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Hefty rises in fuel and other living costs have forced car dealers to slash prices on some large models after a 20 per cent slump in used-vehicle sales.
Dealers report dramatic price reductions on fuel-hungry cars, but say sales of smaller vehicles and "performance" models popular with young drivers are holding up.
"The boy-racer cars are still moving the young guys don't know the reality of higher fuel prices," said leading vehicle importer Peter Johnston.
"But we are finding six-cylinder and V8 sales have slowed dramatically. Some V8 prices have dropped at least 20 per cent in the past six months it's a buyers' market."
Independent Motor Vehicle Dealers Association chief David Vinsen said the used-car market was continuing to slow in a tightening economy, meaning dealers had to adjust their prices if they wanted "to move metal and put money in the bank".
"Interest rates, petrol prices, food prices and cost-price inflation generally are militating against discretionary-income spending," he said.
People were tending to buy vehicles onlu to meet genuine transport needs, such as commuting to a new job, and were struggling to pay cash to avoid hire-purchase arrangements.
Mr Vinsen said car-buyers were considering fuel economy far more seriously than they once did.
"People have an understanding now that fuel prices are only going to go one way".
National sales slumped 14 per cent last month compared with March last year, down to 77,991 used cars traded. Land Transport NZ figures obtained by the Dog and Lemon Guide show that although private sales were down by only 7 per cent, dealers sold 20 per cent fewer cars to the public.
The guide's editor, Clive Matthew-Wilson, predicted a grim winter for dealers amid global uncertainty and local economic gloom.
"Couple this with cautious buyers and an over-supply of cars in the New Zealand market and you've got a perfect recipe for disaster," he said. "On a positive note, there are some real bargains out there."
A flood of used-vehicle imports last year, when dealers stocked up ahead of new emission standards which have stopped them from bringing in cars made before 2000, has abated.
Last month, 8568 newly imported used cars were sold, the lowest figure since October 2000.
Sales of 6364 new cars were 3.1 per cent higher than in February, but 6.3 per cent down on March last year, although the Motor Industry Association says an early Easter meant fewer selling days than usual last month.
Turners Auctions said pressure was on dealers to cut prices to "liquidate" a glut of imported cars. It sold double its usual number of repossessed vehicles in the year to March.
"More than 700 repossessed vehicles have gone under the hammer so far this year, which is an indication Kiwis who may have over-extended themselves are beginning to feel the pinch," said marketing general manager Todd Hunter.
But he said rising petrol prices were continuing to drive up sales of smaller cars, forcing dealers to drop their prices for larger vehicles.
The average price for vehicles sold at auction in the 2000cc to 3000cc range fell 3.3 per cent in the first three months of this year compared with the previous quarter-year, to $7243, he said.
The average price for even larger vehicles fell 4.9 per cent to $10,435.
But average prices for smaller cars rose by up to 2.5 per cent.
Vehicles with engines smaller than 2100cc accounted for 62 per cent of Turner's sales in the three months to March, up from 59 per cent for the previous quarter-year.
