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New vehicle sales: the best- and worst-case scenarios for 2020

on April 7 2020 | in Highlights, Industry news, Latest news | by | with Comments Off

The best-case scenario for new vehicle registrations in 2020? Around 60-65 per cent of the 154,479 logged by the NZ Transport Agency (NZTA) last year – or between 90,000 and 100,000 vehicles.

That’s a 30-40 per cent slump on 2019 numbers. It would be the biggest in a decade, after the 30 per cent year-on-year fall in 2008-2009 in the midst of the Global Financial Crisis (GFC).

Of course that’s if coronavirus somehow goes away over the next few months. If it doesn’t? Expect around 50-55 per cent of 2019 registrations, or between 77,000 and 85,000 new vehicles, in 2020.

Again, that’s only if New Zealand health authorities reign in the spread of coronavirus and the country opens for business under limited conditions.

In that scenario the new vehicle industry will deliver just 50,000 vehicles in the remaining eight months of 2020. Remember, NZTA will have already logged roughly 35,000 registrations at the end of this month.

Whatever happens, the affect of coronavirus will “endure for years,” says the head of one of New Zealand’s top 10 motoring nameplates. He along with two mainstream rivals agreed some dealerships – including those in their own networks – won’t survive this year.

The men spoke on condition they wouldn’t be named. They didn’t want to publicly hurt an industry already staring at job losses and fewer sales. Collectively, they agreed on the following:

“We’ve had years of growth and now there’s a sense of panic – coronavirus will have an impact for sure.

“It’s a low-profit industry, the motoring business. There are huge overheads – leases on premises, staff, service centres, equipment, stock levels.

‘There’s not a lot of cash about for many dealers. Much of it is reinvested in stock. They don’t sell the stock they buy from distributors, they don’t survive.

“The commerce people are saying they expect 30 per cent of businesses in New Zealand to close – the motoring industry is not exempt. It’s going to hurt like never before.”

“Business sales will be down, private sales will be down. There’s no Fieldays in June, typically a boom time for sales. Dealers will be discounting stock, liquidating stock.

“The general election will be a non-event. Agree with Jacinda Adern’s politics or not, she’s done a very good job as a leader in this crisis.”

One obvious indicator of the hurt is the almost non-existent sales of vehicles on short-term leases to rental companies. No tourists, no sales. “Rental cars have pretty much gone for this year.”

The big loser here is Toyota. The 30,140 new vehicles it registered with the NZTA in 2019 included 9009 rentals, or 30.0 per cent of its overall numbers. At the end of March 2019 it had registered 992 rentals. At the end of March 2020 it had logged 114.

Toyota’s rentals alone accounted for around 6 per cent of the 154,479 vehicles registered with the NZTA. The top 15 rental vehicles totalled 13,164 units, or around 9 per cent of overall numbers.

With rentals out of the picture, business and private sales inevitably falling away, a 30-35 per cent slump in registrations in 2020 is not a bubblehead prediction, even though bank money has never been cheaper for car buyers.

There is another factor in all of this, one raised by Melbourne-based ANZ Bank chief executive Shayne Elliot. Auckland-born Elliot predicted the coronavirus crisis could have lasting impacts on consumers’ attitudes to debt, the housing market, and how people do their banking.

“Australia in the future won’t look the same,” he told Australian audiences. “It won’t look the same because it will impact a whole generation of our customers, the way they think about technology, the way they think about borrowing, the way they think about employment, the way they think about frankly the capitalist system and democracy.”

He said the pandemic was crucially different to the 2008 global financial crisis and the Asian financial crisis of the late 1990s because it was affecting the way of life in Australia.

“For Australia in particular and New Zealand, all of those other crises were something we almost watched on television, and we experienced in some ways. With this one it’s fundamentally changing our way of life. That is I think psychologically massive compared to all the other ones,” he said.

“My concern is we’re only at the beginning of this thing, we’re in like week two really, I mean this is going to go on for a long time.”

 

 

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