Car sales fall, but price war inlikely

Press, 31 August 1989, Page 14

Car sales fall, but price war inlikely

PA Wellington A slump in new car sales means competition between manufacturers will increase but will fall short of a price war, industry spokesmen say. New car sales have dropped in July and August after rising 42 per cent in the first six months of this year, compared with the same period last year. The slump casts doubt on the strength of the economic recovery so far this year. It is now thought that many fleet-owners have completed their buying for the year, catching the rash of new models in ! February and price cuts as a result of lower excise duty from March 21. Private buyers would also have bought in advance of the July 1 rise in GST, industry spokesmen said. Some of the boom in sales would also have been a catch-up by companies which had deferred renewing their fleets for a further year. Manufacturers concede that sales in the second half of the year are likely to be weaker, but they are relying on the first-half boom to carry them through without the need for price wars to clear stock. They are tipping more discounting in prices and more promotions, but some also believe sales will pick up as a result of post-Budget optimism and slightly lower interest

rates. “Most of the major firms will look at the whole year and won’t panic, but some will be forced to panic by worse-than-usual market performance,” a Mitsubishi spokesman, Mr Rob Greenfield, said. “It’s not a doom situation for the next six months, just back to normal.” New car registrations totalled 46,957 in the six months to June, compared with 33,156 to June last year and 71,271 in the whole of last year. After hitting a peak of 9694 in June, registrations fell to 5350 in July, the lowest monthly tally this year. Registration figures for August are not due to be released for another month, but manufacturers say their sales figures are just coming close to July’s levels. “They haven’t been quite as strong up to now, but we tend to find information on sales from our dealers picks up in the last couple of days. That is happening now,” said Toyota’s planning manager, Mr Ben White. Orders for imports of new cars — placed several weeks before the expected arrival on the wharves — have continued strongly up to June. That suggests stocks might be building up in car yards throughout the country, forcing discounting and margin-cutting.