In 15 years of economic reform, one of the world’s smallest markets has exchanged
a dozen tariff-protected car plants for some of the cheapest cars in the world.
Dave Moore reports from New Zealand.
With the same land area as Britain, a 20th of its population, petrol and diesel
at $NZ1.15 ($US0.46) and NZ84 cents a litre ($US0.33), and meaningful public
transport found only in its capital Wellington, New Zealand relies upon and
loves the motor car.
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Successive governments’ free-market policies have given new and used cars some
of the lowest prices anywhere, and New Zealand is consequently fast becoming
the world’s most motorised country.
It’s a sea-change. Once, securing a new car required overseas funds, friends
in the industry, independent wealth – or all three. Tariff removal, deregulation
of vehicle imports and the factoring of vehicles previously owned overseas,
principally Japan, into annual sales, has meant a threefold increase in annual
registrations.
However, against world trends, despite bargain prices and a small gain for
1999, New Zealand’s new car market has stagnated. When faced with the choice
of a new family car, a used SUV or a three year old luxury car for the same
price, buyers have tended to go for bulk rather than practicality. Thus small
car sales in particular have abated, while big car and 4X4 sales have burgeoned.
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New car sales show this size preference too. The top performers for 1999 were
Ford’s Falcon and Holden’s Commodore – much bigger vehicles than those US sedan
favourites the Toyota Camry, Honda Accord and Ford Taurus.
Of vehicles freshly registered in New Zealand, the 1999 sales split of 139,400
used imports against 72,232 new vehicles continued a well-established two to
one trend.
Well-equipped used imports have affected the aspirations of all car buyers.
To compete, new car distributors have bolstered specification levels. Air conditioning
(almost unheard of 15 years ago despite the country’s warm summers), airbags,
ABS and hefty warranties are now expected.
A subsidised completely knocked-down (CKD) industry built most of New Zealand’s
new cars 15 years ago. In the face of tariff reductions and used imports, 12
plants have now closed and every car sold in New Zealand is imported built-up.
The Ford, Honda, Mazda, Mitsubishi, Nissan and Toyota CKD assembly plants all
stopped production in 1998. Each appeared to be holding its own, until the government
decision that year to cut remaining tariffs overnight.
In a development unheard of in any other similar market, Toyota New Zealand
became the first new car distributor to join the used Japanese import phenomenon.
Toyota re-fettles its used imports in a factory once used to assemble its new
cars and sells them with a factory warranty. Its used operation has become so
successful that, if regarded as a franchise in its own right, it would be in
New Zealand’s top six. Honda has done the same. Its plant is now employed to
restore approved used Japanese Hondas for New Zealand distribution.
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“New Zealand is consequently fast becoming the world’s most motorised country” |
The initiative was long overdue. For the first few years of used imports, franchise
dealers turned their backs on owners bringing in ‘orphans’ (i.e. car models
never sold new in New Zealand) for spares, repairs and servicing, leaving them
to the people who sold the car.
New car distributors aren’t all matching Toyota and Honda, but they are at
least offering service and back-up, realising that the public at large paints
all Hondas, Mitsubishis or Toyotas with the same brush, whether or not they
were originally intended for export from Japan.
European cars are also imported used from Japan (including Nissan-built Volkswagen
Santanas), along with an increasing number from Singapore and Hong Kong. Audi,
BMW, Mercedes-Benz, Rover, Land Rover, Saab and Volvo cars punctuate the legions
of Japanese cars first owned overseas on New Zealand dealer forecourts. Even
BMW has set up its own import corridor for overseas-sourced used models, ensuring
it too has a slice of the action.
The country’s used import market is set to continue. Over the years the New
Zealand dollar’s volatile performance against the yen has caused shiploads of
used imports to lose millions of dollars of value in transit. It’s hurt and
even removed some players and consolidated others.
But well-backed and intuitive importers remain strong. Grasping electronic
trading with gusto and maintaining teams of vehicle stock buyers in Japan to
keep ahead of the market, they also secure grey-import new cars, though some
find that franchised distributors can be just as aggressive and often severely
undercut their prices.
Ireland, Pakistan, Russia and Britain all engage in grey and used car importation
from Japan and elsewhere. But the New Zealand experience is unique – to achieve
the same level of saturation in the UK, for instance, used imports would have
to land at the rate of 2.6 million units a year. Even large-scale manufacturing
and franchise sales operations would feel the squeeze against that kind of pressure.
While the New Zealand used import phenomenon has fulfilled the pent-up automotive
aspirations of every generation of driver in New Zealand during its 15 years
of existence, the current Labour government is the first to recognise the more
sinister hidden costs of such vehicles.
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The Ford Falcon – another top performer |
Most imports have already had a lifetime’s worth of wear in their country of
origin and pollute from the day they first turn a wheel in New Zealand. And,
by slowing-down new car sales, they have aged the New Zealand car fleet in general
to the extent that, while most developed nations’ fleets are gradually becoming
cleaner and safer thanks to the fresh technologies being built into them, New
Zealand’s is instead becoming dirtier, more crowded and less safe.
The country’s Land Transport Safety Authority has made the suggestion that
used imports be restricted to seven years old or younger, while at the same
time, each car should be individually tested for emissions – preferably before
it leaves Japan or any other country of origin.
This has generated mixed responses from dealers and used vehicle importers,
the most negative of which asks the question – ‘Where will our cheap stock come
from?’
The answer, of course is from trade-ins. Just as it was 15 years ago – before
the modern New Zealand phenomenon of merely selling used cars and topping-up
stock from ‘the boat’. And not from the buying, selling and dealing skills that
were so much part of the car industry’s coal face in the ‘bad old days’.
| Author: Dave Moore is motoring editor of the Press, a regional daily newspaper published in Christchurch, New Zealand |
