2 Cheap Cars to challenge Japanese new car dealerships with parallel imports
2 Cheap Cars, which has built a nationwide chain of car yards selling used imports since starting four years ago, says it plans to enter the market for new cars by parallel importing Toyota, Honda and Mazda vehicles.
Chief executive and 50% shareholder Eugene Williams claims his company will be able to undercut the official dealerships by as much as $10,000 on the price of a new car and he is targeting 10% of the new car Japanese market in New Zealand within three years. 2 Cheap Cars plans to open its first new car showroom in Greenlane, Auckland, in the next two months.
Mr Williams told BusinessDesk his company will buy the cars from dealerships in Japan rather than from the manufacturers but that they will still be able to be sold as new in New Zealand because they won't have been registered in Japan.
"In Japan, every dealership has a quota – they have to buy them whether they can sell them or not, so there is excess stock in the market," he said.
2 Cheap Cars was ranked second in Deloitte's 2014 Fast 50 survey, with sales growth of 1294%, and won the accounting firm's award for fastest-growing retail and consumer products business. Williams says the cars will carry the manufacturer's warranty and his firm "will stand behind our cars."
The industry body for New Zealand dealerships says it is concerned about 2 Cheap Cars' latest move. Chief executive David Crawford said buying cars from dealers in Japan suggests they have been pre-registered and claiming them as new in New Zealand may contravene local law. The vehicles could also become problematic for owners.
"Our concern would be that it creates problems for the consumer that are not insignificant," Crawford said. "There may be flow-on effects with warranties, recalls. If not managed correctly, that will create problems down the track."
Mr Crawford said he hasn't yet studied the 2 Cheap Cars' plan in enough detail to make a more substantive response.
However, Mr Williams said New Zealand consumers are effectively being gouged by existing new car dealers.
"I understand New Zealand is a small market but in this day and age, when everyone is buying from Amazon or whatever, new cars in New Zealand are grossly overpriced," Williams said. That meant new car buyers were mainly government agencies and corporates, while ordinary consumers bought secondhand.
"We will run the new cars as we run used," Mr Williams said. "We're high volume, low margin."
2 Cheap Cars was one of the first potential investors last year to show interest in a proposal to operate services on regional air routes abandoned by Air New Zealand through a new venture, Kiwi Regional Airlines. The plan didn't proceed.
In a statement at the time, Mr Williams said 2 Cheap Cars had turnover of $40 million in its last financial year. Its other shareholder is listed as Yusuke Sena.