Investing and Trading in the Car and Auto Parts Market
Investing and Trading in the Car and Auto Parts Market – by Chrissy Davidson
New Zealand is one of the top ten countries in the world with a high car ownership ratio boasting of 780 vehicles for every 1000 New Zealanders. The auto and car parts industry is a strong player in the economy and is a major revenue earner. Investing in the industry is an opportunity that can yield good returns. Its future is not so shabby either as technology advancements, artificial intelligence and robotics are developing faster than expected. Trading in autonomous cars and parts is projected to be a lucrative investment.
The Car Industry in New Zealand is Growing
According to the Motor Industry Association of New Zealand, car sales are up for the fourth year in a row since the financial crisis in 2008. Low-interest rates and a growing migrant population are contributing factors to this growth. In addition, a car is viewed as a necessity in a large country with big cities and perceived poor public transportation.
The number of Kiwis buying a new car has also been increasing compared to those who are purchasing used cars according to Statistics New Zealand. Given that the price of a new vehicle in real terms is relatively cheaper compared to 25 years ago, a new ride is nearly the same price as a used vehicle. Hence, when it comes to choosing what to buy, it is a normal reaction to go for a modern vehicle with all the amenities and safety features.
The Used Car Market Is Still Important
The 2017 Retail Trade Survey revealed that motor vehicle and parts are in second place after the supermarket industry clocking in revenues at $3.3 billion for the first quarter of 2018. Car wealth in the country is estimated at $30 billion by Turners Auction based on figures of car ownership from the Ministry of Transport.
Many of these cars are old dungas with an average age of 14 years. Their owners find ways to maintain and spruce up vehicles to keep them running, making the secondhand car market an important section of the auto industry. Turners estimate that sales of secondhand vehicles increased by 1.6% in 2017. Around 45% of transactions were private followed by dealer to public, imports and dealer to dealer sales.
Capitalizing in Driverless Cars and Parts
Fully autonomous cars might still take some time before they hit NZ’s roads, but they are coming. Barriers to lower adoption rates of the new technology include infrastructure, laws, technological development and an aging vehicle fleet.
However, once these barriers are eliminated, trading in driverless cars and parts is the future. Replacing an older flotilla of vehicles is crucial to self-driving technology driving sales in this direction. Car parts are going to focus on interior comfort which means plush seats, top of the line electronics and amazing suspension.
The car and auto parts market in New Zealand offers promising opportunities if looking for a growth investment area. In the future, self-driving cars and parts are not only going to change the New Zealander’s way of life but also constitute a bright investment and trading prospect.