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Revenge spending after international travel is blocked, and cashed up returning Kiwis, keep the new car sales market growing in July especially for SUV models. Tradies return for their big utes as well

Revenge spending after international travel is blocked, and cashed up returning Kiwis, keep the new car sales market growing in July especially for SUV models. Tradies return for their big utes as well

The new car sales results in July have turned in something of a surprise, with 8400 new passenger cars sold. That is +3.5% more than in July 2019.

For the first seven months of 2020, overall passenger new car sales are down -23% which makes the July result seem very strong.

An industry spokesperson said, "Returning cashed up kiwi’s and alternative spending to international travel is thought to be behind the July result. However, as the year progresses the economic outlook is for a continuing tightening market."

Another notable feature of these July sales is that SUV's reached a 77% market share in the month, by far the highest ever and accelerating the trend to SUV's and away from traditional car styles. The sedan is now a rarity. Only 1880 sedan sales were made in July 2020, a dramatic reduction from the 3000 in July 2017. In fact, the July 2020 level is the lowest July ever since records began in 1975 and the lowest of any month since before the pandemic started.

The strong July new car results also came without the benefit of strong sales into rental fleets. Less than 150 new cars were sold into rental fleets in July, an unusually low level.

Sales of imported used cars were probably strong too. In June, they totalled almost 12,000 and at year-ago levels. The July data will be released in a day or so.

The strength of sales carried on into the commercial vehicle sector, but dominated by light vehicles. 4063 units were sold in July, slightly more than in July 2019.

The Toyota RAV4 was the top selling model in July winning 794 sales. That was closely followed by tradie utes, the Ford Ranger (781) and the Toyota HiLux (627). The most popular regular sedan was the Toyota Corolla (230) - and then daylight.

Sales of alternate energy vehicles, while growing, are still only a minor segment, and are more noted by their relative absence than as a significant force. Legislative 'force' is going to have to be used to encourage the virtue of EVs, PHEVs and hybrids.

New vehicles sold

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Source: NZTA
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Source: NZTA
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Source: NZTA
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Source: NZTA
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Source: NZTA
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Source: NZTA
The 'Used car imports' chart will be drawn here.
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Source: NZTA
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Source: NZTA

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24 Comments

Why not name the source?

An industry spokesperson said, "Returning cashed up kiwi’s and alternative spending to international travel is thought to be behind the July result.......

People keep throwing these myths around of returning cashed up kiwis, with no evidence for it.
By comparison, the lack of international holidaying is very likely to be boosting local spending.

That's right. Cashed up Kiwis could very well be a fraction of those returning home since the job market for high-earners is quite stable in the popular OE destinations.

Kiwis took more than 3 million trips overseas in 2019 and spent a record amount that's more than 4% of NZ's GDP for comparison. All these pent-up savings and nowhere to go internationally for many more months to come could reshape how NZers spend on goods and services.

Yep, high earners have no need to return to NZ at all.
It is most likely to be those OE people who traditionally worked in pubs and went partying who will be returning.

Yeah like a waiter serving beers overseas suddenly arrives home and buys that JEEP for $80,000 in cash .

I dont believe it

It was David Crawford, MIA, and the quote was in his press release.

Too much international travel money now has no where to be used. People upgrading kitchens, buying houses and cars. Money spent locally.

I simply dont believe the numbers and I suspect a whole lot of these SUV and UTE "sales " are to the dealers, in terms of their franchise agreements with the manufacturers , so they are in effect 2020 registered 'demo " stock sold on very soft terms , and these vehicles will turn up in a few months time for sale as 2020 "demo models " discounted significantly .

As an aside , many small and medium enterprises took the wage subsidy , buying new SUV's and Utes which are a big commitment, is the last consideration right now for these SME's

Believe them Boatman. Dealer demonstrator numbers are in line with previous years - Private buyers are leading the increase in demand. Sales to private customers in July 2020 were up 21.9% over July 2019.

What the???? Why are people spending large sums of money on SUV's? Don't they read? The world is in a pandemic, Aussie/The US/UK is heading into a train wreck. NZ is different?? What happens when the music stops (subsidies, mortgage holidays)? Quite clearly the population thinks that it is business as usual. Or they believe the government is going to continue bailing people out. Or is there a Business Expense Cash Handout in the offing? Courtesy of the taxpayer?

My understanding is that double cab utes etc get an effective taxpayer subsidy, since they're not included in FBT etc. Hence the love affair with them

From Interest.co.nz's resident tax whiz:
https://baucher.tax/is-that-ute-really-exempt-from-fbt/

"... if a vehicle is available for private use other than from travel from home to work or incidental travel, then it is not a work-related vehicle, even if it is sign written, and it is therefore subject to FBT and the Inland Revenue concludes the exemption is quite, actually quite narrow. "

However (some of) the diesel and other costs may well be able to be claimed back.

Just like any private vehicle

Plus easy to load the groceries at the local Pak N Sav.

Probably people who had a bit in term deposits and with the drop in interest rates now think it is a good time to buy. Or maybe car finance rates are lower now too? Maybe not....
I would argue that if they had waited a year or two they would have paid less because vehicle prices may well drop as demand plummets.
The worst think about this is the number of diesel utes coming in. I really hate them due to their cancer causing particulate emissions.

The more people act like business as usual, the better chance we have of actually returning to business as usual!
When you encourage people to stop spending, it just reduces sales at businesses, who then have to reduce staff, and then your idea of a train wreck is pretty self fulfilling then.

Indeed. Recessions are mostly a psychological phenomenon - a vote of no-confidence in the economy.

Anyone who's been through an earthquake or flood event (Christchurch, Kaikoura, Northland, Coromandel) knows exactly why there's such a preference for high-ground-clearance, capable vehicles.....

Aye, Aye, & Aye again.

These must be bloody wealthy cashed -up returning Kiwis , because I happen to know you CANNOT get finance on a vehicle without a job or steady income .

I suspect there is some spin here , and frankly I dont believe these numbers .

Its well known that Toyota were struggling to sell that thirsty V6 Highlander and have given 100 away for a year for free........... FREE , and thats an 80k SUV .

Nor is it likely that immigrants were buying them , they are not issuing visas right now so that strong market is also dead .

You can be sure that these sales were not to Avis , Hertz or Budget , their SUV's are likely getting flat tyres and flat batteries from standing for 3 months

And , by not going on an overseas holiday does not mean you have a spare $80,000 lying around for that Jeep or Prado..............or even $50,000 lying around for a little Rav .

Turners Auctions alone has 530 SUV's for sale and another 120 Utes , there are thousands more for sale on Trade me.

And sometimes the manufacturers force the dealers to buy stock on a complicated floor financing arrangement ( often interest free ) , so the numbers can easily be fudged that way too .

These sales to dealers often turn up a few months later as "demo models "

Dupe

Dupe

I wonder how 2020 will compare to 2019 as a whole. Mightve been penny up demand this month as previous month's were so low. I guess that's another one of the stats to look forward to later in the year

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