The New Zealand used car market is in desperate need of a service; the brakes are squealing, the heat gauge is in the red, and the check engine light has been on for years. But market shifts like this do not occur overnight or without reason. Over the past decade, what started as a high-flying success story has slowly but surely shifted into a challenging era.
Using vehicle sales data from the Motor Industry Association, we're taking a look back at the last decade of New Zealand's used car market, exploring the highs, the lows, and the turning points that got us to where we are in 2024.
The Rise and Peak of the Used Car Market
At the beginning of the past decade, the used car market was full steam ahead, with Kiwis snapping up affordable, reliable cars year after year. This rise came to a peak in 2017, with a record-breaking 178,686 used cars sold! If you were in the business back then, you'd probably have thought the good times were here to stay.
2017 - The Glory Days of Used Car Sales
So, what was so special about 2017? Why did so many Kiwis decide to upgrade their wheels? For starters, the New Zealand economy was humming along. This economic stability gave people the confidence to spend, especially on bigger purchases like cars.
But it wasn't just about timing; there were more options on the lot than ever before, thanks to a flood of high-quality Japanese imports. These were cars with low mileage and a reputation for being built to last, and they were priced well within reach for many Kiwis.
2018 Onwards – The Market Starts to Shift
But all good things must come to an end. After 2017, we started to see the first signs that the used car market was slowing down. Sales in 2018 dropped to 159,804, then down again to 151,871 in 2019. It wasn't exactly a freefall, but it was clear the high tide had started to recede.
Many within the industry saw these numbers as less of a fall-off and more of a settling-down period after such historic peaks. But little did we know, an even bigger challenge was on the horizon.
The Decline Begins – Challenges of a Changing Market
If 2017 was the high point, then 2020 was the wake-up call no one saw coming. Just as the New Zealand used car market was finding its groove, the COVID-19 pandemic came out of nowhere and turned everything upside down. Total sales in 2020 dropped to 122,190, a big fall from the previous years.
2020: A Year Like No Other
The pandemic changed just about everything, and car buying was no exception. With lockdowns in place and financial uncertainty at an all-time high, big purchases like cars took a backseat.
Supply Chain Chaos
And it wasn't just about people holding off on buying. The global supply chain, which the used car market relies on heavily, especially for imported cars, was thrown into chaos. Imports of quality, affordable vehicles from countries like Japan slowed to a trickle as international shipping faced massive disruptions. Fewer imports meant fewer options for buyers, which only added to the industry's struggles.
Rethinking the Daily Commute
On top of all this, COVID-19 also changed how we get around. With so many people now working from home, the daily commute was no longer a big part of life for a lot of New Zealanders. Without the need to travel to work every day, some found they could get by without a car altogether.
2020 was a tough year that left the used car market reeling. But as we'll see, the impact didn't end with the pandemic's peak. It continued to reverberate through the years that followed.
Post-Pandemic Struggles in the Used Car Market
After the pandemic's peak in 2020, the New Zealand used car market tried to make a comeback, but it's been a tough climb. In 2021, there were glimmers of recovery, with sales rising to 128,852 units as restrictions eased and consumer confidence started to recover. Yet, the market never quite returned to its peak days, and by 2022, sales reached a new low of 118,393 units, a clear sign the industry was still facing hurdles.
One of the biggest issues has been a persistent strain on global supply chains. The early pandemic disruptions didn't disappear overnight. Imports were still arriving at a slower rate, and this limited inventory meant that buyers had fewer choices, and prices were pushed higher.
The post-pandemic years have shown that the road to recovery isn't straightforward. As we approach 2024, it's clear that the market's struggle to regain its footing is far from over.
2024: A Year of Volatility and Decline
As we roll through 2024, the used car market in New Zealand is still on a bumpy road. Year-to-date sales figures are down 8% compared to the same time period in 2023 (Jan to Oct), with only 89,089 units sold so far. This drop is one of the largest year-over-year declines in recent memory, showing that the challenges facing the industry are far from over.
Rollercoaster Monthly Sales
Monthly sales data from 2024 showcases just how unpredictable the market has become. Early in the year, January showed promising numbers, with 9,603 used vehicles sold, but as the months went on, sales began to slide. By October, sales were down to 7,767. These rollercoaster numbers point to a market struggling with both supply and demand.
On one hand, fewer imports are still limiting inventory, and on the other, economic pressures are causing Kiwis to hold off on big-ticket purchases. A big part of the story in 2024 is the economic climate. Rising inflation and living costs have left many New Zealanders tightening their belts, making the idea of buying a car, new or used, feel like a stretch. This financial pressure is leaving the market pretty quiet.
Looking to the Future of the Used Car Market
2024 hasn't exactly been smooth sailing for the used car market. But it's not all doom and gloom. Despite the challenges, there are some bright spots on the horizon that might help steer the industry back on course.
A New Electric Frontier for Used Cars
The shift toward electric vehicles (EVs) is already shaking up the market, and it could be an exciting new chapter for used car dealers. As more people trade in older EVs for newer models, we're likely to see an increase in second-hand EVs hitting the market. For eco-conscious Kiwis, this could be a game-changer, offering a more affordable path to going green.
Digital Sales Channels Making Buying Easier
With the rise of online car-buying platforms, getting a used car has never been more convenient. Websites and digital marketplaces allow buyers to browse and compare options without even setting foot on a lot. For an industry dealing with reduced foot traffic and hesitant buyers, embracing these digital channels could be a smart move that opens up new opportunities.
An Eye on Economic Recovery
While it's hard to predict exactly when things will improve, economic cycles do eventually turn around. If inflation cools off and the cost of living stabilises, we might see more Kiwis ready to upgrade their cars. In the meantime, staying adaptable and finding creative ways to reach buyers will be key.
Turning the Corner in NZ's Used Car Market
Every race has its twists and turns, and while the New Zealand used car market might be in a downturn currently, that straightaway could be just around the corner. After weathering a couple of rough years, there's plenty of reason for promise. Platforms like AutoFlip are entering the market and changing the way Kiwis buy cars and dealers sell cars for the better.
Discover how AutoFlip works and join thousands of Kiwis in the future of online car sales.
