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Market Report COVID-19 May 27 2020

Market Report COVID-19 May 27 2020

Posted on 28th May 2020 by Russell Phillips

Car Sales Down 5

Written by Russell Phillips Director of Automotive Employment NZ and JOBCORP NZ. 

As we are all painfully aware the pandemic that is COVID-19 arrived in NZ like a tsunami, changing all our lives in March.

What many of us do not know is how the bounce back is rolling out, it is not all doom and gloom by any standards.     

On March 25 NZ went into level 4 lockdown where we remained until April 27 where we reverted to level 3.  On the 14th of May we moved to level 2.  As at May 27 there are just 21 of COVID-19 left in the country, logically this number may continue to drop away.  It is now possible NZ could become the first country in the world to be virus free and we will know if we drop to level 1 in the next 2 weeks.  The motor industry is back in business and we have a big opportunity.  

This commentary provides an insight across the light and heavy sectors of the industry including observed sales and after sales activity nationally.  

Right now, light automotive dealerships in the new vehicle sector report steady trading activity.  The aftersales departments are busy, e.g. parts and service are holding up particularly well with some drop off occurring but not significantly so.  Repairers and the motor body industry while busy are experiencing frustrations due to panel and parts delays.

Reports from dealers show sales are around 70% of normal levels at today’s date but actual figures are hard to pin down.  Understandably nobody wants to be the company reporting lower figures than their competitor.     Inside guestimates show it is entirely possible new vehicle sales could be trending at 60% of normal levels but we have a suspicion our dealers are more resilient than most realise.  70% overall sounds about right for now but we will see how the figures pan out.

What is really encouraging is some regional areas of NZ are booming and nobody anticipated this.  Agriculture, Vita Culture, Farm operations are reportedly doing well.  Forestry has experienced a big comeback.  In regional areas where the stimulus from this activity is significant sales and service operations are booming, at least for now.

Not all areas of NZ are as fortunate and our largest cities, Auckland, Wellington, and Christchurch are hard hit with redundancies causing those displaced and our executives and HR Managers a great deal of stress.  We are currently running a job rescue program and Christchurch is location with the highest number of jobs rescues for now.

Not all businesses are impacted.  Some of the top operators have been able to drive the businesses forward, limiting losses.

The heavy equipment and commercial vehicle markets are also showing resilience.  While sales are reported as tough going many are holding sales volumes up to around 70 or 80% of normal levels and once again after sales operations are stronger than this in numerous sites.

Forestry equipment sales are up, farm machinery nearing normal levels and materials handling sales are reasonably strong. 

Very few technicians are being made redundant, particularly so in the heavy diesel sector.

Lets look at the forecast moving forward.  Forget the V, U or L shaped recessions reported by Harvard Business Review, the COVID-19 recession is starting to look like an upward trending graph.  It hit hard, plunging business activity, there will be ups and downs and these could be protracted due to international head winds. This is a recession of a shape we have nor previously witnessed in our view.


Think very carefully before you displace workers.  The most accurate indicator we have so far shows New Zealand’s borders could be closed or privy to high standards of entry criteria for 2 years plus, if reports from EPI DEEMY OLIGISTS are correct.


While this is not great news for migrants this must surely create skills shortages as the economy steadily tracks towards recovery. 


Despite having severe doubts companies will be employing apprentices in high volumes in a recession, the industry certainly should be employing apprentices when the incentives arrive.  WHY? If our borders close for more than 2 years, the shortages will critically damage the infrastructure of industry.  Those workers displaced will be urgently needed and many will be lost to industry finding roles in other sectors.


The government’s 1.6-Billion-dollar budget for trades training and workforce development may not be looking so silly if our borders are closed for 3 years and not 2.  If you are an employer can you imagine how big the skills shortage will become if we cannot supplement skills shortages with offshore talent?


Recessions can be useful tools to secure talent that is otherwise hard to find.  Not only think about limiting your redundancies right now but consider what talent you will need in six months.  IF I’m right, the biggest issue moving forward will be the closed borders and lack of available skills long term.


Having said all the above, right now the volume of redundancies is high. For this reason, Automotive Employment NZ started the JOB Rescue and RECOVERY Program.  We have some terrific talent right now, and for the first time in 29 years we additionally have temps, contractors, and casual workers as well as our core business of permanent staff.


Do not for a moment think we are not vulnerable to this recession; we too need help and are not too proud to ask our employer clients for their support. Recessions are tough on recruitment companies. This will be the 4th recession my company has navigated.  If you have a vacancy list it with us, if we place a rescued worker there is no fee, even normal placements are discounted 30%.