NZ used car prices to rise as Japan gets back on road

The price of used Japanese cars will rise because of the number of vehicles lost and damaged in the earthquake, motor industry insiders say.

Graeme Macdonald, of Henderson used vehicle importer Croydon Wholesalers, said the company would soon face increased competition from the Japanese domestic market.

"We've got a large number of vehicles that have been taken out of the Japanese supply chain by this disaster and a large number of vehicles that need to be replaced."

Consumers in Japan had become more cost-conscious in the past five to six years and had developed a taste for second-hand vehicles, he said.

"As replacement for these [damaged or lost] vehicles needs to be found from somewhere, that puts added pressure on the fleet of used vehicles that are usually cascading into the auction system in Japan. [That will] put added pressure from domestic buyers against Kiwis to purchase those same vehicles."

Macdonald said that would put upward pressure on prices that were already rising before the disaster.

Steve Prangnell, Toyota New Zealand's general manager for sales and marketing, said the price of used vehicles in Japan would "go through the roof" when Japanese domestic demand for replacement cars began.

The Toyota plant that manufactures Corolla and Yaris models for the New Zealand market is in hard-hit Iwate Prefecture, on the northeast coast of Honshu island.

"There are no reports coming out of Iwate at the moment," said Prangnell. "I very much doubt that the plant in Iwate is going to go again for a while, but that's just conjecture on our part."

All Toyota's 12 plants in Japan were offline, awaiting reassessment today.

The company said yesterday that it might lose output of up to 40,000 vehicles as a result of the disaster.

Toyota's profit will be cut by 6 billion for each day of lost operations in Japan, Goldman Sachs estimates.

Prangnell said, "We typically carry one and a half to two months' stock on the ground for New Zealand sales. The immediate impact isn't going to be too bad - it's really what happens in the next two to three weeks that matters to us."

Honda New Zealand's head of marketing, Graeme Meyer, said that the carmaker shut down its six Japanese plants on Monday until March 20.

But he said Honda's operation in this country was well stocked with vehicles at present.

- Additional reporting Bloomberg