Bumper spend­ing

Cars are a poor store of wealth but that hasn’t stopped Ki­wis spend­ing $30b on them. By Rob Stock.

Marlborough Express - - BUSINESS -

Ian Hope may own more cars than any other per­son in the coun­try. That’d be quite a boast in one of the world’s most car-mad na­tions, but even if other col­lec­tors beat him on the num­ber, they would strug­gle to com­pete with Hope’s com­mit­ment to stay­ing in the com­pany of his col­lec­tion.

Af­ter Hope has shuf­fled off his mor­tal ignition coil, and is cre­mated, his ashes will be brought back to his Hawke’s Bay Bri­tish Car Mu­seum, which dou­bles as his home, to re­side with his col­lec­tion of 471 cars.

‘‘I’ve got my own hearse here ready with a cas­ket on board ready to take me to the cre­ma­to­rium,’’ Hope says. ‘‘It will bring my ashes back to be kept in the mu­seum.’’

Hope is a paragon of car en­thu­si­asm in a coun­try that ranks in the top 10 on per capita car-own­er­ship in the world (top five if you ex­clude tiny tax havens and mil­lion­aire prin­ci­pal­i­ties).

Just how much money is tied up in our cars is not tracked in the Re­serve Bank house­hold bal­ance sheet data, though Turn­ers Auc­tions has made an es­ti­mate based on Min­istry of Trans­port own­er­ship fig­ures, and came up with just shy of $30 bil­lion.

But sell­ing is the last thing on Hope’s mind.

The skilled me­chanic, now aged 76, is plan­ning on giv­ing the lot away.

A trust has been set up to se­cure the mu­seum’s fu­ture, and own his cars, with the ex­cep­tion of 20 Mor­ris Mi­nors, which he bought to give to his 20 great­nieces and neph­ews.

Our $30b car wealth com­pares to house­holds’ $42b in Ki­wiSaver, and $100b in other in­vest­ment funds, non-Ki­wiSaver su­per schemes and life in­sur­ance funds.

Re­serve Bank data also shows house­holds have about $164b in term de­posits, and $492b in di­rectly held shares in com­pa­nies (in­clud­ing both those listed on stock ex­changes and those pri­vately owned by a small num­ber of peo­ple).

At the end of March, house­holds also had around $771b in hous­ing and land, though prices in Auck­land have since dipped.

That’s wealth of around $286,583 per capita – ex­clud­ing eq­uity in cars – once the debt owed on home loans, per­sonal loans, and busi­ness loans is de­ducted, though wealth is un­evenly spread.

Car wealth is not some­thing that gets of­fi­cially counted by the AA, or the Min­istry of Trans­port, but Turn­ers Auc­tions, which sells more sec­ond-hand cars than any­one else, has done a rough es­ti­mate us­ing sales prices achieved at auc­tion and in pri­vate sales. Turn­ers cal­cu­lates that we have $29.7b of car wealth tied up in some 3.6 mil­lion ve­hi­cles.

‘‘There’s art and sci­ence in­volved in get­ting to this num­ber, and no way of check­ing how close we are,’’ says Sean Wig­gans from Turn­ers.

‘‘Our best ed­u­cated guess would be the av­er­age value of cars is around $8200, and that the me­dian would be more like $5000,’’ Wig­gans says.

The me­dian is the value of the ex­act mid­dle-priced car in the na­tional fleet.

The av­er­age in­cludes the mass of old dun­gas, and the smaller num­ber of highly-priced new cars, clas­sic cars, and su­per cars.

It’s that low be­cause the av­er­age age of cars on the road is just over 14 years.

Our high per capita own­er­ship of cars is thought to be a re­sult of a rel­a­tively small num­ber of peo­ple liv­ing in a rel­a­tively large coun­try, with ge­o­graph­i­cally large cities, and his­tor­i­cally poor pub­lic trans­port.

‘‘A car is a ne­ces­sity. If you don’t have a car, then it re­ally is hard to get around,’’ says Wig­gans.

‘‘A car is a ne­ces­sity. If you don’t have a car, then it re­ally is hard to get around.’’ Sean Wig­gans from Turn­ers

Na­tional laws also make it easy to keep older cars on the road, he says.

As a store of wealth, cars are uniquely poor.

The value of most cars de­pre­ci­ates, and de­pre­ci­a­tion in New Zealand is es­pe­cially rapid for buy­ers of new cars as there is a con­tin­ual flood of sec­ond-hand im­ports ar­riv­ing on our shores each year.

It costs a lot to keep cars on the road, and tanked up with fuel.

‘‘We know when peo­ple come to our auc­tions look­ing for a $5000 car, it is be­cause $5000 is all they can af­ford,’’ says Wig­gins.

‘‘If they could af­ford a $10,000 car, that’s what they would be look­ing for.’’

Well, not ev­ery­one. Turn­ers’ re­search shows there are some sub­sets of the pop­u­la­tion turn­ing away from cars.

Around 32 per cent of peo­ple old enough to drive, but un­der the age of 24, are look­ing to get a car, ex­cept in Auck­land, where it has fallen be­low 20 per cent, Wig­gins says.

On the op­po­site end of the pur­chas­ing spec­trum are the new car buy­ers.

David Craw­ford, chief ex­ec­u­tive of the Mo­tor In­dus­try As­so­ci­a­tion, which rep­re­sents new car deal­ers, says the value of new and used ve­hi­cles ar­riv­ing on th­ese shores is sec­ond only to oil on the im­port league ta­ble.

Around 65 per cent of new cars are bought by com­pa­nies, he says, and sales are buoyed by the boom­ing con­struc­tion, tourism and de­liv­ery in­dus­tries.

The rest are or­di­nary mu­mand dad buy­ers.

Some are new im­mi­grants. Some are wealth­ier peo­ple who drive new cars, and trade them in ev­ery few years, or are tempted by low fi­nance rates.

The real price of new cars, on which the specs im­prove each year, are down, he says, and war­ranties prom­ise years of mo­tor­ing with no fear of a me­chanic’s bill.

Oth­ers trade down from a larger fam­ily car when the chil­dren leave home, and buy a new, smaller car for the same price their older, larger ma­chine cost them, Craw­ford says.

And some, says Wig­gans, buy a new ve­hi­cle when they come into money, per­haps at re­tire­ment, be­cause just once in their lives, they want to own a new car.


New Zealand has one of the world’s high­est rates of car own­er­ship.

Ian Hope, who runs the Bri­tish Car Mu­seum near Napier, owns 471 ve­hi­cles, in­clud­ing this Rover 75.

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