Ask an expert

Why are we currently not seeing the benefit from the high NZ dollar. Example 1. Lexus RX 350 US$39,075 or NZ$45,190 current exchange value. Current NZ$ price in NZ $118,600 a 160% increase. This difference is pretty much common throughout most NZ new car prices. Not withstanding the relative size of markets, this is extortion.

We made contact with the Motor Industry Association (MIA) and asked them for a comment.

Below is the reply from their CEO Mr Perry Kerr.

Thank you for the opportunity to respond as this is not an uncommon question.

In response, firstly New Zealand has one of the most open markets in the world, including the ability to parallel import, meaning that a car company cannot stop the importing of competing products. The new vehicle industry embraces this as it means New Zealand consumers enjoy world best prices available from the major right hand drive markets of Japan, UK, Singapore, Hong Kong etc.

The second point is that the vehicles that are being compared are of an identical specification. In the past, when looking a price comparisons, in particular between New Zealand and the US/Canada the quoted overseas price is for the base model whereas here in New Zealand the official distributor may choose only to import two or three model variants which include additional safety and other features (including something as basic as electric verse wind up windows). These models are chosen with regard to what competitors are offering.

In addition the quoted New Zealand price is always negotiable.

Next new vehicle distributors try to keep prices constant over a model cycle irrespective of whether or not the exchange rate goes up or down. The absolute worst case scenario is to reduce a price as it impacts on the whole market and all owners of that vehicle. That is not to say prices will not drop if it is the long term view that there has been a shift in exchange rates or – as has happened in the past – local taxes have reduced or been eliminated.

While some of your readers may still not agree with our comments the proof is that entrepreneurial importers have no regard for the new vehicle industry and if the price differential quoted is as large as that detailed then you would see a flood of these vehicles crossing the wharf as ‘grey imports’ in direct competition to the official distributor. History has however shown that this is not the case with total import numbers of new unregistered grey imports running at two to three vehicles a month.