Axing the Clean Car program has thrown the new car market into disarray. This car market update reveals what’s changed and what’s in store.
In this car market update we look at the seismic shift the new car market is undergoing since the government eliminated the Clean Car program on 31 December 2023.
The program, which incentivised the purchase of EVs and hybrids while penalising high-emitting vehicles like utes, had a significant impact on buyers.
Its abrupt removal has thrown the market into disarray, with profound consequences for both vehicle sales and the country’s emissions reduction efforts.
EV and Hybrid Sales Plummet
One of the most striking impacts of the Clean Car program’s demise has been the dramatic decline in EV and hybrid sales.
In 2023, these vehicles accounted for an impressive 40% of all new vehicle sales.
However, in the first two months of 2024, their share has plummeted to just 25%, with internal combustion engine (ICE) vehicles now accounting for a staggering 75% of sales.
Ute Sales Surge
Conversely, the removal of the “Ute Tax” has predictably fuelled a surge in ute sales.
With the playing field levelled, utes have become more attractive to buyers, contributing to the overall shift towards ICE vehicles.
How long this will last is unknown, but what is known is that buyers were holding off until the ute tax was goneburger before buying a new ute. And buy new utes they have!
Ute Share Rockets
In 2023 utes accounted for 17% of all sales, while small cars accounted for 6.5%.
In January and February 2024, the ute share rocketed to 26% while small cars plummeted to only 3.75% of all new car sales.
Cost of Living Crisis Dampens Overall Vehicle Sales
While the market dynamics have shifted dramatically, overall vehicle sales have taken a hit, declining by 8.95% year-to-date compared to the same period last year.
This decline can be attributed, in part, to the ongoing cost of living crisis, which has likely dampened consumer spending on big-ticket items like vehicles.
Cybertruck Craze Highlights Tesla’s EV Dominance
Amidst the market turmoil, one company seems to be defying gravity: Tesla.
The electric vehicle pioneer’s highly anticipated Cybertruck pickup truck, which began deliveries in November 2023, has generated an unprecedented level of interest.
According to InsideEVs, Tesla had amassed over 1.9 million pre-orders for the Cybertruck as of July 2023, with CEO Elon Musk describing demand as “so off the hook, you can’t even see the hook.”
This craze has translated into a staggering US$190 million in pre-order deposits (of $100 each), highlighting Tesla’s continued dominance in the EV space and the unwavering consumer appetite for its products, even in the face of shifting market conditions.
Legacy Automakers Stumble
While Tesla basks in Cybertruck demand, legacy automakers are scrambling to keep up in the rapidly evolving EV landscape.
Ford has paused its $3.5 billion EV plant in Marshall, Michigan, while General Motors and Honda have cancelled their plans to sell EVs for around US$30,000.
Even Ford has postponed $12 billion in EV investment, citing market conditions as a factor.
These setbacks underscore the challenges traditional automakers face in transitioning to electric vehicles, particularly in markets where government incentives are being rolled back or eliminated.
Navigating Uncharted Waters
As New Zealand’s car market grapples with the fallout from the Clean Car program’s axing, it remains to be seen how buyer preferences will continue to evolve and whether the country’s emissions reduction targets will be impacted.
However, one thing is clear: the market is in flux, and both automakers and policymakers will need to adapt swiftly to navigate these uncharted waters.
A Strategic Approach for Uncertain Times
When managing your fleet vehicle requirements, these uncertain times call for a strategic approach.
One option to consider is refinancing vehicles nearing the end of their lease terms, which defers the need for a new vehicle purchase.
Alternatively, leasing ex-lease & used vehicles can provide a more budget-friendly alternative to buying new, particularly in the absence of incentives that previously made new EVs and hybrids more affordable.
Both options are viable ways to preserve capital, keep your vehicles off the balance sheet, and manage your fleet in a tax-efficient way.
By exploring these options, you can better navigate the market volatility while still meeting your vehicle needs in a cost-effective way.
Overall, New Zealand’s automotive landscape is undergoing profound changes, and both consumers and businesses will need to adapt their strategies to stay ahead of the curve.
While the road ahead may be unpredictable, taking a flexible and forward-thinking approach can help mitigate risks and seize opportunities amidst the upheaval.
Get in touch to discuss how to take a strategic approach with your fleet requirements…
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