Second-hand car sellers say low stocks caused by Covid-19 are pushing up prices

Monday, 2 November 2020

Which will take out the Car of the Year title for 2020?

The global Covid-19 pandemic is pushing up prices on second-hand cars as dealers struggle to bring in stock.

Imported Motor Vehicle Industry Association chief executive David Vincen says low stocks coming out of the Japanese second-hand market is pushing up the premiums paid by dealers.

“Anecdotally, members are telling me if they sell cars from their existing stock, they are having to pay [the same price] to replace them.”

Second- hand car dealers say the global Covid-19 pandemic is pushing up prices on second hand cars.

The market for used cars was strong despite shadowy forecasts following the country’s lockdown, he said.

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Turners Auto Retail Division chief executive Greg Hedgepeth says higher premiums being paid by dealers and high demand in New Zealand means prices are up anywhere between 10 and 20 per cent.

Reduced production under coronavirus restrictions in Japan meant there were fewer new vehicles available in that market, and tough economic conditions meant people in Japan weren't selling their cars, Vincen said.

“They’re holding onto their cars while they wait for the economy to get back into full swing.”

About half the 300,000 cars imported to New Zealand annually are used, and most of those vehicles come from Japan, he said.

New Zealand was competing with more than 100 other counties for Japan’s used motors and coronavirus was putting the squeeze on supply, Vincen said.

Turners Auto Retail Division chief executive Greg Hedgepeth said there were about 20,000 fewer vehicles on the used market than typically at this time of year.

Recent requirements allowing only models with Electronic Stability Control systems also meant only a smaller pool of newer, more expensive models could be imported which had also increased prices.

The higher premiums being paid by dealers and high demand in New Zealand meant prices were up anywhere between 10 and 20 per cent, he said.

Coventry Cars owner Bruce Stewart has three sites in Lower Hutt. He agreed stock was becoming more expensive and harder to get.

In the last few months his profit margin per car had dropped, on average, $700 per vehicle.

He was having to work harder to secure stock placing up to 100 bids a day, sometimes without winning any lots, where at the same time last year he was placing about 30.

From his perspective costs were not yet being passed on to buyers because sellers wanted to remain competitive.

Stewart said demand had been as high as it had ever been. He put it down to people shifting their disposable income away from international travel.

Hedgepeth said low interest rates and wariness of public transport were also contributing factors. Sales were up about 10 per cent on last year, he said.

Vincen couldn’t see the situation changing any time soon and warned second-hand import prices were going to be “as cheap as they’re going to be for some time”.