Dealerships struggle to keep up as covid accelerates vehicle sales

Monday, 16 November 2020

As international travel restrictions continue to thwart holidaymakers’ plans, cashed-up drivers are splashing out on new vehicles, but high demand and fewer imports have left some dealers struggling to keep up.

Ton Deken, of Hareb Deken Motors in New Plymouth, said he had expected it to be “doom and gloom” when he returned to work post-lockdown and was contemplating an early retirement.

“We thought there’d be a recession and that no one would spend money and that business would slow down,” Deken said.

“But it was the complete opposite.”

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During the first couple of weeks back at their St Aubyn St site, Deken and his business partner, Mike Hareb, were surprised by the surge of business.

“It got really busy and then the next two months were just amazing.”

Sales were up on vehicles New Zealand-wide, Deken said. He attributed it to the pandemic shutting the country’s borders and people having extra cash due to not being able to head abroad.

But dealerships were now scrambling to get their hands on stock in order to keep up with demand while battling the skyrocketing prices on imports, Hareb added.

“In Japan prices have gone up because everyone’s trying to buy them in Japan and some dealers are paying a lot more,” he said.

“It’s hard to justify spending two grand more for a little car that you might land for 10 [thousand dollars] and now you’ve got to land them for 12.”

About half the 300,000 cars imported to New Zealand annually are used, and most of those vehicles come from Japan, Imported Motor Vehicle Industry Association chief executive David Vincen told Stuff earlier this month.

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

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

In South Taranaki, Paul Plumtree of Energy City Motors in Hāwera said trade was equally flat-out.

“We’re busy and we’re also battling the lack of stock.”

This time of year traditionally provided a run on vehicles, but Plumtree said the current situation had taken demand for used and new vehicles to a whole new level.

“We’re battling with demand.

“We’ve got lots of clients we’re trying to satisfy with their vehicles before Christmas, but we’re into January, February ordering now, which is really not what you want.”

And the demand is not just for four wheels.

Derek Hosking, owner of New Plymouth Motorcycle Centre, said he had been “massively affected” by a recent run on bikes.

He said demand was outstripping supply and as a result his Leach St showroom was virtually empty and he was losing sales.

“People have got money and we can’t supply bikes,” he said. “We're losing sales, definitely. It is affecting us, full stop.”

His customers are waiting anywhere up to three months for a motorcycle, whereas before coronavirus Hosking could phone New Zealand’s Suzuki distributor, order a bike, and because they’d have it in stock, it would be delivered within days.

“Now, I’m at the end of a waiting list.”

Hosking said Suzuki recently told him they had more than 900 motorcycles on back order to New Zealand dealers.

Motorcycles were built to order, Hosking explained, and in addition to manufacturers struggling to keep up with demand, supply has also been stymied by overseas factories, such as KTM, an Austrian motorcycle and sports car manufacturer, having had to previously halt production due to coronavirus.

And because Hosking wasn’t getting trades on new motorcycles, he said it was equally difficult for his customers to get their hands on a second-hand bike.

Usually he would have around 40 trade-ins for sale, but last month he was down to three.

“Our floor looks very empty.”