Record March despite supply disruptions

Vehicles are fast-tracking to customers.

Toyota Hilux was the top-selling model in March.

CONSTRICTED new vehicle supply continues to hamper distributors – though last month’s registrations count might suggest otherwise.

Last month 15,498 new vehicle were registered. It’s the highest March count since record-keeping began back in the 1970s.

That this tally represents a massive 86.3 percent up on the same month last year is easily explained – the country went into the Covid-19 Level 4 in March of 2020, so distribution, sale and delivery was highly restricted. April last year was also bleak, with 1039 registrations, a 90 percent fall on April of 2019.

Last month’s accrual follows a record February, when 12,488 registrations were notified. Year to date the market is up 27.6 percent (9046 units) compared to the first quarter of 2020.

And all this is despite supply disruption, resultant from Covid-19 though a global shortage of semiconductor is also influencing. This is a rebound from manufacturers having cut chip orders as vehicle sales fell last year. They have found themselves at the back of the queue when the market rebounded. The entire global car industry buys about $US37 billion worth of chips.

“A year on from our first Covid-19 lockdown, our sector is still operating under disrupted supply arrangements and supply shortages,” says David Crawford, chief executive of the distributor organisation, the Motor Industry Association.

“As shipments arrive, vehicles are going straight through Customs, distributor pre-delivery inspections and entry compliance, to the franchised dealer and on to the new owner, who invariably has been on a wait list.”

Most popular vehicle last month was the Toyota Hilux, which continues to enjoy buoyant sales following a massive facelift late last year. In March it recorded 1019 registrations to claim a 19 percent share of the commercial market. Arch-rival Ford Ranger accounted for 828 sales to sit in second spot, with Mitsubishi Triton third on 691.

In the passenger segment the Mitsubishi Outlander again led the way with 467 registrations, comfortably ahead of the Kia Sportage, Mazda CX-5 and Toyota RAV4.

Of the total of 15,498 registrations, 424 (2.7 percent) were pure electric vehicles. There were also 150 PHEVs and 855 hybrids sold during the month.

Toyota remains the overall market leader with a 15 percent market share, followed by Mitsubishi on 11 percent and Ford on nine percent.

Clean car ambition timeframes challenged

New vehicle distributors agree the CO2 count has to fall, but say the pace of proposed change will be problematic.

NZ-new EV availability is ramping up, with this BMW iX (above) among confirmed 2021 entries, but the industry points out that left-hand-drive markets are prioritised, which hurts planning for this country.

NEW vehicle importers support a clean car standard but believe the mooted deadline of 2025 is impossible to achieve and have labelled electric vehicle uptake forecasting as a fantasy.

The Motor Industry Association, which speaks for new car distributors and has more than 44 members covering 81 different marques, is more partial to a 2028 deadline, as suggested in a Climate Change Commission report.

However, it is also particularly scathing of the commission’s considerations about the pace of EV uptake in New Zealand, saying its modelling “enters the realm of fantasy and wishful thinking.”

This is the MIA’s biggest concern, though it is also questioning the agency’s projections about when EVs will achieve price-parity with conventional internal combustion engine vehicles, saying that forecast is also seriously awry. Predictions of low emission vehicles also run ahead of what the MIA believes is possible.

“We consider that the commission’s target of 50 percent of vehicle imports to be electric by 2027 are overly optimistic, as are the projections for price parity.”

It highlights that the world’s EV makers are primarily concerned with meeting demands in markets where hard-and-fast deadlines for reduced emissions and ICE car availability has been established. It also points out that with the exception of the United Kingdom, which plans to ban new ICE cars from 2030, these are predominantly left-hand-drive markets, so as result production for right-hand-drive countries is limited at best.

The Association also believes the commission undervalues the role of carbon sinks, synthetic fuels – that could keep internal combustion engine (ICE) vehicles in circulation - and hydrogen technologies.

The latest comment comes after a number of high-profile local distributors, including Toyota New Zealand and European Motor Distributors – which holds rights to all brands held by Volkswagen Group, an electric vehicle production juggernaut likely to overtake Tesla next year (yet is unable to begin supply to NZ until 2023) - have called on the Government for a feebate scheme to sit alongside its clean car legislation, fearing that without it new EVs will struggle to see similar demand.

The MIA’s criticisms and alternate proposals are contained in a comprehensive report responding to the Government having announced, in January, an emissions standard which, if approved, will take effect from next year and also the commission’s subsequent draft report lending opinion about what it believes New Zealand must do.

The deadline for submissions about these matters is today.

The Government’s standard will require new and used car importers to meet incrementally lower emissions targets, falling to 105 grams of CO2 per kilometre average by 2025, from a present average of 171g/km.

The commission has subsequently recommended the Government deploy an end-date for petrol and diesel internal combustion cars, proposing 2032 as appropriate.

In a covering letter to the MIA’s submission, chief executive David Crawford says new vehicle importers supports need for cleaner vehicles, but says the timeline for a lower CO2 average is too rushed.

“Unfortunately the Government’s timeline of 2025 is impossible to reach with resulting penalties becoming a financial impost against all new vehicles including low emission vehicles.”

“Additionally, the transport policies in the draft report focus on vehicles entering the fleet which is only a small portion of the in-service fleet. We need policies to focus on not just only those entering the fleet, but also to target existing vehicles. This will garner a faster rate of emission reductions than just focusing on vehicles as they enter the fleet.”

Additionally, the transport policies in the draft report focus on vehicles entering the fleet which is only a small portion of the in-service fleet, he says. 

“We need policies to focus on not just only those entering the fleet, but also to target existing vehicles. This will garner a faster rate of emission reductions than just focusing on vehicles as they enter the fleet.”

In an executive summary, the MIA says the commission should have been “more technology agnostic, and not favour one technology over another, but enable the transport industry to develop innovative solutions” to meet reduced CO2 targets.

Crawford says the commission’s thought that technological breakthroughs will be crucial to enable the agricultural sector to reduce its greenhouse gas emissions does not give consideration to the potential for new technological breakthroughs for the transport sector.

David Crawford.

“The MIA believes the (commission’s) draft advice report needs to give greater weight to the role that synthetic fuels (including e-fuels) could play in reducing emissions from the current ICE fleet.

“ ….we also consider the report has underplayed the potential for hydrogen propulsion, not only for heavy vehicles but also light, in addition to battery technology. There is also no evaluation of the role e-motorcycles/scooters can play in reducing emissions.”

It believes discussion of ICE bans is premature if synthetic fuel can be produced. It suggests the country should invest in the production of such ‘e-fuels’  “and we have an opportunity to do so.

“For example, once the extension to the Tiwai Point aluminium smelter contract has run its term in 2024 then that electricity could be utilised to make e-fuel to lower emissions of the entire NZ fleet of light and heavy vehicles.”

It also moots the use of wind turbines to assist in the creation of hydrogen, a process which is already signed off for trial, and is excited by the development of second generation biofuels which are sourced from various bio-stock (wood, for one) to make a crude bio-oil from which petrol and diesel can be produced.

In a recent commentary, Crawford noted “these second generation biofuels are known as ‘drop-in’ fuels which are 100 percent compatible with existing ICE engines and fuel management systems.”

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.

Strong January, but chips are down for car makers

 A shortage of semiconductors is significantly impacting the world’s car makers.

Toyota Hilux enjoyed another strong month, though overshadowed - yet again - by Ford’s Ranger.

 NEW vehicle sellers made a strong start to the year – but some in the industry wonder if troubles lay ahead.

The Motor Industry Association, which represents distributors, is positive about last month’s tally of 13,893 new passenger vehicle registrations – citing it as being up 6.2 percent on the same month of 2019 and the third most successful January for car purchases. 

Individual brands are celebrating bonanza returns, most particularly Mitsubishi Motors New Zealand which cites the sale of 1403 of its vehicles – 1002 being passenger models and the remainder Express vans and Triton utilities – as being a 30-year peak.

 MIA chief executive David Crawford says the overall industry count suggests huge promise after more than six months of speculation about whether the local motoring industry has ‘turned a corner’ since its big losses during the Covid-19 pandemic’s numerous lockdowns.

He concedes, though, that January’s result was buoyed by “comfortable amounts” of supply arriving, much of which comprised backorders from previous months. 

One industry involver, who declined to be identified, believes January, this month and perhaps March might be the best months of the year.

From there on, he believes, most if not all distributors might start to feel the impact of a global issue for car makers around the world – the shortage of vital computer chips, particular semiconductors.

The factories making these items are now snowed under – and car assembly lines are slowing because products cannot be finished.

A global semiconductor shortage is hurting the world’s car makers.

The local commentator says car makers all around the world have been impacted.

That view is supported by overseas reports that have termed the shortage a “crisis within a crisis.”

Audi is among victims. According to media reports from Europe, it is resigned to 10,000 fewer cars in the first quarter of the year and putting more than 10,000 workers on furlough because it cannot finish cars. 

Its parent company, Volkswagen, announced its own go-slow due to a lack of chips last week, alongside rivals such as Honda.

The issue pre-dates the global Covid crisis; 2020 started poorly for new car sales, particularly in Europe, so brands believed fewer components were required.

Once plants and the countries they locate in were hit, often hard, by Covid-19, many manufacturers cut their orders from the Chinese factories making computer chips. 

The market has since rebounded but now the components are no longer so readily available, as suppliers switched their attention to other sectors, most notably gaming and home electronics.

Ordering new chips has proven to be a challenge. 

As one overseas’ analyst explained: "Semiconductors have a broad range of applications but a very limited pool of companies capable of manufacturing the silicon. 

"Demand is high, and supply is tight" and any sudden needs "can prove very difficult to accommodate". 

"Modern cars are becoming computers on wheels, with an abundance of silicon required to control everything from the infotainment system to camera, radar and lidar," he said. 

The demand from carmakers "competes for manufacturing capacity with smartphones, servers and a host of other segments".

And a boom in the market for devices such as PCs and new game consoles was making it doubly difficult to book manufacturing time. 

Numerous brands have had to suspend production, some for days, some for weeks.

The shortages have seen Mercedes-Benz, Fiat, Ford, Honda, Nissan, Subaru and Toyota all reportedly suspend production for days or weeks at a time.

The MIA has yet to address this matter.

In comment pertaining to last month, it says most of the growth was in the passenger vehicle and SUV sector, which saw a 6.7 percent rise year on year. Commercial vehicles (a sector driven largely by utes) also increased, but by a lesser 5.1 percent. 

The Ford Ranger and Toyota Hilux were the country;s most popular vehicles, respectively with 948 and 750  registrations in January.

Toyota maintained its spot as market leader, with 17 percent market share. Mitsubishi, Ford, and Kia were all trailing, on 10 per cent market share a piece.

It was also a strong month for electrified vehicles, with 1073 hybrids, 93 PHEVs and 244 pure electric vehicles sold. The strongest-selling EV was the Hyundai Kona, with 56 sales, followed by the MG ZS EV, with 49.