New car mini sales boom

Press, 11 March 1983, Page 6

New car mini sales boom

New car dealers in Christchurch have experienced a mini sales boom since the 6 per cent devaluation was announced on Tuesday. People who have been thinking of buying a new car in the next year have taken the advice of local dealers who say they would be foolish not to do so now. Local dealers expect to see substantial increases in new car prices in the next fewmonths. Some expect the price of a new 1300 to 1600 cu cm car to rise about $3OOO during the year. Others put the price rise between $l5OO and $2OOO. an incrase of between 15 and 20 per cent on present prices. Although the devaluation prompted the mini boom in car sales, it is only one of several factors that will contribute towards higher new car prices. Dealers do not expect the flurry of activity to result in an improvement to the gloomy outlook of the motorvehicle industry, however. Once old stocks have been sold and cars are selling at the increased prices, they expect demand to slacken. The general manager of Amuri Motors. Mr David Brown, said that the situation was exactly the same as the devaluation in December. 1976. People were buying new cars in advance to avoid the price increases, but once the pre-devaluat ion stocks had been sold there would be resistance to the new prices. Mr Brown said he expected car prices to rise between $l5OO and $2500 in the next three or four months, depending on how long it took for the old stocks to be cleared. Several other factors would contribute to the price rise as well as the devaluation. The devaluation by itself would add between $5OO and $750 to the price of a

new car costing between $lO,OOO and $12,000. On top of this week's 6 per cent devaluation. the strengthening of the Japanese ven against the NewZealand dollar over the last few months would result in higher prices. The effect of the devaluation on prices would be compounded by a change made last June to the waxduty was charged on imported cars and c.k.d. car kits. This change meant that duty was paid on the cost of the'car when it was landed in New Zealand, not on the cost of buying it overseas. As a result of the devaluation, the duty payable on cars would be higher. The final factor that could affect car prices over the next few months was the general increase in costs that had built up during the price freeze. "Over all. it makes cars a lot more expensive. If all these factors are taken into account. I imagine that we would be talking about an increase of between 15 and 20 per cent in current car prices." Mr Brown said. Cars imported from Australia might not be hit so badly by the devaluation, although they would still cost more. But 70 per cent of the new cars in New Zealand were Japanese, and so the “vast majority" of cars would be affected. The chairman of the Canterbury branch of the MotorVehicle Dealers' Institute. Mr Alan O'Keefe, expects the increase to be higher. The price of the average new car between 1300 and 1600 cu cm would have increased about $2OOO this year because of such factors as the new duty charges and higher costs, he said. The 6 per cent devaluation would add a further $lOOO to that increase.

This meant the average new car might cost about $3OOO more than now. The sales manager of McLaren Motors. Mr John Jacobs, said that cars from countries other than Japan, such as Ford models, might have a slight edge over Japanese models. However. Ford planned to bring out a Japanese model later this year and would be hit by the devaluation. Mr Jacobs said there had been many sales of new cars since the' devaluation was announced on Tuesday and this would flow on to the used car market. When predevaluation stocks ran out. low-mileage, late-model cars would be at a premium. He did not expect the "mini boom" in car sales to last, however. Once stocks of cars at the old prices had run out. demand would drop. Car sales would balance out to expected levels over the year. Motor-cycle industry spokesmen expect to see a similar pattern in the sale of motor-cycles. The South Island supervisor of Blue Wing Honda. Mr Alan Oliver, said there had been a rush on stock since the devaluation was announced. As soon as old stock had been sold, there would be resistance to the higher prices. Mr Oliver said the price of motor-cycles would increase between $lOO and $3OO. depending on size. The new prices would come into effect as soon as the next shipment arrived, which would probably be within a month. However, he said that the situation "got worse" because of the sliding value of New Zealand currency compared with the Japanese yen. The dollar had slipped about 16 per cent since last October, which was happening "all the time". “It is depressing." he said.