Ris­ing pop­u­la­tion be­hind boom in car sales

The Press - - Business - SU­SAN ED­MUNDS

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.

Auck­land Coun­cil runs Movies in Parks but re­spon­dents to a Busi­ness NZ sur­vey want lo­cal au­thor­i­ties to fo­cus on core func­tions such as in­fra­struc­ture.

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