Toyota posts record NZ sales as buoyant economy, lower kiwi, boosts car market
By Tina Morrison
Oct. 3 (BusinessDesk) - Toyota New Zealand, the local unit of the Japanese car maker, had record sales last financial year and is on track to improve earnings this year as the company benefits from a buoyant local economy and a stronger New Zealand dollar.
New Zealand's top selling motor vehicle brand had record sales across all sectors of its business in the year ended March 31, including new cars, used cars, and parts and services, while its sister company Toyota Finance New Zealand achieved a record for new business written.
New car sales in New Zealand are headed for a record of more than 124,000 this calendar year, buoyed by stronger economic confidence and as a higher local currency pushes down prices. Toyota remains the biggest selling brand in New Zealand, with a 20 percent market share, according to Motor Industry Association figures for September released today.
"We have been in quite a buoyant economy and quite a buoyant motor vehicle market," Toyota NZ managing director Alistair Davis told BusinessDesk. "A rising tide affects all boats but it affects the biggest boat, which is Toyota, the most, so we have had an exceptionally strong set of results."
Palmerston North-based Toyota NZ posted a 7.5 percent rise in sales to $985.6 million in the year ended March 31, according to its 2014 annual report. Profit more than doubled to $5.7 million from $2.7 million the year earlier. Meanwhile, Auckland-based Toyota Finance NZ, which offers finance, leasing and insurance for the company's vehicles, achieved a record for new business written of $470 million.
Toyota is on track to post a higher profit in the current 2015 financial year as it benefits from continued strong local demand and a weaker yen, as the company sources about 60 percent of its products from Japan, Davis said. The 2014 calendar year is likely to be a sales record for the New Zealand car market, and for Toyota, he said.
The New Zealand car industry has benefited from a stronger local economy, as record high dairy prices prompted farmers to buy new trucks and other vehicles, he said. The local economy grew at a 3.5 percent annual rate in the second quarter and last month Reserve Bank governor Graeme Wheeler said he expected annual growth of 3.7 percent for calendar 2014.
While dairy prices have been declining this year from their record levels, the die is already cast, and forward orders suggest motor vehicle records will be broken, Davis said.
"I am expecting this to be an all-time sales record for Toyota and an all-time sales record for the car market," Davis said.
Net migration at the highest level in a decade is also helping car sales as is a stronger New Zealand dollar, which has seen the price of new cars fall by about 3.8 percent over the past 12 months, he said.
The used car market is also benefiting from lower prices and the replacement of the ageing fleet. The average age of cars in New Zealand of 19 years means many are now getting scrapped as they fail to pass warrants or are deemed not worth repairing, which drives up demand for other used cars, Davis said.
In September, sales of new vehicles jumped 16 percent to 11,840 from August levels, recording the strongest result for a September month since the Motor Industry Association started collecting records in 1975. Sales of new commercial vehicles were at a record 3,458 for the month, while new passenger vehicles had their strongest September since 1986, the association said.
Meanwhile sales of used imported cars have jumped 31 percent in the year through August to 83,698, compared with the same period a year earlier, according to the figures.
Toyota's Davis said while the 2016 financial year would probably still record solid growth, it was unlikely to be able to replicate the dramatic growth of the past couple of years.
"The car industry is having an extremely good time of it over the last year or so and probably for the next year, but I don't think there's going to be huge upward pressure from here on in."