Archive for » June 9th, 2016«

Nation of Debt : Big ticket sales boom

Sellers of big ticket items like cars, boats and caravans say business is booming on the back of a strong economy and a wealth effect driven by rising property prices.

David Crawford, chief executive of the Motor Industry Association, said New Zealand was headed for its third record year for new vehicle sales.

“2014 was a record then 2015 broke that and now we are already 5 per cent up on sales this time last year.

“We are heading for a third record year in a row — that is significant.” Crawford said a confident economy, strong immigration and people feeling wealthier through rising house prices were all driving factors.

Of the new cars sold in New Zealand around 70 per cent were sold to businesses versus 30 per cent to private.

“As the economy has got stronger we find that those business sales have reverted back the three yearly cycle.” During the global financial crisis businesses pushed out their purchases to four or five yearly.

New car sales:

2014 – 127,352

2015 – 134,234

2016 (until May 31) – 55,435

source: Motor Industry Association

Crawford said luxury car sales had been the first to be hit by the down-turn but had also been the first area to recover followed by commercial vehicles.

Crawford said strong building growth in Christchurch and Auckland was also influencing commercial sales.

“When the trades people have good strong forward orders of work they tend to upgrade equipment.” Crawford said private sales had gone up at the same time as commercial sales.

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“I suspect it is people feeling wealthier as part of that.” “Their house prices have gone up so they feel more wealthy.” Cheap finance was also making it attractive.

Crawford said most new car sales were done using finance.

“I can’t tell you whether that is mortgage debt or other finance — but there is a lot of finance going on.” Mike Rose, organiser of the HutchWilco Boat show, said it did not collect official figures of boat sales from the show but anecdotal evidence from boat manufacturers and retailers pointed to a good year.

Rose, who has been in the industry since the mid 1980s said boat sales tended to be driven by three factors — house prices, low interest rates and people receiving a windfall either through an inheritance or sale of business.

Continued below.

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Rayglass boats chief executive Dave Larson said this year’s boat show had been its best since 2007.

“The overall economy is feeling pretty good especially up in Auckland “The weather makes a big difference – it’s been a good year for game fishing – people are feeling happy.

“For Aucklanders their house is going up in value at $1000 a day so naturally they are feeling wealthier.

Larson said the industry had been through some tight times.

The tap had virtually shut within a week after the global financial crisis hit.

Sales for the last few years had been steady but it was now very busy and was already getting ready for the run into Christmas which usually did not start for another two or three months.

“It comes back to the strength of the economy. People aren’t waiting to go and make a purchase.”

Boats for sale at the Hutchwilco New Zealand Boat Show. The latest show was reportedly the best since 2007.

Larson said most people had their funding organised before they walked in the door so it was unclear how many people were using their mortgage to fund a boat purchase.

Richard Martin, owner of Woods Caravan and Motor Campers on Auckland’s North Shore said his sales were up 15 per cent this year.

Martin said he had been in business for over 40 years and had definitely noticed a pick up in business in the last couple of years.

“The economy is definitely humming along.” “Each year it is getting a little better.” Martin said very few of his buyers, which were typically aged 60 and over, used finance.

“I would say most of the business is cash.”


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Same-store boat dealer sales plunge in May

same-store overall

Boat dealer sales dropped by their largest amount in more than five years in May, giving credence to anecdotal reports of slowing activity during the month.

Overall sales fell 7.4 percent year-over-year, the biggest one month drop since the recovery began, according to the latest report from CDK Global Recreation, which is based on data from users of the company’s Lightspeed software.

It was the first time same-store sales have dropped this year and only the second time since January 2015. Still, overall same-store sales have been up year-over-year for 25 of the last 29 months dating back to January 2014.

The biggest cause of the downturn was an 8.2 percent drop in unit sales, the first year-over-year decline since December 2015 and the largest since October 2014. This could be a reflection of what many in the industry had speculated — that sales had been moved earlier in the year with the mild winter in many parts of the country. Gains posted earlier this year were probably unsustainable, with for example, unit sales up 28.8 percent year-over-year in February.

Service department revenue was down slightly in May, o.7 percent, from a year earlier. Service revenue has been down three of the first five months of 2016.

Parts and accessories revenue was up 0.2 percent for the month, improving on the 1.6 percent decline posted in April.

 


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