Run on luxury cars
August 20, 2019
The tills are ringing at luxury car dealerships in the capital.
“Let’s be honest,” Gazley Motors managing director Myles Gazley said, “property [price] rises are funding it.”
According to sales data collected from by
the Automotive Industry Association, during the first quarter of 2019 luxury cars made up 15 percent of the total market, whereas in 2015 luxury cars made up just 10 percent.
Gazley said he sold 10 Porsches in two months at the end of last year, each worth over $180,000. Half of these were sold to Wellingtonians.
“More people are adding cars to their mortgages than through car finance,” he said.
Gazley Motors also sold luxury car brands Mercedez Benz, Alfa Romeo, Jeep, Dodge, Rolls Royce, and Ferrari.
Gazley also said he had a “good run of sales” in ultra-luxury car brands Rolls Royce and Ferrari recently.
Lexus car dealership salesman Paul Kelly said “people have the confidence to make a bad investment,” because of the increase in Wellington house prices.
More than 20 Lexuses, priced over $80,000, were sold through the car yard on Kent Terrace each month.
The majority of his customers were “older”, Kelly said.
However, Chris Lee & Partners authorised financial adviser Michael Warrington warned against borrowing to fund a luxury vehicle.
“I would not advise a person to use borrowed money, from mortgage or other source, to add a luxury car to their garage.
“Depreciating assets like fancy cars will not cost more tomorrow. They will be worth less,” he said.
“If you borrow to buy a depreciating asset you have doubled your problem, paid interest to use another person’s money, and [you] will reduce your net wealth because the car will fall in value – faster on a fancy car than a cheap car.”
Despite the prospect of depreciating value of luxury cars, the association’s figures showed sales had increased 46 percent – from approximately 2000 in the first quarter of 2015, to over 3000 in the first quarter of this year.
Comparatively, non-luxury car brands such as Toyota, Ford and Holden, had only grown in sales volume by six percent when you compared the first quarter of 2015 with the first quarter of 2019.
Nationwide, 25 ultra-luxury Bentley cars, priced to sell in New Zealand for $355,000, were sold in the first three months of this year. More than double the 10 Bentleys sold over the same time period in 2015.
According to Quotable Value figures, from January 2015 to January 2019 the average house value in Wellington City climbed $274,000.