Why Used Imports Are Good for US
There was plenty in Drive Electric’s recently released election manifesto that caught my attention when I read about it in Autofile. But perhaps the most important point is one where I think we should start by agreeing.
We should be ambitious about the new vehicles entering New Zealand.
New vehicles are, after all, the used vehicles of the future.
If we can encourage manufacturers to bring their latest, safest and lowest-emitting technology to New Zealand, that is good for everybody. If businesses and corporate fleets buy more EVs and other low-emission vehicles today, many of those vehicles will eventually work their way into the second-hand market at prices ordinary households can afford.
Drive Electric is right to focus on that pipeline.
Where things become more complicated is when the ambition we quite reasonably place on new vehicles being manufactured today is applied to used vehicles that were manufactured eight, nine or ten years ago.
We cannot go back in time and change how those vehicles were designed.
That distinction matters, and it is why the Government’s recent decision on the Clean Vehicle Standard is significant. The Government has retained the Standard, but importantly it has recognised that the new and used import markets are different and should have different emissions targets.
That is not weakening our environmental ambition. It is recognising reality.
New-vehicle distributors are choosing from vehicles being manufactured now. Used-vehicle importers are choosing from vehicles that already exist, predominantly in Japan. The policy question for the used market therefore has to be: what is the best available vehicle we can realistically bring into New Zealand at a price New Zealanders can afford?
And that brings me to the word “dependency”.
Drive Electric notes that about 41 per cent of New Zealand’s light fleet arrives as second-hand imports, predominantly from Japan, and argues that developing a stronger domestic fleet-to-used pipeline would reduce that dependency.
The number itself tells an important story. But I am not convinced dependency is necessarily a bad word.
New Zealand does depend on used imports.
And there is a very good reason for that.
We have a light-vehicle fleet of around 4.5 million vehicles. In a typical year only around 80,000–120,000 vehicles enter through the NZ-new channel. At that rate, relying on new vehicles alone to renew the fleet would take more than 30 years.
Meanwhile, New Zealanders undertake close to one million used-vehicle transactions each year.
That market simply cannot be supplied by vehicles originally sold new in New Zealand.
Look at the vehicles around nine to 12 years old – roughly the age and price range where many households are shopping. Used imports make up about half of that entire pool, and more than half in some individual age cohorts.
Take those vehicles away and you do not magically create hundreds of thousands of new-car buyers.
You create fewer vehicles.
You create more competition for the vehicles that remain.
You create higher prices.
And, ultimately, you encourage people to hang onto the older vehicle already sitting in their driveway.
That is the part of the fleet-renewal equation that can easily be missed.
For many New Zealand households, the choice is not between a ten-year-old Japanese import and a brand-new EV.
It might be between keeping a 20-year-old car for another three years or replacing it with a ten or 12-year-old hybrid with electronic stability control, multiple airbags, better crash protection and significantly better fuel economy.
In that situation, better is better.
Fleet transformation does not happen in one enormous leap. It happens through millions of individual replacement decisions as people gradually move from older vehicles into newer, safer and cleaner ones.
Used imports help make those steps possible.
Nor are the vehicles arriving from Japan simply cars nobody else wants. Japan’s tax and roadworthiness inspection system encourages owners to replace vehicles comparatively early. New Zealand’s import industry intersects with that cycle at a useful point – when those vehicles still have substantial life remaining but have depreciated into the price range many Kiwi households can afford.
That is an opportunity, not an embarrassment.
None of this cuts across Drive Electric’s ambition to create a stronger New Zealand corporate EV pipeline. I hope it succeeds.
Businesses buy the majority of new vehicles, so getting more EVs into business fleets today should create more locally sourced used EVs three, four and five years from now. That will give consumers another source of increasingly affordable low-emission vehicles.
But the future pipeline does not replace the pipeline we need today.
For the foreseeable future, we need both.
We need an ambitious new-vehicle market bringing the best available technology into New Zealand.
We need businesses purchasing those vehicles and eventually feeding them into the domestic used market.
And we need a healthy used-import channel bringing affordable, progressively cleaner and safer vehicles into the country from Japan.
Those are not competing ideas. They are different parts of the same fleet-renewal system.
The objective should not be to eliminate New Zealand’s “dependency” on used imports simply because dependency sounds undesirable.
The objective should be to get better vehicles into New Zealanders’ hands, faster and at prices they can afford.
Set strong ambitions for the vehicles of tomorrow.
But use the best vehicles actually available to improve the fleet today.