“Even more daunting than the peak of the Global Financial Crisis.”

That’s the word Motor Industry Association (MIA) head Aimee Wiley is getting from some of her members after the
fifth straight month of slumping sales.

Wiley expects more dealers to go to the wall.

May new car registrations, released yesterday afternoon, were brutal reading for the industry. electric vehicle (EV) sales – stalled by the axing of the Clean Car Discount and the introduction of Road User Charges – remained at a trickle, but the overall market was also laid low by the slow economy and high interest rates.

The only relative bright spots were light commercial vehicles (buoyed to 7.3 per cent year-on-year growth by the elimination of the “ute tax” in the New Year) and increasing sales of non-plug-in hybrid electric vehicles – which are exempt from the road user charges introduced for EVs and Phevs (plug-in hybrids) from this month.

“May saw a relentless dip in new vehicle registrations, perpetuating an ongoing decline. While light commercial sales remained steady and heavy vehicle sales saw an uptick, the light passenger segment continues to be hit hardest by the prevailing economic recession,” the MIA said.

“The distressing trend of falling registrations has persisted for the year’s first five months, underscoring the sector’s struggle.”

At 10,186 new vehicle registrations, May 2024 is 23.7 per cent – or 3168 vehicle sales lower than May 2023 (3168 units) and 23.6 per cent lower than May 2022.

Year-to-date, 2024 is 13.3 per cent lower (or 8198 fewer sales) than 2023 and 23.8 per cent lower (or 16,703) than 2022.

“Recognising that industry consolidation is a pressing concern right now, it’s disheartening to note that several dealerships have already shut down in recent months,” Wiley told the Herald.

They included EuroCity Napier. Earlier this month, it was revealed the dealership – now in liquidation – owed $1.2 million to creditors including IRD ($458,036) staff ($334,296) and various media outlets and sites that carried its listings.

“If the current weak demand persists, as projected by industry experts, government, and key economists for the rest of 2024, more closures are, unfortunately, likely,” Wiley said.

“While we all hope for a revival in the light passenger segment, the government’s forecast of subdued economic conditions in the near term suggests a challenging Q3 and Q4 ahead for the industry.”

Some second-hand dealers are faring better, however. In an April research note, Forsyth Barr noted reliance in the sector, as interest rates stabilised. In May, Turners reported record earnings.

The top sellers in a slow month

While EVs, phevs and hybrids accounted for half the market in several months during 2023, the changing carrot and stick incentive environment saw “ice” (internal combustion engine) vehicles account for 73 per cent of the market in May, followed by non-plug-in, RUC-exempt hybrids (21 per cent), pure EVs (4 per cent) and plug-in hybrids (2 per cent).

For the time being, the Clean Car Discount boom of 2023 – which saw more than 1000 Teslas sold in some months – is a distant memory.

Pure EVs

Plug-in hybrids

Non-plugin-hybrids

Utes

Chris Keall is an Auckland-based member of the Herald’s business team. He joined the Herald in 2018 and is the technology editor and a senior business writer.