Record February belies continued shortages

Straight off the ship and into driveways – that’s the pattern showing in a big month of new vehicle registrations.

Toyota Hilux kicked dirt into Ford Ranger’s face in February

LAST MONTH’s record run of new vehicle sales isn’t a sign that New Zealand’s distributors are overcoming a severe shortage of stock to sell – it’s because every vehicle arriving here is being snapped up by waiting customers.

There are still big backlogs of customer orders, and as a result new vehicle stock reserves are still less than 50 percent of normal, says the Motor Industry Association.

“Essentially all new vehicle arrivals are going straight from the wharves to the distributors to the dealerships to the customers,” says MIA chief executive officer David Crawford.

“February’s new vehicle sales figure of 12,488 registrations was the strongest for the month of February ever, but it could have been even better - New Zealand is still facing a cocktail of supply constraints.”

These include some factories remaining on go-slow due to issues surrounding the Covid-19 pandemic, shortages of various vehicle parts, and big delays in getting new vehicles shipped to New Zealand.

Despite those issues, February was still a very healthy month for new vehicle sales. They were 9.2 percent up on February last year, and year-to-date the market is up 7.6 percent or 1865 units on the opening two months of 2020.

If the trend continues, March and April will be a welcome change from the same months of last year when sales fell to almost nil thanks to the effects of Covid-19 – the national Level 4 lockdown here, and the lack of vehicle manufacturing internationally.

A feature of the MIA figures for February were some significant changes in what vehicles are the most popular.

Mitsubishi Motors New Zealand’s runout programme for Outlander seems to be going well.

The Toyota Hilux cleaned out arch-rival Ford Ranger to lead the commercial sales race, its 804 sales taking a commanding 21 percent market share, well ahead of Ranger’s 15 percent.

And in the SUV/passenger vehicle segment it was the Mitsubishi Outlander that grabbed top spot from the Mazda CX-5 with 595 registrations – helped along by 133 sales to a fast-recovering rental car industry.

Compact SUVs strengthened their lead over from medium SUVs as the most popular vehicle type. Led by such product as Kia Seltos and Sportage, Mitsubishi ASX and Toyota C-HR, the segment grabbed a 22 percent market share with 2778 registrations. Year-to-date the compact SUVs now hold a 24 percent share, well ahead of the 19 percent held by the medium SUVs.

Toyota remains the market leader for all new vehicle sales with a 16 percent share, but Mitsubishi has improved to 13 percent thanks largely to continued popularity of its Outlander and ASX models, and Triton ute. Ford and Kia share third spot with 8 percent market shares.

“The February market has benefitted from recent stock arrivals and a resilient local economy where New Zealanders continue to spend on new vehicles what might otherwise be spent on international travel,” says Crawford.

The top 10 sellers for February: Toyota Hilux, 804 registrations; Mitsubishi Outlander, 595; Ford Ranger, 549; Mitsubishi Triton, 474; Kia Sportage, 370; Kia Seltos, 364; Mazda CX-5, 360; Mitsubishi ASX, 319; Suzuki Swift, 311; Toyota RAV4, 284.

New car market hammered in coronavirus condition

The new vehicle industry took a big hit in 2020, registrations falling almost by a quarter.

Toyota’s RAV4 was the top-selling passenger model for the year.

NEW passenger and light commercial registrations for 2020 were down 22.7 percent on the 2019 tally, a publication specialising in industry news is reporting.

That means overall registrations dropped a massive 35,121 units to 119,620 for the year, says Autotalk.co.nz, citing data it has sourced from New Zealand Transport Agency. 

Report author Richard Edwards says this translates into a sobering impact for distributors and their dealers.

“Assuming an average of $3000 in margin, finance and insurance commissions and accessory sales per vehicle, those figures represent in excess of $100 million in turnover lost to the dealer segment of the trade alone for the year.”

The report has posted ahead of official notification from the Motor Industry Association, which generally posts monthly and annual outcomes on behalf of new vehicle distributors.

Autotalk.co.nz’s  report https://autotalk.co.nz/news/new-market-down-23-for-2020 says passenger registrations were down 23.3 percent for the year to 80,860 units, while commercial registrations fell 22.7 percent to around 39,000 units.

Toyota topped the passenger car segment with 12,795 registrations, followed by Kia on 7985, Mitsubishi on 6479, Mazda on 6289 and Suzuki on 5935.

The most popular passenger car last year was the Toyota RAV4 with 5350 registrations, followed by two Kias, the Sportage (2916) and Seltos (2611).

The Toyota Corolla, a previous pace-setter in previous years, was next with 2570; presumably a victim of the rental car business having collapsed when New Zealand was hit by the global coronavirus crisis.

In commercials, Ford was the top brand on 9124 vehicles, followed by Toyota on 8004 units, Mitsubishi on 3842, Holden – which ceased existence on December 31 - on 2533 and Nissan on 2376.

The Ford Ranger was the top commercial model for the year, and top vehicle overall, with a count of 7986 vehicles. The Toyota Hilux placed second, with 5808 units, followed by the Mitsubishi Triton (3694), Holden Colorado (2495) and Nissan Navara (2376).

The annual tallies arrived once December registration data was delivered; that showed 5572 vehicles being registered, a 31.75 percent drop on the same month in 2019. The Toyota RAV4 was the month’s top passenger model, with 387 registrations, and the Ranger the top commercial, and top-selling single model, with 662 units registered.

TNZ still market leader, but Covid hurt

The swift curtailment of rental car business, where it dominated, certainly affected the country’s biggest seller of new cars and light commercial vehicles.

MARKET leader Toyota New Zealand has acknowledged a tough coronavirus-smashed 2020 market condition delivered a sobering 31 percent fall in annual volume, though it sees increased private consumer interest during this period as a positive.

 In comment today, the Palmerston North-centred distributor says the depleted return was mostly due to the impacts of the international coronavirus calamity on both rental fleet sales due to the immediate halt of international tourism through the closure of borders, and the local economy.

TNZ has not shared exactly how many car and light and commercial vehicle registrations it achieved in 2020 and that figure might not come out until a full data set of registrations is released by Government’s Land Transport agency next week.

However a 31 percent fall is likely the lowest it has achieved in years – though not a market position-altering knockout, in that the make maintained market leadership for a 32nd consecutive year.

It says it achieved an 18.1 percent share of all new passenger and commercial registrations in 2020; which it says represents a 1.9 percent drop on the 2019 tally. 

Last year TNZ claimed 31026 passenger and light commercial registrations.
 
A positive from the year is greater engagement with private buyers – an aspiration that TNZ has chased since the introduction of its ‘Drive Happy’ retail process in 2018 - which fuelled a rise in new vehicle sales, particularly hybrids, toward the end of 2020. That factor meant that, were lost rental volume to be excluded, TNZ’s market share had improved by 2.4 percent.

Chief Executive Officer Neeraj Lala sees that as being a great result.

His office says TNZ private market share was up 2.6 percent compared to 2019 at the end of November.TNZ says the product range it offers now delivers more to appeal to private buyers.
 
“Toyota has made a real effort over the past few years to inject fun back into the range which is resonating with our customers.”

It also credits wider availability of hybrid powertrains across more models, the next recipient being the new Highlander out soon, though TNZ acknowledged recently in might yet maintain a pure V6 in that family, thus backtracking on an earlier vow to deliver the big SUV in petrol-electric form alone.

Hybrid drivetrains, despite battery involvement, are not considered to qualify as electric systems as they lack facility for external power replenishment yet they still offer a positive in modest respite in emissions and economy. Five Toyota models configure with hybrid. Toyota has one car that holds electric vehicle status, this being the Prius Prime, which has plug-in replenishment capability but also runs a petrol engine. Toyota has a full electric car under development and premium offshoot Lexus will deliver a battery-compelled edition of its NX compact crossover to NZ this year. 

As is, TNZ’s volume of hybrids is vastly greater than the combined sales of all pure electric vehicles available in NZ and Lala says demand remains strong.  

In the year to the end of December, hybrids accounted for 59 percent of Toyota passenger cars sold. SUV hybrid sales were the same ratio within the soft-roader category.

The big seller is the RAV4 Hybrid; of the 5346 RAV4s sold during the year, 3830 were hybrids. The next shipment of 574 vehicles is already sold. 

However, like many industry performers, the demand has outstripped ability to supply. Constrained production lines and delays in provision of vital components are hitting all major car makers, Toyota included.

TNZ presently has more than 5700 customer orders waiting to be filled and most are hybrid models.
 
“If there is a challenge with hybrid sales it is securing enough supply for New Zealand, as there is a global demand for hybrid cars and SUVs, despite the economic impact of COVID-19,” Lala says.

In other news, TNZ has appointed a long-time senior management figure, Steve Prangnell, to general manager of new vehicle sales.
 

2020 new vehicle market set to be down 20 percent?

The global drop in new vehicle production during 2020 has been sobering – and is bound to affect NZ’s registrations count for the year.

Covid-19’s impact on car production was unavoidable in 2020.

ABSOLUTE clarity about the state of the New Zealand new car market in 2020 might be weeks away from resolution, but first indications about how the industry fared globally are sobering reading.

Gut feeling from within the industry here is that there’ll be no surprise should the year-total new car and light vehicle registrations count come to around 117,000 units, so around 20 percent down on the 2019 tally and the lowest annual count since 2013.

That kind of decline would be slightly greater than those predicted for the world’s three largest car markets – the United States, China and Germany.

But all has yet to be clear. New Zealand industry participants are awaiting one more set of figures, the registrations count for December, before they can achieve a total picture of the year’s trends and activity. 

As is always the case, this data doesn’t come easily - simply because the Government department involved in the accrual process, Land Transport, closes down over Christmas and New Year.

It is likely that provisional counts might be availed on January 5, but unlikely that full counts will be availed before January 11 – a much slower turnout than for any other month of the year, when normal business conditions apply.

That won’t inhibit individual brands from calculating their own in-house data – they, of course, know exactly how many cars they have retailed at any given time – but does make the achievement of a big picture view much more challenging, as competing brands are quite naturally loath to share.

Even so, the global picture is starting to take shape and it might well provide a pointer as to how the NZ scenario will shape up. 

In which case: Don’t expect an easy ride. The impression that NZ has done okay, simply because we experienced an unexpected surge in new vehicle purchasing activity in the months immediately following the easing of national lockdown conditions from April, does not mean that the market is set to show a decent result.

The big problem, evidenced especially within the final quarter of the year, has been one that should be pretty obvious to anyone who has been visiting new car franchises these past few months. The decreasing count of vehicles on display – and the increasingly obvious amount of unfilled display space -speaks volumes about how constrained supply has become.

Fact is, the vehicles that were bought during that sales rush were all easy pickings, being by and large, examples held in the national stockpile.

What’s become more challenging is achieving replacements for those units – Covid’s interference with not only car-making but component provision and then supply networks has been dramatic. Plants might still be making vehicles, but the rate of production has slowed and, often, so too the processes.

Coronavirus has given the world’s car makers a really rough ride in 2020; according to one report just out from an analyst based in the United Kingdom, all signs are that global car sales were down by $612 billion in 2020 and the entire market appears to be down by 10 percent. 

Data presented by StockApps.com, based on collations by a specialist, Statista, confirm what has long been accepted fact – that the Covid-19 pandemic hit the industry hard, causing supply chain disruptions, factory closures, and huge sales and revenue drops. 

StockApps picks the downsizing trend is set to continue this year and next, pointing out that even before the pandemic, the world’s car makers were already coping with a downshift in global demand.

In 2019 global passenger car sales revenues amounted to $US2.29 trillion. Small SUVs sales, as the largest revenue stream, generated almost 30 percent of that value or $US647 billion.  

Large SUVs and large cars segments followed with $US362bn and $US275bn in revenue, respectively.

However, the COVID-19 pandemic caused a huge hit, with total car sales revenues falling by almost 20 percent year-over-year to $US1.85trn in 2020.

Statista says its data suggests revenues in the large cars segment are expected to drop by 25 percent year-on-year, to $233bn.

Large SUV sales are set to witness a 24 percent cut, with revenues falling to $US275bn in 2020. Small SUVs follow with a 20 percent drop and $525bn in revenue. 

Analysed by carmakers, Toyota represented the market leader with a 10.6 percent global market share in 2020. Volkswagen ranked second with a 7.4 percent market share. Nissan, Ford, and Hyundai follow, with 6.6, 6.2 and 5.6 percent shares respectively. 

Statistics show the downsizing trend is set to continue in 2021, with global passenger car sales revenues falling to $US1.65trn. In 2022, this figure is expected to decrease by another six percent to $US1.55trn.

Statista data also revealed that all of the leading car markets are expected to witness a two-digit revenue drop this year.

As the largest market globally, the car sales revenue in the United States is forecast to fall by almost 18 percent year-on-year to $US507bn. This figure is expected to plunge to $US385bn in the next two years, nearly 40 percent less than in 2019. 

China, the second-largest market globally, achieved $US452bn in revenue in 2020, an 18 percent fall year-over-year. By 2022, total car sales revenues in China are set to drop to $US405bn.

As the third-largest market, Japan witnessed an almost 19 percent year-on-year drop when comparing 2020 and 2019 data sets, with passenger car sales revenues falling to $US92bn in 2020. Germany follows with $US86.5bn in revenue, 17 percent less than in 2019. 

In all, the three leading markets have likely lost $US231.5bn in car sales revenues in 2020 due to the Covid-19 crisis.  

Covid-19: April set to be worst on record for new vehicle sales

The prognosis for new vehicle sales is bleak and post-lockdown recovery will be a long road.

SALES to essential services have helped some new vehicle distributors since coronavirus hit New Zealand, yet the industry fears April will deliver the lowest registrations count on record.

The tally anticipated might be just 10 percent of the count for April of 2019 which at 10,640 units established a new high water mark for the industry.

If that outcome eventuates it will be the worst in living memory, an expert says.

This scenario and thought that even after the Covid-19 all-clear is given it will be many months before a new vehicle trade currently in complete shutdown in respect to public trading regains the same level of vitality enjoyed before coronavirus, has been expressed by the distributors’ organisation.

Comment from David Crawford (pictured), the chief executive of the Motor Industry Association, comes after release of March data signalling passenger and light commercial (meaning ute and van) registrations were down 4954 units, a 37.3 percent decrease, compared to the same month last year. In all 8317 new vehicles in those categories were registered compared to 13,271 in March of 2019.

The commercial sector lapsed far more than passenger; already in decline, it almost halved (down 40 percent, 1945 units) compared to March 2019. Even though the Ford Ranger remained the most favoured product, in category and overall, it did so with just 444 registrations – half its usual monthly tally.

Toyota remained the overall market leader with 18 percent market share (1515 units), also topped for passenger and SUV registrations and saw its RAV4 position as the best-selling passenger car, albeit with 318 units. Interest in Holden vehicles seems to have lifted in wake of General Motors’ announcing the brand will be gone by year-end; Holden car volume was perky and its Colorado was the third most popular ute.

Year to date, the passenger market is down 15.6 percent (6075 units) on the same period in 2019.

Supply constraints factored but, obviously, the swift move into shutdown, which took effect at midnight on March 25, also effectively reducing March to a three-week trading month in which the ‘vast majority’ of business was conducted, Crawford says.

With April set to be effectively wholly impacted by the Level Four enforcement, it’s only going to worsen, he adds. But how bad can it get?

“We think April could be as low as 10 to 15 percent of last year. The only thing that has been sold at the moment are vehicles required for essential services operations.”

That has brought some business. “I’m aware, for example, of a district health board requiring 40-odd vehicles. But there’s just these little spots of activity.

“But we’re expecting April to be probably the lowest month in living memory.”

The MIA has been collating data since 1975.

Some distributors have laid off staff but the industry is not at a point where operability has ceased, but there is recognition that for some the bills will be piling up. Distributors often have to buy product in advance of delivery and, even if that doesn’t happen, once landed cars are subject to goods and services tax.

“So everyone is working hard on cash flow. It is a testing time.”

Even though most of the world’s vehicle makers have frozen their assembly lines, there is product in the pipeline that might sustain demand if and when it picks up.

However, at present a number of vessels are set to off-load vehicles here over the next few weeks.

The MIA is pleased this seems to set to happen.

“There has been some discussion with officials about can and cannot be done. The ship will have vehicles and parts and some of those will be required for essential services activity.

“It doesn’t make economic sense to the industry or the Government for those ships to be turned away.”

He says procedures put in place by Ports of Auckland that Government is content with for the time being will allow vehicles to be off-loaded then sent to containment, Crawford says.

That will allow access to vehicles on an as-required basis during the lockdown which, he personally fears, might well extend beyond a April 22 release.

The longer it is in place, the more severe the impact could be. But even then it is not as simple when it is lifted, he says.

The disruption to the global vehicle industry will inevitably means that some products will be subject to delayed availability.

“There are stocks around but these will be cleared and it’s the availability of new stock beyond that which is going to be patchy.”

Even if New Zealand is deemed free of the virus, it is very likely our borders will remain closed for travel, which has obvious implications on the national economy.

“The recovery of vehicle sales going forward is going to be dependent on how quickly New Zealand can recover.

“We think it is going to be a slow, fragmented and painful recovery.”