Clean Car fee a factor driving up price of vehicles
Rebates, taxes, the pandemic and freight costs are all increasing the cost of new cars.
The chief executive of the Motor Industry Association (MIA), David Crawford, said the price motorists paid for cars had changed over the past three years, mostly because of new taxes or rebates under the Government’s Clean Car Programme.
The programme meant low emission vehicles received a refund of varying amounts based on CO2 emissions, while high CO2 emitting vehicles paid a tax.
An example was the Toyota Hilux 4WD. Three years ago it cost $43,990. This year, the same model costs $47,990. But add on the Clean Car fee, and it comes to $51,268, Crawford said.
The Covid-19 pandemic also had a significant impact on prices, he said. ‘‘Pre-Covid, the supply of new vehicles and used vehicles was strong, and there was a high level of competition between sellers where supply exceeded demand.’’
During Covid-19 a new phenomenon developed – substitution spending. While New Zealand lost about $17 billion of revenue with overseas tourists unable to enter the country, $6b-$7b was not taken out of the country because New Zealanders stayed at home, Crawford said.
‘‘They spent this money [on other things] including new cars, bikes, boats, caravans, home renovations.’’ At the same time, Covid-19 forced car factories to reduce production or close. ‘‘We moved from oversupply of cars, to demand now exceeding supply. Discounting of new vehicles disappeared,’’ Crawford said.
As the country moved out of Covid-19 restrictions along with the rest of the world, demand for new vehicles increased worldwide, leading to long wait lists for popular models. Higher production and shipping costs pushed up the price of new vehicles, he said. This also pushed up the price of used vehicles.