Global supply disruption puts the brakes on business car fleet sales – Newsroom

August 4, 2022 by No Comments


The war in Ukraine, clean car discounts and fuel prices have stymied corporate fleet purchases, with sales of petrol and diesel cars dropping to their lowest number in five years

The war in Ukraine, clean car discounts and rising inflation have all stymied the flow of new cars in New Zealand, with July proving the second lowest month for petrol and diesel car registrations since January 2017.

Given 60 percent of new vehicle purchases are from businesses, it’s a sign of a business sector made hesitant by an uncertain world.

Figures released on Wednesday by the Motor Industry Association had 11,101 registrations of new vehicles for the month of July, down 26 percent on the same month the year before.

Association CEO David Crawford said supply constraints were also in the mix, with a world-wide shortage of micro-processors affecting vehicle production and pandemic restrictions slowing production in China.

Palladium and neon, both crucial elements in automobile production, cite Ukraine and Russia as frequent points of origin. Shortages have put strain on the European market for vehicles.

“New vehicle sales in Europe are down by about 20 to 25 percent mostly due to supply of parts for vehicles being affected by the Ukraine conflict,” Crawford said. “Ukraine has many factories contracted by vehicle manufactures to make parts for them and Russia was a big supplier of micro-processors.”

Car parts from China have also seen hold-ups, and with most vehicle manufacturers relying on Chinese production lines, there are traffic jams in the supply chain.

“Covid is slowing down parts made in China,” Crawford said. “China has a zero tolerance policy on Covid, so each time there is a Covid outbreak, parts supply slows down and becomes problematic for vehicle manufacturing elsewhere.”

International pressures have joined local factors like the clean car discount in pumping the brakes for the petrol automotive industry.

The association reported 8049 passenger car and SUV registrations, down 19.4 percent (1935 vehicles) on the same month last year.

Registrations of 3052 new commercial vehicles were down 39.8 percent (2017 vehicles) on July last year. Public appetite and the economic sustainability of having a fleet of combustion engine company vehicles may be changing quickly.

The Warehouse Group, Air New Zealand, Saatchi & Saatchi, TVNZ, Beca, Westpac, Spark and Z Energy partnered up in May of this year to share a fleet of hydrogen-powered Toyota Mirai.

Toyota New Zealand Chief Executive Neeraj Lala said the project shows new ways for companies to approach vehicle fleet ownership.

“This trial… showcases the ability for large companies to join together to share their fleets, which in the future could lead to larger reduction in carbon emissions when you are talking about sharing say 100 cars,” he said.

Similarly, a spokesperson from Genesis Energy said the company had shifted away from having their own fleet of company vehicles and instead use electric vehicles provided by Zilch, a car sharing company, as a part of a strategy to reduce transport emissions.

Genesis replaced company cars and carparks with a 25 percent public transport subsidy, carpool hubs and free shuttles for staff in 2020, which reportedly resulted in a 71 percent decrease in emissions related to vehicle use.

And as businesses move towards greener transport solutions, new car purchases may remain lower than they were in the past.

Crawford said registration numbers were likely …….



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