New Zealand is a small fleet market due to its terrain and small population. “New Zealand is a mature market with more than 90 percent of businesses classified as small medium enterprises,” said Dennis Kelly, managing director New Zealand for Fleet Partners.
According to Craig Ross, commercial director for LeasePlan New Zealand, Japanese automakers have dominated with secondhand vehicles from Japan. “Those vehicles typically constituted 60 percent of the ‘new car’ market of 180,000 units and were largely responsible for driving the cost of vehicles down in relative terms, between the years of 1990 to 2008,” he said. “The leasing landscape is well covered by major regional players — Orix and Fleet Partners — and the two big international players — LeasePlan and GE.”
The ongoing economic downturn has had a dramatic impact on New Zealand fleet operations. “Due to the effect of the global recession, we have seen a more focused approach to cost savings and fleet management — moving the responsibility of managing and reporting on fleet efficiencies out of the everyday business and placing it in the hands of the lease provider,” Kelly said. “The need for lease businesses to extend leases and ease any cost increases to their customers during the recession extended the replacement cycle, reducing the volume a dealer might have expected to sell. This has led to mistrust in the market.”
However, the low cost of funds makes ownership a more viable and affordable option for some businesses. “Changes to the vehicle mix in fleets are a result of a lot of businesses downsizing both their fleet size and fleet makeup to provide a more efficient fit for purpose outcome,” Kelly said.
Ross of LeasePlan New Zealand noted that 2009 saw the first prolonged increase in car values for two decades. “This is expected to continue for another two years as the Fukushima tsunami impact is felt on vehicle supply ex Japan and as the new emissions standards reduce the potential import levels of secondhand vehicles,” he said.
The disruption to the supply of new vehicles from Japan, following the March 2011 earthquake and tsunami, has eased. “The reduced pool of used cars has, however, increased buying competition among car dealers. Further upward pressure will come on used-car prices when the final phase of the exhaust emission rules for used-car imports came into force on Jan. 1, 2012,” said Kelly of Fleet Partners. “The change will effectively limit the age of imported used cars. Consequently, many middle-income households will struggle to afford the higher price of used imports.
The forecast for the New Zealand used-vehicle market is optimistic. “The outlook for three-year-old ex-lease car prices remains good,” Kelly added. “The reduced supply of older, used imports as a result of legislation changes will boost demand for cars further up the price scale.
Furthermore, in three years’ time, the unemployment rate is expected to have fallen to around 5.5 percent, giving households more ability and willingness to take on debt.”
--By Mike Antich
Originally posted on Automotive Fleet