Traffic jam on the wharves

By JIM EAGLES business editor

The number of vehicles on the roads is rising 900 a day as New Zealanders rush to take advantage of reduced prices, hot competition and a booming economy.

Last month, 27,543 new and used imported cars and trucks were registered for the first time - 17.5 per cent more than in October last year.

Motor Trade Association chief executive Steve Downes said the growth in sales had been phenomenal.

"The motor industry didn't believe it could last," he said. "But it has, and it doesn't look as though it's stopping."

Downes said the influx of cars was partly due to migration - "if you've got 70,000 people a year moving here, then that's a lot of cars" - and partly because the economy was booming.

The MTA says about 150,000 old cars were crushed in the past year.

But a lot of extra cars were coming into New Zealand, Downes said.

"It's no great surprise that the roads around Auckland are getting clogged."

The vehicle influx is having an effect on the economy as well as the roads.

Overseas trade figures show that in the 12 months to the end of September, New Zealand imported more than $5 billion worth of vehicles, parts and accessories.

In September, vehicle imports were worth $489 million - 20 per cent more than in September last year, 54 per cent more than September 2001 and 91 per cent more than September 2000.

The main reason for the increase in September was the arrival of 8584 new cars, the highest monthly tally on record.

But used car imports also continue to boom.

Colonial Motor Company chairman John Wylie told his company's annual meeting this month that imports of used Japanese cars had "gone berserk'.

Wylie said 140,000 to 160,000 used cars a year were being imported, and the market had no idea when the trade would peak.

The big spending on vehicle imports was a significant factor in the country having its highest September trade deficit in 20 years, $721 million.

The bill for imported cars - new and used - has gone from $2.5 million in the year to the end of September 2001, to $3 billion last year and $3.3 billion this year.

Deutsche Bank senior economist Darren Gibbs said this increase of nearly a third in two years "explains a reasonably significant part of the deteriorating trade balance".

Booming car sales are also affecting retail spending figures.

Motor vehicle sales were one of the biggest contributors to the record retail sales figures recorded in the September quarter.

Motor retailers reported sales totalling just under $2 billion during the three months, a 3 per cent increase over the previous quarter.

In September, sales totalled $658 million, 6.2 per cent higher than a year previously.

That increase in the value of sales came despite falling car prices.

Downes said the MTA believed New Zealand had an over-supply of cars, and dealer's margins were being squeezed as a result.

"With the dollar continuing to rise and new cars continuing to pour in the consumer is getting a better product at a better price."

The Colonial Motor Company's Wylie agreed saying the high level of used car imports was putting pressure on prices.

"The New Zealand public gets an incredible deal on new cars now."

Statistics NZ's figures show prices fell by 1.5 per cent in the September quarter, largely because of a 3.8 per cent decline in used car prices.

Car registrations - which includes second-hand imports - this year are 14 per cent higher than at the same time last year.

In the first 10 months 190,305 cars were registered compared with 166,884 for the same period last year.

For the whole of last year, 200,504 cars were registered.

This year, the total looks like being about 230,000.

Gibbs said car sales had relatively little economic impact, as they were all imported, but were a useful indicator of how the economy was going.