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Who’s telling porkies about car sales?


By Jenny Ruth

Nov. 27 (BusinessDesk) - Turners Automotive Group says it had a dreadful October and, that if those conditions continue, its annual pre-tax profit could be down 5-10 percent on its guidance.

The downturn has been bigger in Auckland and “we think it’s a cost of living pressure,” says chief executive Todd Hunter.

Rising fuel costs, in particular, haven’t helped.

Turners sells used cars and it says sales of imported used cars into New Zealand fell 8.6 percent in the six months ended September while sales of imports into Auckland fell 12 percent.

Hunter says that trend has continued through October and has been exacerbated by stink bug mitigation – from Sept. 1, all used vehicle imports have had to be treated to kill any bugs, adding $250 to each vehicle’s landing costs – and by the compulsory Takata airbag recall affecting 50,000 vehicles.

But the Motor Industry Association, which represents sellers of new cars, says October was the strongest ever and the strongest of any month for new car registrations.

There were 16,670 registrations in October, easily beating the previous record struck in June 2017 when 15,985 vehicles were registered.

So what gives? How can sales of new cars be booming at the same time as the bottom falls out of the second-hand market? Have New Zealanders given up their addiction to buying used cars and choosing to buy new?

“Someone has to ask the question how many were pre-registered,” Hunter said. Actual sales aren’t measured, only registrations.

New vehicle franchise owners have to meet targets to collect rebates from the manufacturers and they’re pre-registering cars at record levels, but it’s dealers buying the cars, not end-users, he said.

The dealers then sell these cars off their own car yards.

“The feedback we’re getting is some of these new car franchises are pre-registering up to 70 percent of their reported sales,” Hunter said.

But MIA chief executive David Crawford rubbishes this argument.

“Every now and again, people who are on the fringes of the new car market say that,” Crawford said.

October and November are the months when car rental companies renew their fleets and that’s one reason the October numbers were so strong, he said.

As for Hunter’s comment about dealers pre-registering up to 70 percent of reported sales, “he’s mis-informed. If it was at that level, the new car market would be falling over. I don’t think it’s anywhere near that number,” Crawford said.

Of course, there's a natural limit on how many pre-registrations any individual dealer can chalk up - there's a limit to how many cars their yards can take.

In August, Automotive News said pre-registrations in the first six months of calendar 2018 averaged more than 21 percent and that the registrations data could make the industry look healthier than it actually is.

It said that of the 1,020 BMW's on the New Zealand Transport Agency's books at the end of June, nearly 59 percent were first registered by either BMW's head office of its dealers. Among BMW's luxury rivals, 51 percent of Volvo's were pre-registered and Lexus nearly 51 percent.

In the wider market, 28 percent of Hyundai's, nearly 23 percent of Ford's and just 12.8 percent of Toyota's were pre-registered.

(BusinessDesk)

ends

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