Car scrapyard
Cost to replace Cyclone-damaged vehicles will be at least $190m

Cyclone Gabrielle has wreaked havoc across Gisborne and Hawke’s Bay, leading to the deaths of 11 people and resulting in a huge cost to the economy. This article examines the toll that Cyclone Gabrielle took on cars and commercial vehicles in Gisborne and Hawke’s Bay and attempts to estimate the extent of vehicle damage, and cost of that damage, based on the provisional data that is currently available.

Nearly 200,000 vehicles were in the firing line

There are nearly 200,000 vehicles registered in Gisborne and Hawke’s Bay. Waka Kotahi’s Motor Vehicle Register recorded 199,942 licensed cars and commercial vehicles across Gisborne, Wairoa, Napier, Hastings, and Central Hawke’s Bay as of February 2023. Chart 1 shows the number of licensed vehicles by territorial authority in the areas most affected by the cyclone.

We will use provisional information about the extent of flooding in each council area to estimate the number of vehicles damaged in Hastings, Napier, and Central Hawke’s Bay. At the moment, this information is not available for Gisborne or Wairoa, but we extrapolate our initial estimates to draw some conclusions about damaged vehicles across the Gisborne and Hawke’s Bay regions. We then estimate the cost of the damaged vehicles using average prices for new and used cars to arrive at an estimate of the economic cost of vehicle damage due to Cyclone Gabrielle.

Our initial estimates suggest around 5,000 cars were damaged

Preliminary estimates of flood damage in Hastings District, Napier City, and Central Hawke’s Bay District have been made using satellite images mapping the extent of flooding. This information has been cross-referenced with land use maps to determine the proportion of buildings damaged by flooding. By assuming vehicles were in or next to buildings at the time of flooding, we can use satellite images to estimate the number of flood-damaged vehicles.

We estimate that 4,948 vehicles were damaged across Hastings, Napier, and Central Hawke’s Bay. We anticipate that over 72% of damaged vehicles would have been in Napier, which had more extensive flooding than the other two districts.

After estimating the number of damaged vehicles, we can make initial estimates of the cost of vehicles damaged by Cyclone Gabrielle. A higher proportion of first-time vehicle registrations in Gisborne and Hawke’s Bay are new, compared to the national average. Chart 2 outlines the proportions of new vehicles in each flood-affected area, which range between 60% and 68%, compared to the national average of only 56%.1

TradeMe data shows that the average price for a new car in April 2022 was $54,000, and the comparable figure for a used car was $14,000.

Based on these prices, and assuming all flood-damaged vehicles are replaced like-for-like (ie, a damaged NZ-new car is replaced with another new car), we estimate the cost of the damage to vehicles would total $192m.

Extrapolating our estimates to Wairoa and Gisborne

We can extrapolate these estimates to Wairoa and Gisborne if we assume the extent of flooding in these districts was the same as the average of flooding in the three districts for which we have information. This is a tenuous assumption, as the real extent of flooding is going to vary wildly between districts, but in the absence of any better information, it is the best we can do.

Our extrapolated estimate is that an additional 1,353 vehicles were damaged in Gisborne and Wairoa, taking our overall estimate of damaged vehicles to 6,271 across Gisborne and Hawke’s Bay. Using the above car prices from TradeMe, we estimate the total cost of vehicle damage is $243m.

The need to replace vehicles will boost registrations

The Insurance Council of New Zealand found that 93% to 97% of vehicles are insured in New Zealand, meaning that 3% to 7% of vehicles damaged by Cyclone Gabrielle will not be eligible for an insurance pay-out, and so might not be replaced. A small proportion of vehicles are also only insured with simple third-party coverage, so approximately 10% of vehicles damaged will not be easily or immediately replaced. Allowing for uninsured vehicles not to be replaced reduces our estimate of additional registrations following the cyclone across Hastings, Napier, and Central Hawke’s Bay to 4,453, and our extrapolated estimate for all of Gisborne and Hawke’s Bay to 5,644 vehicles. The estimated cost of replacement then becomes $173m and $219m for the two areas respectively.

Cyclone Gabrielle will have profound implications for our next round Building Forecasts and Transport Forecasts, which are set to be published on 14 April.

2 We recognise that the higher proportion of NZ-new registrations in Gisborne and Hawke’s Bay might reflect a greater supply of used imports in main centres such as Auckland. Some people purchasing used imports are likely to travel to other regions to purchase the car, meaning the proportion of new vehicles in Gisborne and Hawke’s Bay is overstated. However, in the absence of better information, we have chosen to use the registration figures as published by Waka Kotahi.

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