Car yards feeling the squeeze

Growing compliance costs may satisfy Government's demand on better emission controls and a more modern motor vehicle fleet, but it poses a considerable threat to the used car industry in Wanganui.
Neil Gallagher, director of City Cars, has been in the used car business for 12 years and he says "bureaucratic bullshit" is squeezing the industry to death.
"Government argues that it's a problem with emissions from used vehicles. But it's not the fault with the vehicles. The problem lies with the owners who don't get their cars serviced regularly.
"And the problem's not petrol-engined vehicles, it's diesels." The Government has directed the Ministry of Transport to consider ways of reducing greenhouse gas emissions from vehicles, by setting minimum fuel economy standards and limiting the age of imported vehicles to no older than 1999-2000 However, the industry suggests meeting that age objective will come at a cost, probably pushing the price of used imports up by 20-30 percent. Mr Gallagher says that will simply crush some local car yards.
"We can't compete with the prices they're demanding for the later models because other countries are competing against us.
"Places like Russia, India, Pakistan, South Africa and England are making it bloody hard for us." He said compliance costs were simply another form of revenue-gathering by Government: "The Government is only thinking of revenue."
Mr Gallagher said he has more than 40 units on his car yard at present and only three of those are year 2000 models or later. The rest are 1995-98 models. Antony Rountree at Harvey Round Motors, said if the new regime was in place it would have a detrimental affect on both the used and new car markets.
"The used car market keeps the prices of new cars in check. Take that away and the result is obvious," Mr Rountree told the Chronicle.
He said restricting the age of imported vehicles to no later than 1999-2000 would have a "huge difference" to the industry.
"I believe an age limit of no later than nine or 10 years is reasonable.
"The later the model the higher the price. And for a lot of potential buyers that means they won't be able to afford changing to a later model. "All that means is people will hang on to their current vehicle longer which means the country's vehicle fleet gets older," he said.
Mr Rountree said forcing this sort of change will force some in the industry to the wall. "And that will have a significant flow-on effect. It won't just be car yards affected, but panel beaters, paint shops, parts suppliers."
Wayne Brougham has been involved as a vehicle wholesaler and importer for 10 years and says the industry would have very little problem with the matter of emission testing. But he suggested the age restriction could be another matter.
"We've got to remember what's being talked about here is only being suggested at this stage, so nothing is set in concrete."
Mr Brougham, who is also a member of the Independent Motor Vehicle Dealers Association (IMVDA), said Japan already had a very stringent emissions testing regime, so it there would be little difficulty meeting new standards if they were imposed by authorities at this end.
"The thing is there's been no solid indication from Government Ministers as to what will be expected," Mr Brougham said.
"New car prices in Japan are approximately the same as NZ but the rate of depreciation is greater over there. It really kicks in on vehicles five years of age or older. "That's why cars aged between five and eight years are so popular over here.
"So the age barrier, if it was put in place, is the big problem. It could simply make late model used vehicles too expensive and that means the market slows down and the fleet becomes older again.
"I'd be more than happy with say a nine year age limit. The issue is getting affordable cars in Japan that are affordable here and popular."
But Ian Brown of Wanganui Car Centre says he welcomed the projected changes.
"The New Zealand vehicle fleet badly needs upgrading. There are oodles of 1995 to 1998 cars in yards and on our roads. The sooner they're upgraded the better."
Mr Brown says there's no doubt that restricting the age to no earlier than 1999-2000 will get rid of a lot of small players and importers.
"Undoubtedly cost will be a factor and that means my margin's being eroded. But I've raised the bar and we're specifically targeting late model imports. "I've got 12 vehicles coming in the next fortnight and they include 2000 to 2005 models."
The majority of cars he imports through his own Japanese-based agent but he will also purchase through other wholesalers.