10 Sep 2021

As auto-makers cut production, consumers could feel the pinch in NZ as supply is hampered

11:54 am on 10 September 2021

Consumers could soon feel the pinch as used car dealers come under pressure from auto-makers cutting production, which is affecting second-hand car supply.

Parked cars for sale, car yard.

Turners chief executive Todd Hunter said sourcing had become increasingly difficult due to the constraints in the new car market, which was hampering used car supply in Japan and in New Zealand (file image). Photo: 123RF

New Zealand's largest used-car dealer, Turners Automotive, says used imports have fallen 10 percent drop over the past two years.

It comes as the world's biggest carmaker, Toyota, recently announced it would cut global production by 40 percent this month, because of the global microchip shortage.

The second largest car producer, Volkswagen, has also signalled it may need to cut production further.

Turners chief executive Todd Hunter said sourcing had become increasingly difficult due to the constraints in the new car market, which was hampering used car supply in Japan and in New Zealand.

"If you've effectively got reduced new car supply, you don't get the churn happening. So obviously every new car that's produced and sold, you have a used car unit that would flow into the pool of used cars available for sale," Hunter said.

The problems were not going away any time soon, he said.

"I think that used imports will be under some pressure for some time. And again largely tied to the recovery of the new car supply chain. So I can foresee a period of quite elevated car prices for quite a period of time now, at least another two to three years."

Covid-19 has exacerbated the sourcing issues, he said.

But prior to the nationwide lockdown Turners had seen "excellent momentum".

For now it had been business as usual in the sector despite a drop in imports, Hunter said.

"Used cars are generally bought out of necessity. They are not as much of a discretionary purchase as new cars are so I think you just see a far more consistent level of transaction in the used car markets than necessarily in new cars, which can be more affected by economic cycle."