Ute sales surge forecast in New Zealand amid 'ute tax' axing

Monday, 30 October 2023

With the Clean Car Discount scheme – colloquially known by some in the motoring industry as the ‘ute tax’ – set to be culled by the end of the year, there could well be a ute sales boom in 2024.

The Clean Car Discount pinged high-emission vehicles with penalties of up to $6,900, in an attempt to shift consumer behaviour towards cleaner alternatives whilst also helping pay for rebates of up to $7,015 awarded to electric vehicles.

Although it has yet to be confirmed how the National Party’s new government will look, prime minister elect Christopher Luxon has pledged to axe the Clean Car Discount scheme by December 31 of this year.

It is expected that savvy ute dealers will be encouraging customers to hold their orders until the scheme is lifted and vehicles can be purchased without inheriting a Clean Car levy.

One marque expecting to see a solid rise in ute sales is Mitsubishi. The first of its all-new Tritons is already in the country, with the brand’s head of marketing Reece Congdon confirming that it will launch a national pre-sales campaign for the model later this week.

Despite the brand not yet confirming any local pricing or spec details, Congdon said that consumers are already flocking to their local dealerships wanting to put orders in for the all-new ute.

“Our dealers have been swamped with enquiry for it, which has been surprising given the indicators in the LCV [light commercial vehicle] market,” Congdon said.

Whilst sales of the Ford Ranger and Toyota Hilux have remained stable to strong throughout the Clean Car Discount ‘feebate’ era, sales of other utes like the Triton and Nissan Navara have dropped significantly.

Across the 15 months prior to the introduction of the Clean Car Discount ‘feebate’ scheme for utes and other high-emission vehicles, Mitsubishi registered on average 615.8 Triton utes per month. In the 18 months since the scheme was introduced (between April 2022 and September 2023), the Triton’s monthly registration average dropped to 263.3 utes per month.

Congdon believes that the new Triton is arriving at the perfect time.

“The ute market has obviously been exceptionally quiet over the last 6 months. At this stage it’s hard to know what part the ‘ute tax’ has played in that lack of demand and how much of it has been economic uncertainty,” Congdon said.

“However, from our point of view we’re launching the right truck at the exact right time, whatever demand there is in the market in 2024, we’re supremely confident that this truck will claw back a significant share of it.”

Motor Industry Association chief executive Aimee Wiley is amongst those expecting dealers and customers to delay their ute purchases until the scheme disappears. She believes the scheme has “achieved its intent”, but is too expensive to be sustainable.

“[…] Vehicles that attract CCD fees, consumers will hold off buying from now onwards until the CCD fees are gone. Some dealers have already commented that this pattern of push/pull demand started as soon as election results were known, and it presents both opportunity for some and considerable challenges for others,” Wiley said.

“The policy achieved its intent, but it is now costing big bucks. As at 30 September, $519.1m has been paid out in Rebates, whilst only $246.7m was collected in fees. For a scheme that was intended to be self-funding, the current $272.4m gap demonstrates just how powerful the feebate model is for driving consumer retail behaviour.

“With approx. $115m left available in the fund (from 1 October), by the time the policy is removed it will likely cost New Zealand the full $401.4m of government grants currently allocated.”

One thing that might stifle ute sales in 2024 is the Clean Car Standard. Annual CO2 targets for commercial vehicles are set to drop from 218.3g/km to 201.9g/km, with distributors that can’t meet these targets set to face fines. The National Party has pledged to keep the Clean Car Standard, although it plans to modify the scheme.

“I think it's fair to say distributors and their dealer networks will welcome less policy-driven retail market disruption,” Wiley added.

“It’s incredibly complex to manage the impacts of CCD changes, they effectively disrupt the market before and after each change. I am sure most in the industry will likely welcome a return to more stable and consistent trading conditions.”