It can be about 13 per cent cheaper to run a new car than an imported vehicle in New Zealand, saving over $5000 over four years.
The surprising estimate comes from Rick Armstrong, Managing Director of Armstrong Motor Group*, and turns the normal perception on its head.
Armstrong uses two
case studies of almost identical value vehicles to make the point – focusing on running costs of the two vehicles (see below) and not including depreciation nor the greater residual value of a new car when it comes to resale. He also criticises the environmental impact of bringing in 150,000 used Japanese cars.
"When used vehicle imports first started coming into New Zealand from Japan 30 years ago, it was to provide New Zealanders with a cheaper car option," he says. "However the unprecedented growth of the new car market over the past five years or so has seen a major shift in the levels of value and affordability you now get when purchasing and owning a new vehicle."
New Zealand is still one of the world's biggest importers of used cars but that no longer makes sense for a number of reasons, Armstrong says:
• Unlike new New Zealand vehicles, imports rarely come with a traceable service history. Without that, these vehicles are far more likely to have major failure issues down the track as well as general maintenance upon arrival.
• Vehicle ownership periods in Japan are much shorter than in New Zealand so the necessity to maintain the vehicle isn't as great, many needing maintenance upon arrival in New Zealand.
• Many imports arrive with snow tyres that need to be switched out and vehicles imported from Japan are predominantly 5-10 years old, most have done high kilometres and require a lot of work to pass a Warrant of Fitness inspection.
"You also have to consider the impact on the environment," he says. "We get very little use out of these vehicles and then they have to be disposed of or sold with little residual value. Used imports are adding to the age of our fleet as well as potentially affecting the amount of fatalities of the road due to the low safety levels of these aged vehicles.
"Many imports require used parts to be replaced – lights, glass and oil. When you consider this across 150,000 vehicles, it's a lot of waste for the country to absorb."
Big and rapid changes in technology have led to increased safety levels of new vehicles, now packed with safety features and driver aids, he says.
"More safety features are being introduced as standard so you don't need a big budget to find affordable technology. New vehicles have also become more environmentally friendly with lower emissions and innovations like stop-start technology which helps to save on fuel."
Due to the competitive nature of the new vehicle market, more new cars come with standard features and advantages for the buyer: "Servicing is often offered free for the first 3-5 years, the vehicle is covered by warranty and the resale value of a New Zealand new car is much higher.
"Most new cars can now be purchased on a flexible finance plan on a very low finance rate which makes them more affordable, paying off the vehicle with a small interest component. Once upon a time, for example, a Mercedes-Benz was an exclusive vehicle – now, with all of these options available, it has become far more attainable to own one of these cars. "
The overall running cost is far lower for a new vehicle, says Armstrong, who uses two similarly priced SUVs to make the point:
New Car
Nissan X-Trail SUV
Cost: $37,490 + orc
Service Plan (3 years): $1,250 including GST
Warranty (3 years): Free
Finance (4 years) at 1.9 per cent (typical from a dealership); 0 per cent deposit
Interest + Fees Paid: $2,319
Total Amount Paid: $41,059
Imported car
2012 Mazda CX-5 SUV
Cost: $31,980 + orc
Servicing Cost (3 years): $1,440 including GST
Warranty (Autosure 3 Years) $1,995 including GST
Finance (4 years): at 14.65 per cent interest rate (an average; market rates vary from 10-16 per cent depending on personal and other circumstances); 0 per cent deposit
Total Interest + Fees Paid: $10,891
Total Amount Paid: $46,306
Armstrong says that is a differential of $5,247 or 13 per cent.
*Armstrong Motor Group is a large privately owned New Zealand dealership network retailing 19 brands and operating 13 dealerships nationwide. The Armstrong Group has been in Auckland for four and a half years, with three branches of Toyota (Auckland City Toyota) in Grey Lynn, Greenlane and Mount Wellington. The group opened facilities in East Auckland last year for Hyundai and Mercedes-Benz and have had Peugeot Citroēn operating out of Greenlane since 2015.
Many of the showrooms have been transformed with the group about to launch the South Island's first Mercedes-AMG Performance Centre in Christchurch at one of the Prestige dealerships.
Armstrong says: "We are very proud of the brands we represent and our biggest focus is taking care of the customer and providing the best solution of car ownership. What we do best is looking after people; getting them into the right car and then ensuring they are continued to be looked after throughout the lifecycle of their vehicle. We believe we have the best brands in the market with the best offers. We have a huge number of exciting new models that have just arrived or will be arriving over future months."
For more information: https://www.armstrongmotorgroup.com/