Rise in used-car prices ‘inevitable’

The price of used cars looks set to increase as dealers struggle to secure enough stock out of Japan.

David Vinsen, chief executive of the Imported Motor Vehicle Industry Association (VIA), says the word from dealers is that when they sell a car, they are having to pay the same price or more to replace that unit.

His comments come as the used-car market has proved surprisingly resilient and defied early concerns of a “huge oversupply of stock” because of the Covid-19 pandemic.

Vinsen, pictured, told Radio New Zealand: “We feared the demand in New Zealand would dry up because of people’s concerns about their jobs and income … but that hasn’t happened.”

About half of the 300,000 cars imported into New Zealand annually are used, with the majority of those coming from Japan.

“It’s been very difficult to buy stock,” Vinsen explains. “In Japan … manufacturers stopped manufacturing for some months so there were no new cars sold into the Japanese market which means there were no used cars traded and fewer used cars available at auction for us to buy.

“Anecdotally, dealers are saying the prices they’re selling vehicles for are the prices they’re having to pay to replace them.

“In other words, if they sell a $12,000 car, they’re going to have to pay $12,000 or $13,000 to replace it so prices are inevitably going to go up.”

He adds the fact New Zealand is competing with dozens of other countries for used cars from Japan puts more pressure on prices.

Vinsen does not expect the situation to change any time soon and warns second-hand import prices are unlikely to get cheaper any time soon, reports Stuff.

Greg Hedgepeth, chief executive of Turners Group, also told Stuff there were about 20,000 fewer vehicles on the used market than is usual at this time of year. 

He notes the combination of higher premiums being paid by dealers and high demand in New Zealand means prices have increased up to 20 per cent from where they would normally be.