Government moves to reduce car pollution are having the predicted effect of hitting the poor in the pocket. And if proposed changes to the warrant of fitness testing regime go ahead, those at the bottom of the heap will be dealt another blow. So says Clive Matthew-Wilson, a self-styled road safety campaigner who edits car review website dogandlemon.com. He is not a lone voice. Long-time car importer Chris Jellie says the combination of tighter vehicle emissions rules and fewer safety inspections for older cars is a recipe for disaster.
In June 2011, Jellie launched an online petition – backed by a punchy YouTube video – to try to persuade the Government to pull back from its anti-pollution plans. The petition failed to fly, collecting about 500 signatures, and in January 2012, phase three of the new emissions rules – banning imports from Japan of used cars built before 2005 – came into effect.
The result is exactly as Matthew-Wilson, Jellie and others anticipated: the inflow of vehicles has slowed, fewer old cars are being scrapped and prices at the bottom of the market are said to have trebled. “This was originally a Green policy that was taken up by National despite heavy lobbying by me and a number of other people,” says Matthew-Wilson.
“But because there have been fewer vehicles available to import, it’s had the opposite of the intended effect. The Greens’ plan was to restrict the number of imports from Japan and to compensate by improving public transport. What’s happened is imports have simply been cut off. That means vehicles that would have been off the road are still being driven, despite the fact that they’re heavily polluting and extremely unsafe in accidents.”
An old Toyota Corolla that would have cost $500 10 years ago is now three times that, Matthew-Wilson claims. “And the cars are trash – they’ve done 250,000-350,000km. It used to be that when an old car failed a warrant, it was taken to the wrecker and the owner bought another one. That was good for road safety, because it lowered the age of the vehicle fleet and meant people were driving increasingly fuel-efficient and safe vehicles.”
The trend is corroborated by figures from the Imported Motor Vehicle Industry Association, which went to court in late 2011 to try to block the latest emissions rule change. The association was expecting about 75,000 used cars from Japan to be imported in 2012, 20,000 fewer than in the previous year.
WHAT’S BEHIND THE DROP IN IMPORTS
The number of imports has fallen for several reasons. Because only 2005 and later models can now be brought into the country from Japan, the pool of available vehicles has shrunk. Japanese domestic demand for those vehicles has also increased after new car supplies were disrupted by the 2011 tsunami in the country’s northeast and floods in Thailand. And New Zealand is competing with other countries in the used Japanese vehicle market.
As imports slow, fewer cars are expected to be scrapped – about 123,000 in 2012, down from 145,000 the year before – says Imported Motor Vehicle Industry Association chief executive David Vinsen.
“The logical conclusion to be drawn is that people are retaining older vehicles for longer,” he says. Increased demand and rising prices for older cars mean it is cheaper for motorists to pay $500 for warrant repairs, and eke another two or three years out of an old banger than it is to buy a replacement.
“The rule has had the unintended consequence of worsening the fleet. I said to Steven Joyce when he was still Transport Minister that the best way to improve the fleet was to have New Zealanders in well-paying jobs. That might be a bit facile, but they will then migrate to the best vehicle they can afford as quickly as they can.”
The Ministry of Transport acknowledges the average age of cars on the roads is increasing, but doesn’t concede emissions rules are to blame. “There is no evidence the emissions rule has had any effect on the age of the vehicle fleet, or that it has changed the rate at which vehicles are scrapped,” a spokesperson says. “Although the average age is rising, it is rising at a constant rate and shows no step changes associated with any Government policy.”
The spokesperson says fleet ageing is a result of improved rust prevention and mechanical reliability, and a big influx of 1995-97 model imports in the early 2000s causing an age bulge that won’t begin to decrease until the early 2020s. Jellie – a pioneer of the used Japanese car trade who supported an initial ban on imports of pre-1998 vehicles – maintains his campaign against the latest emissions rule change is safety-motivated.
“The New Zealand buyer is paying for the reduction in imports – which is a direct result of the emissions rule – with increased prices. Their safety is also being put at stake.”
Safety is being compromised by increases in both the number of old cars and of poorer-quality imports. Jellie, a former panel beater who lived in Japan for 18 years before returning to Auckland’s North Shore to import vehicles to order, claims to know the Japanese end of the trade better than anyone. “I have spoken to people working in compliance centres and importing vehicles from Japan and they are saying that particularly some of the larger companies are being forced to target high-mileage damaged vehicles in order to meet New Zealand market demands.”
Markets such as Russia, parts of Africa, South America and increasingly Burma have learnt the trade from New Zealand. And because they are less choosy, Japanese buying agents prefer to supply them. “The biggest issue I have is that we’re putting unsafe cars on our roads,” Jellie says. “Combined with older cars staying on the roads longer and the proposed warrant of fitness rule change, it is a recipe for disaster.”
Tauranga dealer Craig Retief is finding it harder to lay his hands on the cars buyers want at the prices they’re used to. From one week to the next, a Toyota Ipsum he was trying to import for a customer went up in price by $1000.
“They’ve screwed the prices for a while,” Retief says of the emissions rule change. “There’s a limited variety of cars at the prices New Zealanders can afford. You’ll find a lot of Mazda Demios, Nissan Tiidas and Nissan Marches, but if you’re looking for a people-mover, what you would have paid $10,000 for is now $15,000.”
Whereas in 2011 he would have sold a 2003 Mazda Demio with 40,000-60,000km on the clock for about $8000, a 2005 model now goes for $10,000. “You’ll see a lot more older cars on the roads again. Statistically, instead of overall car ages improving, they’re going the other way. That’s the opposite of what the rule was supposed to do. It would have been better to have sold 10,000 cars that met the previous standard than for 10,000 cars that billow smoke to still be on the road.”
A CHANGE IN ATTITUDE
Yet it could have been worse. Vinsen says the Imported Motor Vehicle Industry Association was expecting a much steeper fall in imports. But the numbers have been bolstered by Japanese Government incentives for buyers of new cars and by the strength of the New Zealand dollar against the yen, which has softened prices.
Another factor, according to the Automobile Association, is that late-2011 import numbers were inflated because of the impending rule change. In the first nine months of 2012, used imports numbered 52,000, says AA motoring services general manager Stella Stocks, which “is quite good when compared with the 63,000 for the same period of 2011”.
The AA had advocated bringing in the last phase of the emissions rule a year later, at the start of 2013, because it expected motorists would hold onto their cars longer, resulting in an older fleet and higher vehicle emissions. Stocks says that appears to have happened, with the state of the economy exacerbating matters.
AA tracking of used car sales shows there was a sharp drop in 2009, rises in the following two years and a fall again in 2012 to just above the 2009 level. Part of the reason is a change in attitude, Stocks says, as people attach less status to the vehicle they drive. “I think cars are seen in a different light than they were several years ago. People are now asking, ‘Do I need the latest vehicle or is this one servicing my needs?’ And if the car they have is reliable and is doing the job, they will stay with it rather than update.”
But new car sales suggest otherwise. As Matthew-Wilson noted, the decline in used imports is matched by an increase in sales of new cars – 57,000 in the nine months to the end of September, up from 47,500 in the same period last year – proof, he says, that National is catering to its car-industry friends. Jellie attributes the jump to buyers who would otherwise have bought a used import.
However, Stocks doesn’t think there’s a direct relationship between the two markets. “I think they are distinct. About 80% of new cars are sold to fleet buyers and some of their volume would be catch-up after supply issues from the Japanese tsunami and the flooding in Thailand.”
What of air-quality improvements from the new emissions rules? The short answer is the Ministry of Transport doesn’t have figures for the period since the emissions rules targeting used imports began to be phased in. However, a 2011 report for the New Zealand Transport Agency found average light-vehicle emissions fell significantly in Auckland between 2003 and 2009.
But Stocks points out a flaw in Government policy. “If you stand on the corner of Albert and Victoria streets in Auckland, where my office is, the air quality hasn’t got any better because you have all these buses. If you want to address the emissions question, you need to do so across the whole vehicle fleet.” Heavy diesel vehicles aren’t covered by the new rules, Stocks says, although that doesn’t render the rules pointless. “Doing something is better than doing nothing.” Meanwhile, there is general agreement that the present squeeze on import volumes and prices will pass.
“There is always that hope,” says Jellie. “It depends largely on the Japanese economy and people’s willingness to part with their cars, and other external factors such as the other countries that are buying from Japan. The Government has said it is not going to tighten the rules further in the immediate future, so that should mean the market will soften somewhat.”
Loosening the WoF regime will increase the number of deaths, lobbyists claim, but others say they’re merely protecting their bottom line.
The poor will pay the price if the Government presses ahead with a proposal to do away with six-monthly warrant of fitness checks on vehicles between six and 12 years old, says the editor of car review website dogandlemon.com, Clive Matthew-Wilson.
“Anyone who has seen the vehicles poor people drive will know there is nothing other than the six-monthly warrant check that gets people to keep their vehicle in a roadworthy condition. There is no question in my mind that many people will stop replacing bald tyres, for example, if they don’t have a warrant coming up for renewal.
“A six-month gap between warrants is relatively frequent. In 12 months, many vehicles will be in a substandard condition by the time warrant renewal comes up.” Matthew-Wilson says Government estimates of “a few extra deaths” a year resulting from changes to the warrant of fitness rules are a long way below his calculations – based on overseas research – of up to 80 additional fatalities.
According to the Government, the type of vehicle safety problems picked up during warrant inspections contribute to about 2.5% of fatal and injury crashes and are the sole cause in 0.5% of incidents. However, Matthew-Wilson says German research suggests 10% of accidents are caused or strongly affected by vehicle defects, while Melbourne’s Monash University puts the figure at up to 24%.
“I’m not saying 24% is accurate – it’s impossible to gauge. When a vehicle is wrapped around a lamp post, there are very few things that are visible. You can check for bald tyres or something like that, but there’s not much left to evaluate. “What I am saying is that internationally most people who have researched this say vehicle factors affect a hell of a lot more crashes than is acknowledged.”
In opposing changes to the warrant regime, Matthew-Wilson has allied himself with the Motor Trade Association (MTA), whose members include car repairers. The Automobile Association (AA), which supports less-frequent checks, claims the MTA is motivated by self-interest.
“There’s a group of opponents who have a vested interest in retaining the status quo, because the changes put forward by the Government will affect their bottom line,” says AA spokesman Mark Stockdale. “They are putting profit ahead of safety.”
The AA’s view is that reduced vehicle testing frequency, combined with measures to encourage safe vehicles, will make the roads safer and reduce costs to motorists. Matthew-Wilson, who claims the pro-road transport AA and National Party are “loosely interchangeable” on this issue, says to suggest that opponents of the WoF changes are self-interested is like saying GPs encourage regular health checks just to keep their tills ticking over.
As for his own position: “I’m not for sale. I don’t accept advertising. I do what I think is right for the people of New Zealand. And in this case I think the MTA is 100% right and the AA 100% wrong.”
Both the AA and MTA enter the fray armed with surveys that they say show majority support for their points of view. More than 70% of 1395 AA members questioned support the idea of an annual WoF for all vehicles, says Stockdale. Meanwhile, the MTA says a phone survey of 1000 drivers showed 98% agreed that WoFs are a valuable safety check and 63% were “concerned to some degree” about the possibility of fewer inspections.
The Ministry of Transport says various options it has suggested for changing the warrant system “are designed to counter any increased risk from changing frequency alone. We aim to achieve similar or improved safety outcomes.”
The bright side
If you know where to look, you can still find good buys out there.
It’s not all gloom for used car buyers. Although vehicles at the bottom of the market might be poorer value than a year ago, a regular bidder at Auckland car auctions, who didn’t want to be named, says he finds good buys in the $2000-$6000 price range. He favours New Zealand-new European cars up to 12 years old on the basis that cars that had a hefty new price tag will have been well cared for. They also tend to be overlooked by most auction-goers, who are looking for Japanese imports.
Consumer NZ, which surveys members every three years on car reliability, gives the best scores to Toyota Corolla and Honda Jazz models from 2001-10, based on more than 8500 responses. Toyota consistently sells more new cars in New Zealand than any other make, although the combined sales of Korea’s Hyundai and its part-owned stablemate Kia are within striking distance of the Japanese manufacturer.
“The other thing that is going to happen that no one has factored in yet is the Chinese tsunami,” says dogandlemon.com editor Clive Matthew-Wilson. “At present, Chinese cars are every bit as dubious as they appear, but the Chinese will get it right, just as the Japanese did and the Koreans after them. In five years’ time, they’ll be making seriously good cars at prices that’ll put other makers out of business.” He says Great Wall, which sold 142 cars in New Zealand in the nine months to the end of September, is the Chinese market leader.