If you are in the market for a new car and have been holding out for prices to drop, you might be out of luck.
Car prices went up 10 to 15 percent last year, according to trade figures. Photo: 123RF
A vehicle shortage caused by the pandemic has seen the average sale price for new and used cars climb since the middle of last year, with predictions once supply returned, prices would go down.
Supply is starting to come back, but prices are not budging.
Stats NZ data showed the average price for a small car in June last year was just under $15,000, it was now over $18,000.
It was the same jump for a medium car - now going for about $25,000, and a large car - which you could get for about $34,000 in March last year - was averaging $40,000.
Richie East from the buy-sell website Auto Trader said from about April last year, prices were only heading one way.
"With the lockdown last year, new vehicle production stopped overseas so that of course increased the demand and the prices of vehicles.
"So we saw prices go up by 10 to 15 percent."
Although not back to pre-Covid levels, he said supply was starting to flow again with about 30,000 vehicles now online, up from 27,000 at the end of last year.
Despite this, he did not expect prices would drop.
"I think that could be the new normal. Prices have definitely levelled off and I don't think they'll go up any further but I think where they're at, at the moment will hold for the next six to 12 months."
The situation has been compounded by the delay in the global production of new cars, due to a shortage of semi-conductor computer chips.
East said the upside for car-owners was their existing cars would have depreciated slower and low interest rates made getting a vehicle loan cheaper.
He said this was making luxury vehicles - like Ford Mustangs and Jeep Wranglers - hot property.
David Vinsen of the Vehicle Import Association said that if Covid-19 had created waves for the motor industry in New Zealand, the proposed fuel economy standard would cause a tsunami.
"I was speaking with a representative of one of the manufacturers' distributors - in other words the people who import and distribute new vehicles - and they've just done the analysis based on this [proposed] fuel economy standards legislation.
"They think it's going to add an extra $4500 per vehicle to everything in their model range."
The head of the company that runs the 2 Cheap Cars used-car business, NZ Automotive Investments, Karl Smith agreed. He said prices should soften as supply levels returned to normal, but things would heat up later.
"Everybody's going to be fighting for the same volume of second-hand EVs, so unless the price point can be lowered via some governmental support - as has happened in many other countries - it'll be priced out of our range."
