Car dealers warn of expensive challenges rolling out subsidised EVs


Transport

The Government is watching closely for any attempts by overseas car-dealers to hike asking prices in order to take advantage of this week’s new subsidy for electric vehicles.

The prices of used electric vehicles have leapt in response to the Government announcing its subsidy of up to $3,450 a car, the country’s biggest secondhand car importers say.

Japan-based vehicle buyer Marcus Jones has emailed car importers with a somewhat sardonic update on pricing.

“I thought perhaps you could pass on thanks from the wives and orphans of Japanese EV and Phev owners,” he wrote, “who have seen the auction values of their cars rise in the past few days by more or less the precise amount that the New Zealand taxpayer has generously agreed to contribute.”


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It comes as two big secondhand car dealers report to the NZX on their plans to roll out EVs to New Zealand motorists. The Climate Change Commission has warned of a shortage of EV imports from Japan, for the rest of this decade – and dealers say they are already experiencing that.

NZ Automotive Investments Ltd says it sells 7.5 percent of the country’s secondhand imports through its 12 dealerships, branded 2 Cheap Cars. It says its sales of electric and hybrid electric vehicles have almost doubled in the past 12 months, with 21 percent of sales (more than 100 cars a month) being EV/HEV in the last quarter of the 2021 financial year.

“Our customers are everyday Kiwis who rely on safe, reliable and affordable transport,” write the company’s chair Karl Smith and chief executive David Page, in the company’s annual report. “Making sure that electric vehicles are affordable, safe and reliable will be fundamental to New Zealand making the switch to lower carbon emission vehicles.”

“The new and imported used vehicle market is very competitive and I’m sure anyone attempting to distort market pricing will be called out. I have asked my officials to keep a close eye on the market as the Clean Car Discount gains momentum.”
– Michael Wood, Transport Minister

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NZAI Ltd says it is well-positioned to meet forecast demand, and to meet future requirements set by the Government – but warns there are challenges ahead. The company is ready to support the rebate scheme, it says, as a transition towards lower emission vehicles over time will be essential to reducing New Zealand’s carbon footprint. “We acknowledge that there is still significant work to be done to ensure we have the appropriate infrastructure in place around the country to enable Kiwis to confidently make the shift towards electric vehicles.”

Ninety minutes after NZAI, auction company Turners Automotive Group  delivered its annual report for the year ended March 31. “We are conscious that we operate in a sector which has a high carbon footprint and are in the process of measuring our own carbon impact,” write chair Grant Baker and chief executive Todd Hunter. 

“We are helping by removing old and end-of-life cars off the road and are making a serious investment into increasing our Turners Subscription electric vehicle fleet, which makes it more accessible for people to try and drive an EV car.”

Shortly after lodging the report, Hunter told Newsroom that sourcing secondhand EVs for the New Zealand market would be a challenge. Most of the cars Turners sells are sourced from the local market, but it does import some – including for its subscription scheme.

There is big demand from the public to drive EVs from the subscription scheme, often “try before you buy”. Chris Saunders, Sara Smeath and their children were among families to get a car from Turners subscription scheme, for a Northland holiday.

“We’re just working out where the demand is and what sort of fleet we need,” Hunter said. “Mostly it seems to be driven by price point – the more in-demand cars are the lower-priced ones.”

“In Japan, there’s such a small number of EVs. In terms of pricing, the vehicles in Japan have all gone up for the amount of the subsidy – $3450.”
– Todd Hunter, Turners Automotive Group

Of the 120 vehicles available in Turners’ subscription scheme, Hunter said 35 were EVs, mostly Nissan Leafs but also a couple of Hyundai Ioniqs and a Nissan electric van. They hoped to build that fleet to 150 in the next four or five months.

Car-share or subscription schemes like Turners are seen as a more sustainable option than every household continuing to own one or two cars, which may sit parked in a garage 95 percent of the time.

Turners’ subscription fleet was made possible with a grant from the Government’s green transport fund. But used EVs were becoming more difficult to source. “In Japan, there’s such a small number of EVs,” Hunter said. “In terms of pricing, the vehicles in Japan have all gone up for the amount of the subsidy – $3450.”

“Ultimately the Government wants to force people out of private vehicle ownership but they aren’t giving the majority of Kiwis another solution. Unless you can afford to live in a ritzy inner city suburb or cramped apartment block, the money they are spending on cycle-lanes and pedestrian walk/cycle-way over the harbour bridge will never benefit you.”
– Robert Young, Nichibo Japan

Robert Young, director of New Zealand’s biggest used car importer Nichibo Japan, agreed prices had gone up, though not by quite as much. He said the market had been “perverted” by the subsidy, and New Zealanders would see that as the new EV and hybrid stock was shipped over from the Japan used car auction houses.

He estimated about half the $3450 subsidy would end up off-shore, benefiting the auction vendors in Japan and the UK as well as new car manufacturers. More would go to GST – meaning Kiwi EV buyers would pocket only about one-third of the subsidy.

“This policy is more about political run-scoring than achieving its objective,” Young said. “It will drive up new and used car prices for New Zealanders and increase the age of the national fleet which reduces road safety. 

“Ultimately the Government wants to force people out of private vehicle ownership but they aren’t giving the majority of Kiwis another solution. Unless you can afford to live in a ritzy inner city suburb or cramped apartment block, the money they are spending on cycle-lanes and pedestrian walk/cycle-way over the harbour bridge will never benefit you.”

David Vinsen, chief executive of the Imported Motor Vehicle Industry Association, said they had sat down with successive transport ministers – Simon Bridges, Julie Anne Genter and Michael Wood – and warned them that any EV subsidies would simply be absorbed by price hikes. Now that was being borne out.

But Transport Minister Michael Wood said the Government was keeping a close eye out for any attempts to take advantage of the subsidy.

“The new and imported used vehicle market is very competitive and I’m sure anyone attempting to distort market pricing will be called out,” he said.

“I have asked my officials to keep a close eye on the market as the Clean Car Discount gains momentum. Over the lifetime of the policy, it will help make cleaner cars more accessible to Kiwis.”

When Wood announced the EV subsidy on June 13, Newsroom asked about the risk that vendors would manipulate prices or double-claim to take advantage of subsidies.

He expressed confidence that this would be too difficult for importers, and that the New Zealand import market was not big enough to set prices.



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