Headache looms with ageing car fleet

Own a 1996 model car? That's the most common age of vehicles in New Zealand - and it proves that the national vehicle fleet is getting older, reports Rob Maetzig.

Here's an interesting exercise. Conduct a quick survey of your workmates by asking them the model year of the vehicles they own.

Chances are that a substantial percentage of your colleagues will own vehicles of model year 1995, 1996 or 1997.Latest statistics - which relate to 2008 - show that of the 2.8 million vehicles on New Zealand roads, about 660,000 are from those three years of manufacture.

And more specifically, the most popular vehicles are year 1996 models, of which there are about 260,000 on the roads - with by far the most common a 1996 Toyota Corolla.

So is this a good thing or a bad thing? Toyota says it is definitely not good, because it shows that more than 20 years of importing used cars from Japan has not led to the promised land of better motoring for New Zealanders.

Instead, the used import phenomenon has actually helped increase the average age of the national car fleet, which is now more than 12.5 years - way older than the averages for countries such as Australia and the United States, which are well under 10 years.

The result is that New Zealand is now heading towards an obsolescence problem that will prove very difficult to overcome because the country's car "park" is now completely unbalanced, says Toyota New Zealand.

This viewpoint was voiced at a media briefing hosted by Toyota in Auckland last week to introduce the new Camry hybrid. Chief executive Alistair Davis says the New Zealand new vehicle market is incredibly volatile. "Over the time I've been with Toyota the market has swung from less than 70,000 sales a year to almost 120,000 depending on the health of the economy, the availability of used vehicles, and the sentiment of customers.

"But where next? Will the market climb back gradually as happened in the decade following 1997?

"Will it bounce back quickly as it did in the early 1980s, or will it languish as it did for most of the 1990s?"

Mr Davis says vehicles are high-cost consumer durables that owners can own for longer if required when times are tough, so the generally held view is that after a recession the car industry will suffer.

But it is more complex than that, he argues.

The first key point is that New Zealanders enjoy a high rate of vehicle ownership. Currently it has a population of 4.35 million, with a vehicle total of 2.8 million.

That equates to 643 vehicles per 1000 people, which is one of the highest in the world. This ownership rate is a function of geography, New Zealand's small, dispersed population which leads in turn to a lack of efficient public transport, and the fact that New Zealanders have a culture of independence, he says.

"Sadly, our gross domestic product per capita is not quite enough to finance that level of conventional vehicle ownership, so we have effectively achieved it by keeping our cars going longer than most developed countries, and more recently by allowing Japan's cast-offs to come into New Zealand to fuel our need for cars." Mr Davis wonders whether, as New Zealand emerges slowly from a recession, the consequence of massive debt levels and the escalating cost of vehicle ownership will cause the country's vehicle density to fall. But Toyota considers that unlikely, because New Zealanders love their cars and will find ways to keep them going.

But this may cause problems, he says.

"The most common car on our roads is a 1996 Toyota Corolla and at 14 years of age it is probably within six years of the end of its life. That means we are going to have a sudden shortage of vehicles over the next decade."

Not only that, but with New Zealand having to keep up with changing international trends in emissions and safety, it is likely that older vehicles will be forced off the roads, resulting in a rising level of vehicle scrappage.

That in turn would also drive up the number of new vehicles needing to be registered in New Zealand.

"At the same time, increasing compliance requirements could limit the number of used imports entering New Zealand, which would shift the supply mix towards new vehicles."

Mr Davis says that trend has already started in the past two years.

He believes those factors could drive the new vehicle market back over 100,000 units a year within three to four years.

However, despite the positive outlook, Mr Davis says there are economic factors that could slow down new-vehicle sales, in particular the rising cost of high- technology vehicles to reduce emissions and fuel consumption.

Mr Davis predicts international pressure will eventually encourage the Government to tackle the vehicle fleet issues such as scrappage programmes, in-field testing of emissions, and a progressive registration structure that encourages smaller vehicles.

"At the same time, a supply- side structure similar to that in Europe will encourage distributors to improve the environmental performance of their product. While vehicles make a smaller contribution to Co2 performance than agriculture, they are still a big contributor - and one that can be tackled with little collateral damage to in terms of employment and export performance."

Mr Davis says he expects that an increased focus on modernising New Zealand's fleet will result in a recovery of new- vehicle volumes to well beyond 100,000 sales by the middle of the decade. Many of those will be smaller cars.

He says hybrids are likely to be commonplace as other car marques endeavour to follow the Toyota and Honda lead. Alternative power options are expected to be available, including LPG, biofuel- compatible vehicles, hydrogen vehicles, plug-in hybrids, pure plug-in electric vehicles, battery replacement vehicles and hydrogen fuel cell vehicles.

He does not expect any of the more radical electric or hydrogen vehicles to become mainstream choices for some time because it was a decade before Toyota sold its millionth Prius and then three years before it sold the second million.

"While many manufacturers have been promising all sorts of cool technologies, most of them remain motor show concepts and the ultimate test of a new technology - whether it be an iPod or a Prius - is whether it sells in the market place," he says.

- © Fairfax NZ News