2 Cheap Cars to challenge Japanese new car dealerships in NZ
2 Cheap Cars to challenge Japanese new car dealerships in NZ with parallel imports
By Jonathan Underhill
July 1 (BusinessDesk) - 2 Cheap Cars, which
has built a nationwide chain of auto yards selling used
imports since starting four years ago, said it plans to
enter the market for new cars by parallel importing of
Toyota, Honda and Mazda vehicles.
Chief executive and
50 percent 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
percent of the new car Japanese market in New Zealand within
three years. It plans to open its first new car showroom in
Greenlane, Auckland, in the next two months.
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 percent, 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."
Crawford said he hasn't yet studied the 2
Cheap Cars' plan in enough detail to make a more substantive
response.
However, 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 second hand.
"We will run the new
cars as we run used," 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,
Williams said 2 Cheap Cars had turnover of $40 million in
its last financial year. Its other shareholder is listed as
Yusuke
Sena.
(BusinessDesk)