No-Remittance Car Imports Show Little Change

Press, Volume CVI, Issue 31224, 23 November 1966, Page 1

No-Remittance Car Imports Show Little Change

Imports of cars under the no-remittance scheme are being maintained, in spite of restrictions in the Budget of June 16 last on the acquisition of overseas holdings.

The Customs Department in Wellington says that 4246 no-remittance licences were issued for the July-Sep-tember quarter, compared with 4345 for the same period last year.

Although prices for new cars are fixed by law, representatives of car firms in Christchurch concede that nearly-new cars are being sold above list prices. One man said prices were as much as £2OO more.

Keen competition for noremittance business, and the willingness of buyers to pay these prices were mentioned as factors.

But a spokesman for one franchise holder said the profit on a no-remittance deal involving a trade-in was not as high as persons imagined. He mentioned costs involved in selling and overhead, and said these reduced the profit on the new car. Chch. Figures Christchurch figures for norenrittance cars are 698 from July 1, 1966. compared with 844 for the same period last year. The total for the 196566 year was 2046, according to the Customs Department, and 2481 for the previous year.

One city firm reported that sales of no-remittance vehicles had remained steady. For the first six months of the year, 165 were sold, and at the end of September the figure was 330.

The representative of another franchise holder said that sales were much the same as last year’s, but he felt sure this was attributable mainly to an influx of highly competitive, new models. A firm handling another make of car reported a definite drop in the number of no-remittance deals, but indicated they were still a substantial part of its business. Extension?

A survey revealed mixed feelings towards the scheme. Mr R. K. Bray, president of the Canterbury branch of the New Zealand Retail Motor Trade Association, said the Government had been asked recently to extend the qualification date under the noremittance scheme.

At present this is January 1, 1965. The association, he said had asked that this become June 16 of this year. Asked for the association's

attitude towards the scheme, and the inflation of prices of nearly new cars, Mr Bray said every no-remittance car brought in was an additional car for the country. Because no-remittance cars continued to be imported, prices should come down. Asked for his reaction if the scheme should be abolished by the Government, Mr Bray said he could not comment. Share Deals

One effect of the last Budget was to prohibit any transaction involving Australian or other overseas shares, in exchange for New Zealand currency. This prohibited anyone selling overseas shares to finance a car from replacing these shares, using New Zealand funds. A Christchurch stockbroker said that this provision must limit no-remittance car sales. However, the Customs Department in Christchurch reports that between 50 and 60 per cent of no-remittance licence applications involve the use of overseas shares which qualify. Among funds which do qualify for use are legacies, lottery winnings, overseas earnings, the assets of immigrants, pensions or superannuation paid by overseas governments, and reparation moneys under the German war compensation scheme. And overseas shares acquired before January 1 last year also can be used. One motor firm representative considered the qualifying date for shares should be December 31, 1965. Another man, however, considered that the qualifying da + e system could be abolished, because currency restrictions effectively limited the number that could be brought into the country in any case. “Should Be Used” Another suggestion was that funds held overseas which have no chance of being brought back into New Zealand’s banking system should be used for the

scheme. An example given was the funds of persons who had gone to England for a holiday some years ago, had not used all their allocation, and had deposited the remainder in a bank there. Motor firms agree that noremittance sales are a substantial part of their business, but most feel that these sales must decline as the available funds for use are used up. A stockbroker’s comment on this was that the funds were rapidly drying up. One firm’s representative, who said he favoured an increase in the basic allocation, rather than a continuance of the no-remittance scheme, maintained that inflated prices brought about by competition for deals meant that the following example would occur: A 1965-model car, with a mileage of 8000 to 10,000 could be bought as a trade-in on a new vehicle on no-re-mittance at £l4OO. It could sell three to four months later at, say, £1440. Costs Involved

The cost in preparing the car for resale—paint, mechanical work, tyres, and overhead—could be £75 or more, he claimed. This could then mean a loss, which bad to come off the new-car profit. “The only people who are benefitting are those with overseas funds who go from one firm to another and are interested in how much money they get in their hand in addition to the new car,” the representative said. Questioned on the attitude of the firms involved, he said they must regard business on a cost-plus basis. Questioned further, he admitted that the profit margin on a deal involving a new car from basic allocation and a trade-in would be higher. “But we

must make if up in some way,” he added. The Price Control Division of the Industries and Commerce Department in Christchurch confirmed that prices for new cars are fixed by price control. Used-car prices were not fixed, said a spokesman. If there were complaints of profiteering, the department could take action, but this had to be proved. He said he was not aware of any cases of profiteering in nearly new cars in Christchurch.

The spokesman said the department would not take the initiative unless definite complaints had been made. It was difficult to establish profiteering, as all sorts of costs were involved.