unless something happens to stop the downwards spiral of the NZ dollar Im predicting car prices are going to increase in the next couple of months. This time last year the dollar bought 82 yen -today its down to 72 Hope im wrong but Im already seeing the bottom feeder types putting their prices up on cars in transit-that's always a sign for the future.
poppy62,
Aug 21, 12:18pm
Just another business cycle for a country that seems to court open slather on the back of bad economic decisions by the powers to be. We were doing well, praised by most other Govts for the way NZ was performing in a depressed market. Then along came the Trumpeter, NZ's Queen of hearts and a Sideways glance from the main man in China and "It's all over now baby blue". Harder times ahead as everything increases in price and the dog goes on chasing his tail.
bwg11,
Aug 21, 12:36pm
Just Government policy. NZ gets more NZ$ for its exports which means more tax paid by exporters, imports rise in price (in NZ$) which means more GST revenue for the Government. All the extra police, benefits, wage hikes, inquiries, etc have to be paid for somehow.
cjohnw,
Aug 21, 12:42pm
As much as it pains me, I have to agree. As a small business owner we have witnessed a real decline in confidence and also in trade itself. Almost all of the companies we trade with have expressed similar sentiment and we all are watching with a wary eye. There does not seem to be the same attitude as a few years ago when Key/English were at the helm and business was bubbling. From what I can see just among our trading companies there is a lot of suspicion and trepidation about what the Minister of Finance might do next. Tricky days ahead and it probably will get worse sadly.
budgel,
Aug 21, 12:46pm
And when the dollar is strong the same bunch of tories whinge about how bad it is for farmers.
rob_man,
Aug 21, 12:48pm
A lot of becomes self fulfilling prophesies due to the media rubbing everyone's nose in the slightest indication of a slowdown. I often wonder what would happen if they took a less strident approach.
tgray,
Aug 21, 12:53pm
5 months ago the NZ dollar bought 73 USA cents. It now buys 66c. To bring a 2018 Corvette in now, would cost me about $7,000 NZ more. Yes, they cost a little less to buy now, but not $7,000 less. Since there are only 55 LHD permits left for 2018, I made a decision to let my 2018 Camaro go for $65,000 last week. Far less than replacement cost. (the last one I sold a few months back for $79,500). It was either that, or hang onto it until next year, when a facelift shape comes out and mine would be last years model. Price increases coming? absolutely.
poppy62,
Aug 21, 1:33pm
Unfortunately mate, the downturn also sees job losses on the horizon. i know we've all been down that road before, but unfortunately there are a lot of people who have sold themselves to the Devil (banks) and are likely to lose a lot more than just weaker NZ$. The eye watering mortgage repayments some are making looks like it may become a major case of Lemmings heading for the edge of the cliff. I suppose when people live in a fools paradise someone does eventually have to bear the costs of frivolity.
headcat,
Aug 21, 2:00pm
Having learned from my parents who were children during the depression that debt was to be avoided if at all possible, I wait for these chickens to come home to roost.
poppy62,
Aug 21, 2:12pm
Hope im wrong but Im already seeing the bottom feeder types putting their prices up on cars in transit-that's always a sign for the future. Quote kazbanz (60 60 positive feedback) 11:15 am, Tue 21 Aug #1
When you consider that the current old 2nd hand cars are really at "Can't give them away" prices at the moment and if replacement imports are going to increase, this surely means that people will try and wring some more life from the older rockets rather than trade them in. With scrap at it's lowest for many years and less demand from Korea/China for it, there is going to be a back up at this end. Just when NZ starts improving the age of the car fleet it seems that a step backward will be taken again. Hard times ahead again, but the Land Transport will swell their coffers with more WOF & Rego infringements.
mojo49,
Aug 21, 5:05pm
Any price increase will be short lived. What actually happens when the NZ $ devalues is that dealer margins shrink as a result of price competition and the bottom end low margin dealers drop out of the market while the better organised and better reputed dealers end up selling more cars for lower margins but can make enough to stay in business. That is the basics of supply and demand in a true free market like Used Cars. I have no doubt you have seen this process before and you have survived each dollar drop cycle and will again. Ultimately cost ex Japan does not set the local market selling price. That comes down to supply and demand and supply is virtually unlimited so there will always be an oversupply which puts downwards pressure on price. Only cheap finance for people with low deposits helps keep the prices up.
kazbanz,
Aug 21, 5:11pm
Mojo--NORMALLY I agree--but I think we are already close to the bottom of the tank. Only way to sustain pricing is lower quality/higher miles. maybe I'm wrong but that's my gut.
mojo49,
Aug 21, 7:58pm
Sadly Kaz, we were in the Home Appliance industry when it truly hit the bottom in the early 90's. In truth there is no "bottom." What happened in our industry was almost every independent Home Appliance retailer went broke, so did the Farmers plus an assortment of chain including Smith's City first foray into the North Island. Other chains merged including Bond & Bond- Electric City-Electrix with Noel Leeming to survive. Just hope that your industry never hits that wall, when demand evaporates overnight, and customers are rarer than hen's teeth. If you do experience that the outcome will be the same. The large well financed will survive and the small will fall by the wayside.
the-lada-dude,
Aug 22, 10:17am
You have to gaze into that crystal ball . but you won't see the TRUMP factor in it ! . Trump is turning the USA into a business, a multi trillion $ business that gives no favours and simply will steam roller any country into the dirt if they don't play ball. . that aside, don't think that NZ is alone in currency devaluation against the US $ . If the Yen retreats against the US $ then our $ will seem to be on par with recent NZ $ .> Yen . then cars out of Japan will remain NZ $ .> Yen at a comparative cross rate
kazbanz,
Aug 22, 10:32am
My take is that the normal boom in car availability is nowish (Christmas time in Japan) Summer etc. Buying has slowed up due to the dollar. Those cars are just being bought up by other markets. so we will end up with dearer cars.
mojo49,
Aug 22, 1:13pm
The flaw to that is that you assume that the retail price of cars is a factor of their cost. That is not correct and that is what happened to home appliances. Costs remained static but price competition forced the retails down and Gross margins collapsed which drove most retailers out of business. With Jap imports the market will balance only when supply and demand are in balance or there is excess demand. If costs rise, without an increase in demand, there will be less gross margin to spread across the industry and some players will have to exit.
kazbanz,
Aug 22, 4:52pm
nope sorry didn't say that.
the-lada-dude,
Aug 23, 1:33pm
NZ $ has hardened a bit today
kazbanz,
Aug 23, 1:53pm
I see thaty--back almost to 74
mojo49,
Aug 23, 5:31pm
Then what did you mean by "unless something happens to stop the downwards spiral of the NZ dollar Im predicting car prices are going to increase in the next couple of months. "
kazbanz,
Sep 6, 1:11pm
you are implying that cost prices on cars remain static and the downward trend this end. THAT isn't what Im talking about,. Cost prices on cars increase as the dollar softens against the Yen added to that the follow on affect of The stink bug issue -ie all cars to be heat treated during stink bug season and now RTyphoon has dramatically cut into supplies so price must go up.
poppy62,
Sep 6, 1:58pm
I remember trading with suppliers in Japan when it was at 53Yen-the $. It had started at somewhere well over the 100Yen-$ bracket in the early part of 1980s. Couldn't do much about price increases at this end to offset the strong Yen because there were so many in the trade going belly up, especially in the 1987 crash. Took a long time to recover the lost ground and will never get back to the Halcyon days of 120Yen-the $. Kaz I don't envy your plight now-a days. But as always as has been in the past, the Cowboys are the first to fall. Hopefully their lack of demand will help with the prices.
the-lada-dude,
Sep 6, 5:02pm
Well the US $ is getting harder by the minute, oil prices are almost slumping, and the US stock market is booming, and the main man Trump is forcing US manufacturers back home . all this by Trump turning the US into a stand alone business. The rest of the world is heading for a massive turmoil & I see a guttsa for the EU / China . the milk payout is sliding badly, and all we need is log prices to fall and I agree with others, NZ is in trouble . and just to show how strong the yanks are, AMAZON is just about to become the 2nd TRILLION $ Co behind APPLE . the only bit I can't get to grips with is where Russa fits in
mojo49,
Sep 6, 6:04pm
Kaz I have been saying just the opposite. Just because the cost of jap imports rises, the retail does not rise with it. The two are related but there is "elasticity" in the relationship. The retail is primarily a factor of demand and such things as the availability and cost of finance. If dealers' costs rise for whatever reason and retails cannot rise with them because of market factors, the number of dealers will decrease until the supply and demand and related factors come back into balance. The used car market especially with the almost unlimited supply of jappers is one of the few true "markets" in NZ, where all the requirements for a true "market economy" in economic terms actually exist. You would recall about 10-15 years ago when every man and his dog could get car finance no matter their credit status. Prices rose, not because of cost, but because of the demand that created. When the chickens came home to roost and the finance companies were swamped with bad debt car loans and worthless wrecks to repossess, credit terms tightened and prices dropped very quickly and a lot of dealers shut up shop. That is the market working and the effects of the short term market distorting cheap easy credit flowing through the system.
toenail,
Oct 2, 4:19pm
not going to happen, there are enough inventory sitting in car lots to supply NZ for another year.
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