Second-hand cars’ resale values halve in two years

Press, 11 May 1989, Page 14

Second-hand cars’ resale values halve in two years

PA Wellington The resale value of second-hand cars has probably halved in the last two years, motor dealers say. According to the Motor Vehicle Dealers’ Institute’s executive officer, Mr lan Pearson, the decline in the cost of new cars, with the reduction in excise duty and the large number of imported second-hand Japanese cars (21,000 in the last four months), have had a significant impact on the used car market. One dealer pointed to a low-mileage two-year-old Mitsubishi Mirage Geneva on his lot and said its first owner paid about $24,000 for it. When she traded it in she got $14,000. Another dealer, Mr Paul Calogaras, of Lower Hutt, said the market for older high mileage cars had also fallen dramatically. Many dealers just did not know what to do with some of the older

trade-ins. A 10-year-old car with well over 100,000 km on the clock might be worth only $5OO to $lOOO and they had to dispose of them by sending them to auctions. Mr Calogaras said many buyers opted for second-hand Japanese imports rather than the equivalent New Zealand model because they were better value for money — a better finish, more extras and lower mileage. This had had a dramatic impact on the market. With the volume of imports, there was now much more to choose from and the market was reaching a saturation point.

Another dealer, Mr John Williams, of Williams and Adams, said the market was tight. Some people were trying to buy new cars before the rise in GST, but there was a glut of second-hand cars. The fall in the market was

related to the growth of imports and the greater availability of new cars. Another factor was the drop in inflation, he said. Mr David Russell, of the Consumers’ Institute, said another factor affecting the market in the last two years had been the strengthening of the New Zealand dollar and the tighter economy.

New cars had come down in price and this had been reflected in the second-hand market as well.

The editor of the Automobile Association’s “Motorworld” magazine, Mr Ray Hocking, said loss of trade-in values could have increased motoring costs. Last year when it calculated motoring costs, the magazine assumed depreciation of about 12.5 per cent a year. That figure might now be more like 20 per cent, which could be translated into 2c to 3c more a kilometre for a modern vehicle doing a moderate mileage.