on the other hand, only categorises its plus-$90,000 C70 and S80 as luxury models. The remaining 70 series and 40 series fall into the "European" segment.

Mercedes-Benz categorises its cars against its competitors by price - 0-$50,000, $50,000-$100,000 and $100,000 up. But, like BMW, all its products are considered luxury.

The jumbled methods, for instance, ignore a $55,000 Holden or Ford, although the Australian models fall into luxury pricing.

Toyota leads new-car sales after the first two months of this year with 2140 units, or 18.4 per cent of the market. Ford sits in second place with 1640 sales, or 14.1 per cent, and Holden is third with 1455 sales, or 12.5 per cent.