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New Cars Versus Imports – The NZ Herald

Rick Armstrong

Leading auto group says new cars now much cheaper to own & finance than imports.

It can be about 13 per cent cheaper to run a new car than a used imported vehicle in New Zealand, saving over $5000 over four years.

The surprising estimate comes from Rick Armstrong, Managing Director of Armstrong Motor Group, and turns the normal perception on its head.

Armstrong, who says there is little data available but quotes 25 years’ experience in the industry, uses two case studies of almost identical value to support his opinion. They focus on running costs of the two vehicles (see below) but don’t include depreciation nor the greater residual value of a new car when it comes to resale. He also criticises the environmental impact of bringing in 150,000 used Japanese cars.

“When used vehicle imports first started coming to New Zealand from Japan 30 years ago, it was to provide New Zealanders with a cheaper car option,” he says. “However the unprecedented growth of the new car market over the past five years or so has seen a major shift in the levels of value and affordability you now get when purchasing and owning a new vehicle.”

Armstrong says:

• Unlike new New Zealand vehicles, his experience was that imports rarely came with a traceable service history. Without that, these vehicles are far more likely to have major failure issues down the track as well as general maintenance upon arrival.
• Vehicle ownership periods in Japan are much shorter than in New Zealand so the necessity to maintain the vehicle isn’t as great.
• Many imports arrive with snow tyres that need to be switched out and vehicles from Japan are predominantly 5-10 years old, have done high kilometres and require a lot of work to pass a Warrant of Fitness inspection.

“You also have to consider the impact on the environment,” he says. “In my opinion, we get very little use out of these vehicles and then they have to be disposed of or sold with little residual value. Used imports are adding to the age of our fleet as well as potentially affecting the amount of fatalities of the road due to the relatively low safety levels of these aged vehicles.

“When you consider this across 150,000 vehicles, it’s a lot of waste for the country to absorb, in my view.”

Big and rapid changes in technology and competition have led to increased safety levels of new vehicles, now packed with safety features and driver aids, he says: “More safety features are being introduced as standard so you don’t need a big budget to find affordable technology. New vehicles have also become more environmentally friendly with lower emissions and innovations like stop-start technology which helps save fuel.

“Servicing is often offered free for the first 3-5 years, the vehicle is covered by warranty and, in my experience, the resale value of a New Zealand new car is much higher.

“Most new cars can now be purchased on a flexible finance plan on a very low finance rate which makes them more affordable, paying off the vehicle with a small interest component.”

New Car

Nissan X-Trail SUV
Cost: $37,490 + orc
Service Plan (3 years): $1,250 including GST
Warranty (3 years): Free
Finance (4 years) at 1.9 per cent (typical from a dealership); 0 per cent deposit
Interest + Fees Paid: $2,319
Total Amount Paid: $41,059

Imported car

2012 Mazda CX-5 SUV
Cost: $31,980 + orc
Servicing Cost (3 years): $1,440 including GST
Warranty (Autosure 3 Years) $1,995 including GST
Finance (4 years): at 14.65 per cent interest rate (an average; market rates vary from 10-16 per cent depending on personal and other circumstances); 0 per cent deposit
Total Interest + Fees Paid: $10,891
Total Amount Paid: $46,306

Armstrong says that is a differential of $5,247 or 13 per cent.

• Armstrong Motor Group is a privately owned New Zealand dealership network retailing 19 brands and operating 13 dealerships nationwide.
• The group includes three branches of Toyota (Auckland City Toyota) in Grey Lynn, Greenlane and Mount Wellington and opened facilities in East Auckland last year for Hyundai and Mercedes-Benz, with Peugeot Citroēn operating out of Greenlane since 2015 and the South Island’s first Mercedes-AMG Performance Centre having just been launched in Christchurch at one of the Prestige dealerships.