NEW ZEALAND CLASSIC CAR PRICE ON Kiwi vehicle fleet’s age
As many of you will recall, I have often talked about the average age of New Zealand’s vehicle fleet, and my lifetime objective is to increase this average by reintroducing vehicles — mainly motorcycles — that have long since been removed from the NZTA database.
Why? Well, for as long as I can remember, both the new-car industry and the used-car industry have been trying to get us to change our vehicles at least every five years — probably for no other reason than to ensure that those in the car-retailing industries are kept in the lifestyle to which they have become accustomed.
Unfortunately for them, a number of factors prevent this from happening — not the least being one of pure economics. Remember that around 80 per cent of all new-vehicle sales are to businesses, government departments, and rental companies, which means around 20 per cent of new-car sales are to private individuals. Private buyers need to be able to absorb massive depreciation hits from the moment they drive their new car out of the showroom — those with a bit of common sense will look for a low-kilometre, ex company car that has been over-maintained at huge expense. These cars often turn up at vehicle auctions, and can be real bargains. By way of an example, I had a brand-new company car provided to me in 1997 — cost, $36,000 — and I was the only driver until 2005, when I handed it over to my successor. At that stage, the car had covered just 67,000 kilometres. My successor had the car until 2007, when it was replaced. When it came up for auction, I successfully bid on it with the advantage of knowing exactly how much had been spent on it by way of maintenance. When my son returned from his big OE, I on sold the car to him, by which time it had covered just 97,000 kilometres — a Ford, of course! Admittedly, the car’s value is marginal at the time of writing, but it is still in use and totally reliable, so why get rid of it.
“If it isn’t broke, why fix it?”
The above example is, I expect, typically why many people keep their cars beyond the five years desired by dealers — as the old adage goes, “If it isn’t broke, why fix it?” In the time that I have been keeping records, the average age of the nation’s vehicle fleet has increased from just under 11.5 years in 2000 to over 13 in 2010.
Readers will recall that I often boast that returning yet another classic motorcycle to the roads legitimately is my small contribution to increasing the overall age of the fleet. Of course, other factors are also at work here — not the least being imports, be they Japanese or classic American.
Remember the late ’80s, when dealers were allowed to import Japanese cars en masse? The first thing removed from such cars were their emission controls because they ‘impaired performance’. Then, over time, the authorities — LTSA, then LTNZ, and now NZTA — endeavoured to clean up these imports by introducing new emission standards relating directly to them.
Once they were introduced, they did not stem the flow of older imports. Last year, for example, the average age of used-car imports was reportedly eight years. The Motor Industry Association (MIA) reportedly says cars that cost practically nothing in Japan can be shipped here for $3000 and then sold for $5000–$6000. Regular readers will recall that I have made similar claims for years — and received a fair bit of flak from ‘interested parties’ for having made them. It’s nice to be finally proved correct. Unsurprisingly, new-car dealers are pushing for even tougher used-import rules.
It seems that the current glut of used imports is having an adverse impact on new cars — they are apparently losing value quickly. The chief executive of the MIA recently said that the cost new vehicles has never been cheaper — interesting in itself, when another player is about to enter the car market, and claims that, later this year, it will be able to offer savings of up to $10,000 on new Toyotas, Hondas, and Mazdas.
My immediate reaction is, Hang on a minute; I thought that newcar sellers traditionally claimed that the mark-ups on new cars were minimal. If this new player is on the level, how can it slash up to $10,000 off the price and still make a profit?
Special Interest Vehicles
The other factor affecting vehicle average ages is, of course, the continued importation of classic American cars — and even Special Interest Vehicles (SIVS). This is going to influence the average because, in the main, classic US cars are more than 20 years old anyway, with many people using a favourable exchange rate to import several cars with the purpose of selling all but one or two of them to offset the costs of the ones they elect to retain. That, of course, is yet another reason why many imports ‘ just need Vining.’
If you Vin/register an import and on sell it, the transaction gets captured by the data-matching programme of the NZTA/ Ministry of Business Innovation and Employment. You are only allowed to import three such vehicles in any 12-month period. If these imports are NOT VINED, then your transaction is not picked up.
So I will watch with interest to see how that new player pans out with its sales of new Toyotas etc. I will also be watching for yet more attempts by vested-interest groups to lobby the government to remove yet more old cars from the roads. The new ACC levies for some older — albeit much safer cars — are a prime example. The reason many older cars have no safety rating is simply because they have not been involved in enough serious accidents to feature in the research data! If you don’t believe me, then why is it that over 80 per cent of the vehicles that are written off each year — or that have their registrations cancelled — are less than 10 years old? Maybe we should be looking at the drivers, not the cars!