Rising population behind boom in car sales
A rapidly growing population is not only putting pressure on the housing market, but driving a car sales boom, too.
Statistics NZ figures show car imports topped half-a-billion dollars for the first time in June. New cars led the increase, with imports worth $86 million more than in June 2016.
For the month, new and used car registrations were up 11 per cent.
The value of imported cars was higher than in the equivalent period a year earlier for the 11th month in a row.
Mieke Welvaert, an economist at Infometrics, said population growth was a big driver of the increase.
‘‘We think population growth directly drove 34,000 car sales over the March 2017. It’s the same as for houses. There are more people arriving in the country and when they arrive, they buy all the set-up things – houses and cars.’’
She said the number of cars owned by each household was also increasing. ‘‘We calculate that in March 2017, there were 1.58 cars per household in New Zealand, the highest rate since our records began in June 1991.’’
When the economy was doing well and people were more secure in their employment, they were more likely to upgrade their cars, she said.
The growth in sales was strongest in cars with smaller engine sizes.
David Crawford, chief executive of the Motor Industry Association, said cheap finance, thanks to low interest rates, was also a factor. ‘‘People aren’t buying cars on the mortgage any more. It used to be the cheapest way but now people just take the finance rates at the dealer.’’
Electric-vehicle sales increased 184 per cent over the year to June. There are now just under 4000 in the country.
New Zealanders now get better value for money from their vehicles. In 2007, a buyer would have paid $31,345 for a new Mazda 3 ($34,466 when adjusted for inflation). Now, despite 10 years’ worth of technological developments, the 2017 models sell for $32,795.
A Toyota Corolla was $31,650 in 2007 ($34,802, inflation-adjusted). Today they sell for $31,690.
Standards for used cars have lifted and Welvaert said that although New Zealand had lower emissions rules than in Australia, Britain and Europe, local consumers benefited from higher expectations internationally.
‘‘As a result of what they buy we tend to get a similar composition because we are a smaller market by comparison. We get better, more fuel efficient cars as a result of what everyone else decides they want.’’
There was significant price pressure in the market, she said.
‘‘Prices are really low – prices for new cars have consistently gone down.’’
Crawford said the strong New Zealand dollar made cars more affordable, and buyers were increasingly getting better-quality vehicles for the same money.
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