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Plummeting car sales have led to a slump in prices, and some car sellers are headed for the wreckers' yard, says an industry commentator.
"There's blood on the showroom floor and it's inevitable that some car retailers are going to go to the wall this year," said Clive
Matthew-Wilson, editor of the Dog & Lemon Guide for car buyers. "On a positive note, there are some real bargains out there at the moment."
But while car buyers might be happy, Mr Matthew-Wilson predicted a grim year for sellers.
"Car prices traditionally go up with the sun and come down with the rain: we are heading into winter at a time of global uncertainty and local economic gloom. Couple this with cautious buyers and an oversupply of cars in the New Zealand market, and you've got a perfect recipe for disaster."
According to Independent Motor Vehicle Dealers Association chief executive David Vinsen, the used-car market is "slow and slowing".
Land Transport NZ figures show new-car registrations for 2008's first quarter rose 3.6 per cent. Used imports fell 8.2 per cent. Comparing March 2008 to March 2007, sales from the public to dealers have dropped nearly 21 per cent, private sales are down by over 7 per cent, while sales from dealers to the public are down nearly 20 per cent.
Sales from dealer-to-dealer have fallen nearly 28 per cent, while registrations of used imports of have dropped nearly 18 per cent.
Mr Matthew-Wilson blamed a combination of factors.
"The economy is in decline, which has made buyers suddenly cautious," he said. The new vehicles on sale were ordered during boom times, so there is now an oversupply.
"Although overall imports of Japanese secondhand vehicles are falling, a few dealers brought in vast numbers of vehicles in anticipation of tighter government controls on vehicle emissions," Mr Matthew-Wilson said.
"There are now too many vehicles chasing too few buyers."
The recession had also hit optimistic car buyers who had already bought expensive vehicles during the economic boom and were now suffering financial pressures as the downturn begins to bite.
Turners Auction general manager for marketing Todd Hunter said repossessed vehicles going to auction had risen 100 per cent in the year to March 2008, with 700 going under the hammer.
The Fairfax-owned online auction site Trade Me - now the dominant force in car sales - was the only retailer reporting growth, and increasing numbers of commercial car dealers were using the website to move stock.
In the twelve months to March 2008, about 170,000 vehicles were sold on Trade Me compared to 115,000 the previous year.
But Mr Matthew-Wilson said that despite more new cars and upmarket second-hand models being offered on Trade Me, the median price remained at around $11,000.
"This suggests that while volumes are up, prices continue to soften," he said.
The second-largest auction house, Turners, did not reveal sales figures but said that lower prices had meant a major increase in bargain hunters on the auction floor.
According to Statistics New Zealand, it was a $41 million fall of 5.8 per cent in the value of car sales which sent the nation's overall retail sales down in February. That followed falls of 0.6 per cent and 2.5 per cent in January and December.
- NZPA
