It’s a buyer’s market as car sales slump

Blood on the showroom floor
It’s a buyer’s market as car sales slump

Plummeting car sales have led to a slump in prices.

Comparing March 2008 to March 2007, sales from the public to dealers are down nearly 21%, private sales are down by over 7%, while sales from dealers to the public are down nearly 20%. Sales from dealer to dealer have fallen nearly 28%, while registrations of used imports of have dropped nearly 18%.

[Source: LTNZ: all figures rounded]

Clive Matthew-Wilson, editor of the car buyer’s Dog & Lemon Guide, says that a combination of factors has hit vehicle sales.

“First, the economy is in decline, which has made buyers suddenly cautious. Second, the new vehicles on sale were ordered during boomtimes, so there’s now an oversupply. Third, although overall imports of Japanese secondhand vehicles are falling, a few dealers brought in vast numbers of vehicles in anticipation of tighter government controls on vehicle emissions. There are now too many vehicles chasing too few buyers.”

The recession has hit existing car owners as well. Optimistic car buyers who bought expensive vehicles during the economic boom are now suffering as the downturn begins to bite. Industry sources indicate a 100% increase in vehicle repossession since this time last year.

Online auction site TradeMe ­– which is now the dominant force in car sales – is the only retailer reporting growth, as more and more commercial car dealers use its website. In the twelve months including March 2008, around 170,000 vehicles were sold on TradeMe compared to 115,000 the previous year.
However, despite an increase in the number of new cars and upmarket second hand models offered on TradeMe, the median price remains at around $11,000. This suggests that while volumes are up, prices continue to soften.

New Zealand’s second largest auction house, – Turners – won’t reveal sales figures but says that lower prices have meant a major increase in bargain hunters on the auction floor.

Matthew-Wilson predicts a grim year for the motor industry: “Car prices traditionally go up with the sun and come down with the rain. We are heading into winter at a time of global uncertainty and local economic gloom. Couple this with cautious buyers and an oversupply of cars in the New Zealand market, and you’ve got a perfect recipe for disaster.”

“Right now there’s blood on the showroom floor and it’s inevitable that some car retailers are going to go to the wall this year. On a positive note, there are some real bargains out there at the moment.”

ENDS

© Scoop Media