Used car prices could stay 'elevated' for three years

Sunday, 22 August 2021

New Zealand has not been able to import as many new and used cars in 2020 and 2021 as it has needed to replenish the national fleet.

Used car prices could stay elevated for up to three years, but the current national lockdown was unlikely to push prices much higher.

The numbers of new and used imported cars dived last year, driving prices up for buyers, data from car auction company Turners shows.

But while new and used car imports rebounded this year, Todd Hunter, Turners Automotive Group chief executive said it would take some time for prices to come down again.

“Overall, prices have increased by 10-15 per cent over the last 12 months,” Hunter said.

* Turners' new car subscription service a sign of changing times, CEO says

The Clean Car Discount scheme means there are now some truly decent electrified bargains around. Here are five of the best deals.

* Eight hundred more cars a week in Auckland? It's a myth

“Supply is still constrained,” Hunter said with SUVs and utes having seen the sharpest price rises.

Turners' Informetrics used care price index tracks movements in aggregate used car prices. Used car prices have spiked as a result of the Covid Pandemic, and are expected to stay elevated for the next three years.

“I think this is going to prevail for quite some time,” Hunter said.

But he said prices were stabilising.

New Zealand was dependent on the importation of new and used cars to replenish its car fleet.

Hunter said the numbers of cars being landed in New Zealand had risen.

The number of ex-overseas cars being registered had risen from 65,129 in 2020 to 75,301 in the first seven months of this year.

There were just 44,145 new car registrations in 2020, compared to 67,660 between January and July this year.

Part of the reason for the dive in imports was a drop in demand from the rental car industry, which has contracted due to the suspension of the foreign tourism market.

But the country was still playing catch-up on imports, and the number of used car sales remained down.

The number of dealer to public sales of used cars was down on the same month last year by nearly 21 per cent in June, and nearly 20 per cent in July, Turners’ figures show.

The number of sales between members of the public was down just over 14 per cent and just over 11 per cent in June and July.

Many people are holding onto their cars for longer, as prices of new and used cars remain elevated.

“People are hanging onto their cars for longer,” Hunter said.

Online auctions at Turners were continuing through the national lockdown, Hunter said.

“We are still running auctions because they can be done online. There are cars still being sold through the auction process,” Hunter said.

The drop in supply had seen some car dealers throwing the towel in, and shutting their businesses.

Around 100 car dealers had left the industry since the Covid pandemic struck, but the long-term trend has been downward.

At the end of 2017, there were just over 3500 registered car dealers.

The number of registered dealers could dip below 3000 later this year for the first time, if the trend continued.

The drop in car imports was also feeding through into fewer people scrapping older vehicles. In July this year just 3562 cars were deregistered compared to 4625 in July last year.

Prices for electric vehicles had risen.

Hunter said prices paid by importers in Japan for EVs had risen when the Government had introduced the electric vehicle subsidy scheme.