KEY POINTS:
Struggling car yards are dropping the price of used cars, offering up to 20 per cent off the usual sticker price.
Figures released yesterday by Statistics New Zealand showed motor vehicle sales had slumped 16.6 per cent since September last year. Sales fell 5.3 per cent, or $32
million, in July, after bouncing back temporarily in June.
The value of vehicle sales is now at the lowest level since November 2001.
Car sales businesses spoken to by the Weekend Herald said used car yards were having to slash prices to keep buyers in the market.
A rainy winter, stretched household budgets and the collapse of easy finance meant salespeople were working harder to make the same number of sales they did this time last year.
For some, that meant dropping prices. John Dallimore of City Imported Autos in Penrose said he had knocked between 10 and 20 per cent off the cars in his lot.
He said the number of sales was unchanged, but profit margins were dramatically different from a year ago. "The bottom line's not that hot."
Another Penrose dealer, Craig Hogg of Genuine Vehicle Imports, said the market was "stuffed".
"No one's buying anything."
He said prices were "absolutely" dropping, as car yards tried to make every sale work. "You're looking two or three times at every application, trying to make it work," he said.
Mr Hogg said the number of sales was down 40 or 50 per cent from the same time last year.
But cutting prices was becoming more difficult as the New Zealand dollar weakened.
"You're strangled at one end because you're struggling to sell, but you're strangled at the other end because the exchange rate has come back dramatically, so you're struggling to cut the price."
Trevor Rooderkerk, of Cheap Cars in Grey Lynn, said a lot of smaller traders had closed during the winter.
Those who were still open had to work hard to keep their existing customers happy because there were few new buyers in the market.
Martin Harwood, of Just Right Cars, said he was not discounting his cars because, with the currency falling, he would end up going backwards when he had to replace them.
He said sales had suffered during Auckland's run of rainy weekends, but after 40 years in the business, he was confident things were picking up.
Mr Dallimore said used car prices would rise again as the NZ dollar lost ground against the Japanese yen.