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Market set for sales rebound

Report predicts better year ahead for new-vehicle sales with extra demand in 2024 for utes and EVs. 
Posted on 28 November, 2023
Market set for sales rebound

Sales of new passenger electric vehicles (EVs) are tipped to increase by nearly a quarter next year despite the clean car discount (CCD) facing the axe from the incoming government, according to an economic consultancy.

BMI, a unit of the ratings agency, Fitch, says increasing demand for low-emissions models will contribute to most of the growth it expects to see in the New Zealand market in 2024.

It expects sales of new passenger and commercial vehicles to increase year-on-year by 5.5 per cent in 2024 to 168,500 units. 

The passenger EV segment is forecast to jump by 24.3 per cent over the same period and registrations of passenger cars with internal combustion engines to contract by 3.1 per cent.

BMI’s report says cooling inflation and the expected removal of the CCD will “serve as tailwinds to vehicle sales in 2024 as consumer’s purchasing power strengthens and the demand for utes surges”.

It notes dropping the feebate scheme in the coming months and removing rebates for the purchase of low and zero-emissions vehicles threatens to slow the demand for EVs. 

“Still, the arrival of new mainland Chinese EV models, from brands such as BYD, will continue to support the country’s shift towards e-mobility,” it adds. 

“This is because many of the new Chinese EV imports are expected to be well-equipped and offered at competitive prices, hence offering a strong price-value proposition to consumers.

“Moreover, risks to our 2024 vehicle sales forecast for New Zealand are tilted to the upside on the expectation that the Reserve Bank of New Zealand could embark on a cutting rate cycle. 

“This is because such a measure would underpin the demand for vehicles as borrowing costs decline and the use of auto loans picks up among consumers.”

The report also highlights BYD’s plan to launch a new electric SUV in plug-in hybrid and battery electric variants, as well as an all-electric ute. “The latter could prove to significantly boost EV demand, given the high popularity of utes within the New Zealand consumer market.”

The predicted uptick in sales for new vehicles is also based on the gradual easing of the semiconductor shortage and bottlenecks in the supply chain.

An increase will be welcomed by the industry as BMI’s report forecasts new-vehicle sales will drop by 7.1 per cent to 159,700 units in 2023, a reversal of the 2.5 per cent growth seen last year.

BMI explains the weaker-than-expected demand in the market this year is mostly due to a mix of macroeconomic headwinds and uncertainty surrounding the general election results.

It adds the hawkish stance from the Reserve Bank on monetary policymaking has negatively impacted demand for cars in 2023, as its approach kept vehicle financing costs high for consumers.