The price gap between new and used cars in New Zealand had narrowed since the introduction, earlier this year, of new frontal impact compliance rules for imported used vehicles, the head of one of the country’s oldest established vehicle retail groups said on Thursday, the Dominion Post reported.

According to the newspaper, Colonial Motor Company chairman John Wylie told the annual meeting in Wellington: “The current relative value of new vehicles has made retailing of higher-priced used vehicles much more difficult.”

But Wylie noted that the price increases did not appear to have had a lasting impact on the inflow of used imports, which continued to enter New Zealand in high numbers, the Dominion Post said.

According to the newspaper, Wylie said the company’s product range of Ford and Mazda vehicles had improved markedly in recent years and new model releases, including the Ford Falcon BA and the Ford Focus, were expected to boost sales.

“However, new car sales are dominated by fleet buyers, and that market has become more competitive with aggressive discounting,” Wylie said, according to the newspaper.

The Dominion Post said Wylie told the meeting that the cost structure of Colonial’s dealerships was not always geared for this form of selling, and changes were being made to better suit the market.

Colonial made a tax-paid profit of $NZ8.16 million for the year to June 30, up from $5.01 million the previous year, the Dominion Post said.

Wylie noted that, while provincial dealers had benefited from the rural economic upturn, trading in the large cities of Auckland and Wellington had been below expectations for about two years, the newspaper reported.

According to the Dominion Post, Wylie said that despite some doubts in recent weeks about the longevity of economic growth, New Zealand sales of new cars and light commercials were forecast to continue at current levels and overall Colonial Motor group sales and profitability for the first quarter were similar to last year.

Heavy truck sales were up on a year ago and forward orders were encouraging for the rest of the financial year. Tractor sales were down on the first quarter of last year but still significantly better than previous years, Wylie said, according to the Dominion Post.