New car sales are surging as companies upgrade fleets and middle-aged Kiwis give up on low returns on savings.

Car and light commercial registrations in July, at 8361, were up by 25 per cent on the same month a year ago, the strongest July since 2007.

At the start of the year the new-car industry predicted growth of 5 per cent across the industry. However, sales are up 19 per cent in the first seven months, with every month ahead of the corresponding period in 2011.

While new vehicle sales are dominated by fleet sales for company cars, typically representing about 70 per cent of sales, those in the industry report rising demand from private buyers.

Matthew Foot, principal dealer at Brendan Foot Motors, said the company's main demographic, Kiwis aged 45-70, was being tempted both by record low interest rates, which were undermining returns on savings, and a strong exchange rate, which affects imported goods prices.

"They see no value in having the money in the bank, and with the dollar the way it is, it's a good time to buy," said Foot, whose company operates six franchises in Wellington, Lower Hutt and Trentham.

Buyers were discovering new cars were often better value than used cars, Foot said, with the difference in some instances only a few thousand dollars, with the gap made up by fuel economy and safety features which were now standard on all sales.

Ian Stronach, spokesman for the Motor Trade Association, said some Kiwis who were hit by finance company collapses had now recovered and were committing to upgrading.

Companies which had delayed upgrading fleets were now buying, a sign of underlying confidence and a "highly competitive market" with manufacturers competing hard for new business.

The Motor Industry Association, which predicted 5 per cent growth in total new-vehicle sales this year to about 89,000, has now upgraded its forecast to 93,000, which would be the highest since 2008.

Chief executive Perry Kerr said among sales to companies there was a catchup from previous weak years, as well as strong business from Christchurch, related both to the rebuild and from extra insurance staff working in the city.

Typically, new-car sales are strongly linked to economic confidence, and Kerr said the feeling on the ground may be more positive than the impression in the media that the economy is stalling.

"You can't relate the sales to what you read in the press right now, but talking to manufacturers who're talking to dealers, they're finding that the underlying sentiment [among businesses] is there's reasonable profits being made, people are happy with the way things are going."

Toyota, New Zealand's leading car brand for a generation, continued to lead sales in both car and commercial vehicle sales in July and year to date.

The Holden Captiva was the largest selling passenger vehicle in July, with 261 registrations, although the Toyota Corolla has seen the most sales in the year to date at 2176, ahead of the Suzuki Swift.

In light commercials the Ford Ranger, with 330 registrations, was the biggest seller in July, narrowly ahead of the Toyota Hilux, which has been the biggest seller in the year to date, with 2502.

- © Fairfax NZ News