Vehicle industry doesn't need any more hiccups – Perry Kerr

The motor vehicle industry is pinning its hopes on a disaster-free couple of years to bolster new car sales.

That's the view of one of the industry's long-serving members, Motor Industry Association chief executive Perry Kerr, who s retiring after 16 years at the wheel.

The association began in 1996, amalgamating two different associations – one which looked after the assembly industry and another which looked after the new vehicle importers.

It now represents the new vehicle industry and lobbies on issues such as vehicle safety, emissions, fuel economy, consumer standards and codes of practice.

Dealing with deregulation of the new car market was perhaps his biggest challenge, Mr Kerr told NBR ONLINE.

"When I first came in to the industry it was heavily protected. Import volumes were only allowed up to a maximum of 10% of the total market.

"You had restrictions of what components you could import. There were restrictions on the source of the market for componentry and so on. It was very, very heavily protected and government controlled.

"At the time the assembly industry closed, in 1998, I thought it was probably a bad decision. But in hindsight the industry has flourished as a result."

"Today you’ve got an open market. Because of the open competition, basically the distributors here now source at the lowest price of any right-hand-drive markets in the world so we, in effect, have got Tokyo prices in New Zealand for motor vehicles.”

In the years which followed, the new vehicle market enjoyed a huge jump in sales, with press release after press release talking of an industry boom and record sales. In November 2007, the association recorded 6723 new cars sold and a year-to-date figure of 95,204 sales.

In recent years, however, the industry has taken a hit as the global financial crisis worsened and consumer spending dried up. July 2008 saw just 5429 new cars sold, down 15.7% on the previous July. And the figures got worse.

“The other thing which had impacted certainly on the lower end of the motor industry, was all these finance companies being taken out of the market early on. That had a dramatic impact because if people can’t get finance on the bottom end of the market, it filters its way up,” Mr Kerr says.

“In 2010, the market dropped 25% to 30% on the previous year and then last year we were starting to climb out of the hole then basically got hit by the [Japan] tsunami and later in the year, by the Thailand floods.

"So the market is certainly picking up at the moment – we’re 25% ahead of last year.

The new vehicle industry is now sitting at around 80,000 sales a year.

Mr Kerr is confident within the next five to 10 years the industry will once again be selling more than 100,000 vehicles every year – “as long as there is no significant market disruption from an outside source”.

He expects the trend to smaller vehicles to increase and new safety and fuel-efficiency technology to improve.

"Once Kiwis understand that unleaded 91 is going to sit over $2 a litre and possibly up round the $2.50 mark, you get a significant shift in terms of what vehicles they buy. The European vehicle market is being driven by regulation to get their fuel efficiency down to quite low levels.

"That means significant innovations in terms of both hybrid technology but also things like stop-start technology. Those vehicles end up in the New Zealand market relatively quickly after they’re released in Europe.”

Mr Kerr is planning a complete change after he finishes at the association and is following his daughters “across the ditch”.

The recruitment drive has started but it is likely to be a long road to finding a replacement. Mr Kerr wants someone appointed by Christmas, but expects they may need to give three months’ notice so is keen to see a replacement start in February, before he leaves next June.