Tauranga car sale companies are busier than ever post lockdown. Photo / Getty Images
Car registrations may have dropped in the year to June but Tauranga car sale companies have been busier than ever after the Covid-19 lockdown as people spend their overseas holiday savings on new cars instead.
Despite not being able to trade during the lockdown, those in the local car sales industry say Tauranga has "outperformed" the rest of the country in its recovery.
The latest Priority One and Infometrics Quarterly Economic Monitor for June 2020 showed the number of cars registered in Tauranga City dropped 14 per cent in the year to June.
Nationally, car sales dropped 19.3 per cent.
A total of 6448 cars were registered in Tauranga City in the year to June compared to its 10-year average of 6118.
The report said, nationally, car registrations had been on a downward path since the middle of last year but constraints on trading during lockdown contributed majorly to the drop in new and used cars.
But there were signs that money saved by households during lockdown was being spent on new cars.
However, that spending may only be temporary as job losses begin to accumulate, and consumers' and businesses' willingness to make major purchases could dry up.
"The additional impact of New Zealand's closed borders on demand for rental cars from the tourism industry and the outlook for the car market is far from rosy," the report says.
Ebbett Group Tauranga dealer principal Julian Clements said there was obviously going to be a decline in car sales with five weeks in lockdown and eight weeks of restrictive trading.
However, business post-lockdown had been busier than ever with "over a hundred" vehicle sales each month.
"I have never seen this level of trading in my 22 years in the industry," he said.
"Our staff have simply been run off their feet. Our workload from our sales and workshop has been out of this world."
Clements believed the rush was widely felt across the entire motor industry and said it was partly because people were spending money they had saved up for international travel.
"We have had numerous people buy cars from us saying they had saved money for travel and they decided to spend it on a new car."
However, he said the heat had started to come out of the market since Auckland returned to level 3 and the rest of the country was put in level 2.
Farmer Autovillage group managing director Mike Farmer said the car industry had been through significant growth in the past eight-to-10 years.
Experts never predicted the car market would get to the size it is currently.
"We are in a strong position."
Farmer said business had been strong since lockdown with about 270 new and used vehicles sold each month.
"Normally we sit at about 230-250. It has been higher.
"I always thought there would be some sort of rush but I had no idea it would be quite this big."
There would always be ups and downs in the car industry and his plan for the future was to continue business as usual and be agile if things changed.
"The biggest challenge facing the motor industry is lack of supply. We will come right in January but November and December we will see a lot of car yards relatively empty."
He believed the public understood that, which was why there was a rush to buy now.
Turners Group NZ Ltd chief executive officer Greg Hedgepeth said Tauranga's car market was out-performing the rest of the country in terms of its bounceback from lockdown.
"We have seen Tauranga rebound stronger than the rest of the country," he said.
"It has been busy out there. We have been having really strong months both nationally and in Tauranga. July was our best month we have had as a company."
Hedgepeth said people had saved a bit of money over lockdown as well as savings that were intended for overseas travel.
"In Tauranga, my take on it is that it has been going very well. It might be because of the population make-up.
"Their income streams are more resilient to redundancies or market movements and they have been a bit more confident in their spending."
He said there was also an element of people who used to buy new cars becoming more conservative and instead choosing to buy used, which he expected to continue.
"With used cars, it is more of a need than a want. I think we will see that market increase."
However, he said the new car market may have been held back from supply with fewer Japanese car imports arriving into the country.
Infometrics senior economist Brad Olsen said vehicle registrations provided some insights into how household spending was changing for larger purchases.
"The fall in car registrations in Tauranga were inevitable given New Zealand was locked down for 4.5 weeks, but the softer fall in Tauranga compared to the national average."
Olsen said monthly registrations have, however, bounced back to normal levels, which showed Tauranga households were continuing to make bigger purchases and reinforcing a cautious level of confidence locally.
"As household budgets continue to contract as New Zealanders look to keep some money in reserve, we expect that car purchases will increasingly focus on used cars which have a lower price point."
Priority One chief executive Nigel Tutt said new car registrations showed a strong resurgence from lockdown and some confidence.
"There's also some transfer of spend likely where people buy a car rather than go on an overseas holiday."
Tauranga Chamber of Commerce chief executive Matt Cowley said many businesses had benefited from extra spending since lockdown as people were unable to spend money or travel overseas.
"Consumer spending was like a coiled spring after lockdown, but it appears to be easing back to expected levels now.
"Government spending, mortgage deferrals and KiwiSaver holidays certainly helped fuel the strong spending since lockdown."
Cowley said there will likely be a few bumps in the road during spring that local businesses will need to navigate through, including the latest Covid-19 alert levels, general election uncertainties, and wage subsidies finishing.
"The local economy needs a good Christmas and summer spending season to help businesses get through what may be a tough winter next year."
Jefferies and family will enjoy a leg of lamb with summer sides.