Empty car sales yards around Southland and New Zealand have been caused by disruptions to the manufacturing and supply chain of imported cars and parts by the Covid-19 pandemic and pressures on international freight.

Macaulay Ford Invercargill new Ford sales manager Brehan Cairns said yesterday that empty spaces did not mean the business was in trouble.

Rather, sales had been “insane” in the last six months as people spent money on new cars rather than holidays or other things, creating additional pressure for deliveries, he said.

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New stock had been arriving in waves. More began arriving on Wednesday and by the weekend the Macaulay Ford yard should be fully stocked again – although much of it would go straight out again to fill customer orders, Mr Cairns said.

“Our yard goes from being chokka to having not much in it,” he said.

However, manufacturing and supply chain issues are expected to continue causing fluctuations in stock levels this year.

“We will probably see another 12 months of the scramble,” Mr Cairns said.

Motor Industry Association chief executive David Crawford said several factors had caused car sales yards to empty around the country.

He expected the situation to improve later this year, once the Covid-19 vaccine rolls out around the world and gives confidence to international manufacturers, which have had to shut down several times because of Covid.

“When Covid struck and we went into lockdown in later March (2020) the world quickly became an uncertain place... We have had two types of factory closures. The vehicle factories that make the new vehicles... and also factories that make parts to go into the new cars. Other factories had to reduce production because they couldn’t get the parts... Those dynamics are still in play. There are countries that are now in their second or third wave and still going into shutdown,” Mr Crawford said.

New Zealand distributors order several months in advance – usually six or seven months for European-made vehicles and between three and five months for vehicles made in Japan or North America.

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When Covid first struck, New Zealander distributors were uncertain about the impact on the economy and what the world would be like, so were cautious with advance orders, Mr Crawford said.

“In the middle of the year, everyone thought our economy would be more severely hit that it was,” he said.

Vehicles arriving in New Zealand in December had been ordered some months ago, but not in as big numbers as they might have been.

Meanwhile, another dynamic had emerged – that of substitution spending, Mr Crawford said.

While New Zealand lost at least $16 billion in international tourism income, it had benefitted from about $7 billion in spending by Kiwis no longer able to take overseas holidays.

Overseas tourists usually spent their money on food, accommodation and travel, but Kiwis were spending their money in different ways, such as house renovations, or on caravans, boats, and vehicles, Mr Crawford said.

“June and July were strong sales months we did not anticipate so stock levels ran down more quickly. The consequences are we are waiting for more stock now... What you are seeing in Southland is repeated around the country. The wait list is much longer than it would normally be,” Mr Crawford said.

Car parks aplenty at Invercargill car sales yards. PHOTO: Lucy Henry

Statistics collected by the association’s monthly survey of members were now showing stock orders picking up. 

The low point had been October and November, the lowest point Mr Crawford had seen in his eight years with the association.

“It reduced by 60% from what we would normally have in the country. That made it really tight,” he said.

The availability of new cars was now increasing and should continue to increase as the Covid-19 vaccine rolled out, Mr Crawford said.

Meanwhile, the vehicle parts supply chain had also been disrupted by a significant reduction of air freight services into New Zealand.

Car part importers had turned to ocean shipping, which took longer. 

But the shipping industry had also been disrupted by Covid, as well as other issues at various ports, and all those delays were pushing the price of car parts up, Mr Crawford said. 

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‘It is a different world to January last year. But one of the messages we have for consumers is to be patient . . . I think by year end [December 2021] we will be more confident. We will know by October- November how the vaccines are rolling out,” he said.

Mr Cairns said when Covid struck, it was clear it was going to be tough to get stock into Southland.

“Ford and Mazda were quite proactive at damage control... We ordered up big time, a lot more units than we would normally, just to look a few months down the track. That has worked out well for us,” Mr Cairns said.

Mr Cairns also expected the used car supply chain to gain more traction during 2021.