An ageing fleet of 3m vehicles in New Zealand has created a “very pronounced bubble” of 16 to 18 year old cars which will soon need replacing, an outlook exciting dealership group Colonial Motor Company.
Colonial, whose roots can be traced back to early importation and distribution of Ford vehicles, today runs 12 primarily Ford and Mazda focused dealerships nationwide, and achieved a record after-tax profit of NZ$13.8m last year, according to a Fairfax News report.
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The company has enjoyed four years of successive profit increases, up 17% in the past financial year alone.
Chairman Jim Gibbons said at the annual general meeting new vehicle sales had consistently risen since 2009 but it was reasonable to consider how large they could grow. This year’s sales were tipped to be the highest of the last two decades, he said.
Motor Trade Association figures showed 7,272 vehicles were sold in September, up 10% on the same month last year. The market was described by the MTA as being “on fire”, and new commercial vehicle sales for the year to September were the highest since 1982.
Meanwhile, the Motor Industry Association has just announced October sales of 10,696 with new commercial vehicle volume up 33% and passenger car sales up 8.5% year on year.
Gibbons said it was helpful to assess the current state of the vehicle fleet to determine if the growth was sustainable.
Passenger vehicles currently had an average age of 13.8 years, but there was a “very pronounced bubble” of cars aged between 16 and 18. “Clearly there is a large replacement market out there. Our fleet of 3m vehicles is getting older.”
As such, CMC was confident sales would continue to grow as more and more vehicles needed to be replaced.
Sales were already ahead during the first three months of the current financial year, versus the same period last year.
“We have had a record year on top of last year’s record year.”
CMC also has dealerships selling trucks and tractors, from which sales of truck brands DAF and Kenworth had helped haul the company’s result up.
Bumper demand for heavy trucks, light commercial vehicles and SUVs had bolstered CMC’s trading revenue by 13% to $612.5m for the year to 30 June.
