Global view provides a valuable insight

This month I want to expand on the impact of the tough economic times I covered in last month’s Radiator.

As business owners, you need to understand the markets you operate in, and be able to and be ready to adjust to meet the changes.

Hardly a day goes by when we as consumers or perhaps as business operators are not confronted by price increases somewhere – whether that be in the essentials of food and power as we head into winter, or via the slower-burn sectors, including rates, insurance etc.

New Zealand isn’t unique in this regard, with similar situations taking place in many countries around the world.

It was interesting to read an article in the Australia-based motor-industry journal GoAuto News, which covered the rising costs and impacts on the retail motor industries across the Tasman and in the US.

Inflation bites

“Inflated car prices, bigger loan repayments and breakdown costs leaving financial stress.”

Rather than attempt to paraphrase the article, I have reiterated the opening paragraphs here simply because they might as well have been written for our consumption anyway.

It states: “The Wall Street Journal is reporting that Americans who have signed up for used cars at prices driven up by a lack of low-mileage cars in the market are now struggling to meet their loan repayments.

“As a result of monthly payments being much higher than what they are used to, owners are falling behind on their repayments and defaults on car loans are rapidly rising.

“To make matters worse, because of the shortage of stock, many buyers were forced into much older cars than they would have normally bought. These are now breaking down, leaving owners without a car because they cannot afford the repairs.”

Yes, used-vehicle prices have increased in New Zealand in the face of tighter new product supply and Government policies, such as the clean car discount (CCD) and clean car standard (CCS).

Tony.everett@mta.org.nz

Yes, some consumers have reduced disposable income because of inflationary pressures. And, yes again, spending budgets in some cases might have forced them into older vehicles with greater risk of them breaking down.

Seemingly reflective of the expected outcomes, it’s interesting to note that MTA’s mediation helpline team is reporting an increase in calls from owners who are obviously under financial pressure and looking for ways – valid or not – to get out of their cars.

On the flip side, the latest data for the consumers price index shows an unforseen decline – economic forecasting is hard these days – to 6.7 percent for the March quarter.

So a glimmer of hope on the horizon maybe? But perhaps it’s still timely to recall the old saying, “when America catches a cold, we catch pneumonia”.

In other words, it would still be wise to take stock and scrutinise business overheads and practices where you are able.

Change impacts stability

We don’t have the luxury of stability in our market with yet more changes being muted, so forecasting is no easier.

Changes to the settings for the CCD take effect on 1 July which has not gone down well with many industry participants and representative organisations along with the potential imposition of another step upwards in used-vehicle exhaust emission standards later this year, that’s to say Euro 5 compliance for used imports from 1 September.

As a final note, used-import dealers who have pay-as-you-go CO2 accounts need to plan for settlement in June of their January to May CCS balances, and from 1 June, they will have to meet individual CCS fees if no credit offsets are available as vehicles pass through compliance – no more on account-accrual privileges or “putting it on the tab”, so to speak.

So there’s a bit of a cashflow double whammy for those affected next month.

Registrations of 10,178 were up 4 percent on April 2022, but to be fair, that was due to advanced registration activity leading into CCD last year.

The market is down 15 percent across the first quarter of 2023 but comparable with the last five-year average.

There were 7,061 new passenger vehicles, down 17 percent on April 2022 and down 6 percent YTD.

New commercials at 3,117 were up 155 percent on April last year, given the market at that time was living in the shadow of volume advance registrations pending CCD introduction.

Model and brand performance

Product shortages continue, but to a lesser extent than previously.

Toyota again claimed market lead for the month, and holds a dominant 19 percent share for the year so far.

Across the first four months of the year many brands are behind same point last year. Toyota, Kia and Suzuki are the only brands in the top 10 ahead YTD.

Outside the top 10 ranking, brands showing positive increase across the first four months include: Tesla is up 10 percent, Cupra up 15, and Chevrolet up 39 percent.

Top 15 models included: nine SUVs, three utes, two cars, and one van.

Top

DRIVE TECHNOLOGY MIX:

ICE 66 percent, Hybrid 18 percent, EV 11 percent, PHEV 6 percent .

1,814 Hybrid - 493 RAV4, 157 Highlander 143 Corolla, 113 Swift and 87 Niro.

1,087 EV - including: 184 BYD Atto 3, 127 Tesla Model Y, 111 MG Zs, 87 Kia EV6, and 70 Tesla Model 3.

566 PHEV - including: 284 Eclipse Cross, 84 Sorento, 56 Ford Escape, 19 MG HS and 19 Lexus NX.

KONA 136 -25%