A record stockpile of new vehicles in New Zealand is a bonus for buyers as the booming car market comes under pressure from a falling dollar and an economy that shows signs of flattening out.
An estimated 24,000 new models are sitting around the country, around 8000 more than would usually be available at this time of year, say distributors.
Such a stockpile means dealers can continue to discount prices to keep the buoyant market humming along. But once the stockpile shrinks, along with the economy and value of the dollar, replacement vehicles will cost more.
“Price rises will be inevitable if the dollar stays where it is,” said Subaru NZ managing director Wallis Dumper. He said the stronger dollar had allowed Subaru to pass on price cuts.
“Our current model range is enjoying record sales and the recommended retail prices (RRP) reflect some of the best prices we have ever offered. The currency might recover, so we are not panicking just yet.”
In the past 10 months the NZ dollar has bought 88 US cents, 53 British pence, 92 Japanese yen. Now it is buying 67 US cents, 43 British pence, 82 Japanese yen.
Distributors buy vehicles at an agreed price from offshore plants well in advance of production schedules. Many have been buying up big on the back of the strong dollar and continued demand for new vehicles.
Mitsubishi Motors NZ marketing manager Daniel Cook believes many manufacturers have high stock holdings due to lower than anticipated retail sales, but he expects the market to be insulated from currency movements for a while yet.
“As for Mitsubishi, we have been retailing very strongly this year and consequently don’t have an excess of stock in New Zealand, “ he said. “That said, we are not forecasting any price rises in the short term.”
Peugeot/Citroen distributor Sime Darby NZ buys in euros. Not long ago the NZ dollar bought 67 euro cents, now it’s trading at 60 euro cents. Sime Darby general manager Simon Rose said: “It’s true, we have been through a strong period. Unfortunately, in recent months this has dropped back considerably.
“So while stocks are still at the right rate it’s logically the right time for consumers to take advantage of the situation before the currency sees changes to retail pricing.”
Skoda NZ general manager Greg Leet said the strain on the exchange rate would affect the car market. “We may see a number of manufacturers attempt to disguise price increases by returning to a RRP position instead of the commonly used ‘recommended special price’ approach.
“Skoda are conscious of maintaining consistency with our RRP and we will only look at putting up prices as a last resort,” he said.
Overall car sales in NZ after six months of 2015 were 6 per cent up on the same period last year. NZ Transport Agency figures show 65,574 cars and commercials had been registered in the first half, including a near-record 13,030 in June alone.
- Many other distributors declined to comment for this story