Skip To Content Skip To Menu

fairview motors

Dealerships doing OK

After the pandemic lockdown, there’s some cautious optimism within the dealership sector. But most are waiting to see how their July and August figures shape up before letting out their breath.

prescotts top
There's a sense of relief thanks to better than expected sales in the past two months and huge demands on their workshops. The dire economic predictions early in the crisis had led many to believe disaster was imminent.

While sales took a dive to the floor in March and April, the May figures showed a recovery and the new vehicle sales for June are even better. Overall, the market for new vehicle sales was down by about 32 percent in May but made gains in June - down just 17 percent less than the previous June. Used import registrations were down 21 percent in May but in June, they recovered and were up 7 percent on 2019.

However, no one is expecting to return to pre-Covid numbers and many dealerships are restructuring or making tweaks to gain efficiencies.

dealership Steve Prangnell
Toyota ‘strong’

New registrations for Toyota vehicles were down by 24 percent in May, compared with a 36 percent drop for VW and 45 percent for Mazda. Kia was down by just 5 percent, thanks to the popularity of its new model Seltos.

Toyota New Zealand’s General Manager of used vehicles, logistics and franchise development Steve Pragnell says, “Our dealerships have returned strongly and we are running close to pre-Covid levels. We have got a very full order book and new orders are running at about 75 percent of the last quarter, pre-Covid. We are trying to stimulate demand, but it’s too early to tell if we are succeeding.” He says the next few months of sales will reveal what the sector can expect for the rest of the year.

In the face of the pandemic, Steve says Toyota New Zealand managed to negotiate a reduction on its orders for May, June and July, including cancelling some vehicles destined for rental fleets. He is not expecting any supply issues and says all forward orders are confirmed.

Parts are also not likely to be an issue, with no shortages reported among the global suppliers. “We had 161 40-foot containers arrive during lockdown, which had to be devanned once we reached Level 3. Typically we would do 8-12 containers a week so we were very busy.” He says the parts supply service rate is running at 98 percent – well over its target of 95.5 percent to be despatched within one day, depending on the order.

Sale of rental fleets

There has been concern that with the slump in tourism, rental car fleets may dump their unwanted vehicles on the used car market. However, there are no signs of this happening. Some are coming up for sale and are being bought by dealers, but not in large enough numbers to make any widespread price impact. One dealer noted that it was in the rental car companies’ best interests to release their vehicles slowly to be sure of getting the best prices. Another believed finance companies were holding rental companies to their usual buy-back or lease agreements, making it difficult for them to sell early.

Matthew Foot3
Finding efficiencies

Wellington dealership, Brendan Foot, took decisive action during lockdown to ensure the company was in the best possible shape to cope with the Covid-19 fall-out.

“We did a lot of financial modelling looking at different scenarios; if we were 75 percent down, 50 percent down or 25 percent down in sales.

We made decisions on a restructure and adjusted the workforce when we reopened,” says Dealer Principal Matthew Foot.

The company also accelerated its project to provide a fully digital online sales process. “Customers can now view a vehicle online, arrange a test drive if they want one, request any extras, do all the paperwork including finance online, and book the delivery. We think we are one of the first in the country to be offering this option, initially, for used vehicles purchases.”

Matthew says customers are doing more targeted purchasing online. “Our website traffic went up by over 200 percent during and after lockdown, and we are getting a massive increase in digital enquiries.” In June, Brendan Foot advertised 10 ex-rental cars for sale on its website and had over 4,000 views in four and a half hours.

In May and June, the company had strong sales and the workshops were fully booked. Matthew has had to re-hire two staff and run the workshops on extended hours to manage the backlog and ongoing demand.

“But we are suspicious sales are going to flatten out and are preparing ourselves for the next phase of the cycle.”

Matthew sees the situation as an opportunity for the business to look for ways to become more efficient and target new markets.

He expects buying patterns to completely change. “Overseas, there’s been a jump in millennials getting their licences for the first time and buying their first car because they want to avoid using public transport. Other people are not so keen to fly – I’ve sold two high-end cars to customers who want to drive rather than fly around the country. Then there are those who are swapping a planned overseas holiday for a new car and a family holiday in New Zealand. Road trips will be more popular. People will also upsize or downsize, depending on what’s happening with their jobs. However, a desire to use their own form of transport has re-emerged.”

While tourist areas such as Queenstown, and the West Coast will take a particularly hard hit from the loss of tourism, Matthew believes the Wellington region may dodge the worst impacts because so many people’s livelihoods are linked with the Government.

Jim Gibbons 5
Sales better than predictions

Colonial Motor Company Chair, Jim Gibbons, says the brands have been very good about balancing the impacts of the pandemic. “Different companies have had different responses but their reaction is not comparable to the GFC.” During the GFC the vehicle manufacturers were much stricter with the supply pipeline but he says there has been a lot more flexibility in 2020. “We may have been helped by the cut in overseas production.”

“Meanwhile, sales have been better than was predicted in the early months of the pandemic. However, the current activity is not necessarily a guide to the mid-term future. The normal seasonal patterns have been affected.” In general, Jim says, the company’s provincial dealerships are performing better than those in cities and they are adapting to the new level of activity. “From this point on, the real issue is consumer confidence.”

Waikato doing better than many

While national sales dropped by around 30 percent in May, Waikato figures were much better, showing a 15 percent decline.

Managing Director of Fairview Motors, Dennis Sexton says, “Waikato is very fortunate. We have a strong rural economy, ports, shovel-ready infrastructure projects, roads, a large aluminium extrusion company and other diversity to keep money circulating.”

Like others, he believes the full picture has yet to be revealed. “By the time the second round of the wage subsidy ends, we’ll know more.”

While Fairview’s new car sales were down slightly in May, their used car numbers were the same as last year.

“People are walking in ready to buy, they’re not tyre-kicking.” He says both commercial and private sales are strong, the workshops are fully booked and staff have responded “magnificently” to the situation.

“I’m happy with where we are at – there are a lot of cars on the road and as long as they break down and people keep driving, our business will continue.”