New rules to push up used car prices
There’s been a lot of comment in the media recently on the probability of increased vehicle prices with the introduction of new emissions standards early next year. MTA believes the market changes. Consumers are the ultimate deciders of whether a product is purchased and a price increase could result in people delaying the purchase. Previous experience shows that as the price of goods or services increase, consumers often change their buying behaviour and hold off purchasing that particular item or service.
This story has been sourced from www.stuff.co.nz
Prices of some of New Zealand's most popular second-hand cars could rise by more than 50 percent next year as new emission standards lead to a "step change" in the cost of used imports, dealers say.
From January 1, Japanese imports will have to conform to the Japan 05 emissions test, which produce less pollution than the current standard, Japan 02. This means most cars manufactured before 2005 will be excluded.
Importers, who say the changes will hurt consumers, have published figures from a submission to Transport Minister Steven Joyce appealing for a delay.
Mr Joyce has refused and played down the impact of the changes.
The figures show a sharp price difference between the cost of some models that can be imported under the new rules, and those that do not comply. Based on retail prices, the oldest BMW 3 series which can be imported from next year costs $10,000, or 59 per cent, more than the 2004 model, which does not comply.
For the popular Subaru Legacy station wagon, the retail price of the oldest compliant models, manufactured in late 2003, is at least 17 per cent more than cars that will be excluded.
David Vinsen, chief executive of the Imported Motor Vehicle Dealers Association, said the figures showed a "step change" in the price of models that accounted for about 30 per cent of used imports. The rule changes would force up the price of cars already in New Zealand because no additional older stock would be added.
Mr Vinsen said used imports numbers could plunge by about 50 per cent next year, because consumers would not be willing to pay the new prices. Average used car prices could increase by "thousands of dollars".
Proponents of the changes say that though prices could increase next year, several factors could be behind it. New car sales fell during the recession, dropping 26 per cent between 2008 and 2009 and causing a shortage of quality new cars now.
More recently, New Zealand importers have had more competition when buying used cars in Japan from Chinese and Russian traders. The Japanese tsunami in March has also caused a collapse in production and destroyed thousands of existing vehicles, squeezing supply.
Mr Joyce said car sales were more aligned to the strength of the general economy than any rule changes, and the arguments being used by importers were the same as the last time new standards were introduced in 2008.
"On balance, it's unlikely to be as significant [an increase] as the used car guys say."
Transport ministry sources said the figures provided by Mr Vinsen were correct, but largely irrelevant. Fresh stocks of used imports accounted for only a tiny fraction of the 3.2 million cars on the road in New Zealand, so a fall should not hit prices materially because there was no shortage of supply.
"This isn't Cuba, and it isn't instantaneous. It assumes that dealers haven't been stockpiling, it assumes consumers only want a Subaru Legacy and won't be happy with some other station wagon, and it assumes that people have money in their pocket anyway," a source said.
AA spokesman Mark Stockdale said the impact of the changes could lead to higher prices, but the changes would mean safer, more efficient cars on the road. "There comes a time when we have to bite the bullet and upgrade our fleet."
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