A strong economy and wealth from rising property prices have seen car sales soar, despite growing household debt.
New Zealand has a national debt of $492.5 billion, with household debt making up $232.9 billion.
David Crawford, chief executive of the Motor Industry Association, says New Zealand is heading towards its third record year of new vehicle sales.
“2014 was a record, then 2015 broke that, and now we are already 5 per cent up on sales this time last year.”
Crawford says a third record year in a row is significant, citing strong immigration, a confident economy and people experiencing wealth from rising property values as factors.
New vehicle sales have continued to break records, with 127,352 sales in 2014 and 134,234 in 2015. As of May 31 this year, 55,435 units had already been sold.
Of those sales, 70 per cent went to businesses, with 30 per cent going into private ownership.
Crawford says the strong economy has reverted sales back to a three-yearly cycle, down from the four- or five-yearly business purchases seen during the global financial crisis.
He adds that luxury cars were the first to be hit by economic downturns, but had also been the first sector to recover, followed by commercials. Sales of commercial vehicles had also been influenced by strong building growth in Auckland and Christchurch.
“When the tradespeople have good, strong forward orders of work they tend to upgrade equipment.” He says that private sales had increased at the same time as commercial sales.
Crawford attributed the rise in sales to “people feeling wealthier”, saying “their house prices have gone up so they feel more wealthy”.
He added that cheaper financing was making new car sales more attractive.