Driving a hard bargain

If you've thinking of buying a new car now is the time to act. Further price hikes, reports ALASTAIR SLOANE, are on the way.

The prices of Japanese cars have risen by up to 3 per cent over the past few days and carmakers say further price hikes are inevitable if the New Zealand dollar continues to weaken against the yen.

But mainstream European carmakers, competing in some segments on comparatively level ground with the Japanese, say they will hold prices rises until 2000, unless there is a dramatic drop against the German deutschmark, French franc or Euro.

Mazda New Zealand yesterday increased its prices by up to 3 per cent, after similar October 1 price rises by Nissan, Toyota and Ford. Mitsubishi hiked the price of its vehicles by up to $900 last month.

Peter Aitken, the managing director of Mazda New Zealand, said there could be further increases in the New Year.

"This time last year it was 71 yen to the New Zealand dollar compared with the current level of 55. Given this fall of around 22 per cent, we can no longer continue to absorb the currency-driven increases in the cost of vehicles sourced from Japan," Aitken said.

Ford New Zealand, second behind new-vehicle market leader Toyota, hiked its Laser model by 3 per cent and also increased the prices of its Australian and British cars and commercials.

The Falcon, Fairlane, Mondeo and Transit models have gone up 1.5 per cent but the diesel Mondeo station wagon has dropped 1.5 per cent as Ford seeks to capitalise on petrol-price hikes and make the oil-burner more of an affordable option.

"The [motoring] industry can no longer absorb foreign exchange increases," said Ford managing director Nigel Wark. "Currency depreciation has undermined the initial drop in vehicle prices following the removal of tariffs last year.

"Vehicles will not get cheaper. Depending on the stability of the exchange rate over the remainder of the year, it is likely further price changes will be announced on January 1."

Ford's longtime rival Holden will hold prices on its Australian-built Commodores and European-sourced Astras and Vectras at present levels.

"We are not dependent to the same extent on Japanese-sourced volume, whether it comes out of Australia or Japan doesn't matter too much," said Holden managing director Don Bowden.

"The movement with the German deutschmark hasn't been as great, nor has the movement with the Aussie dollar.

"Indeed, if the Aussie dollar comes down one or two points there is no reason why I have to knee-jerk and increase prices, because the Aussie dollar rebounds pretty quickly as well.

"The only thing we might have to face up to is price increases on some of our light commercials out of Japan. But right at this point I don't have to do it."

The price hikes of Japanese-sourced vehicles has given popular European carmakers like Volkswagen, Peugeot and Citroen new impetus.

"There is no need to change our pricing, certainly for the balance of this year," said Richard Giltrap, managing director of Volkswagen importers European Motor Distributors.

"Unless there is a substantial change in the currency, we don't expect any change in our retail prices."

Giltrap said the increased price of Japanese cars would enhance the opportunities of all European carmakers in New Zealand.

"Obviously with Volkswagen the second largest European behind BMW, we have a lot to gain from it [Japanese price hike] because we are in that mainstream price range."

BMW marketing chief Mark Gilbert, coming off a record September sales month for the company, said he was "reasonably confident we can see out the year without increasing the price of BMW or Rover models."