New Zealanders have a passion for cars. With the exception of the US, our love affair with the automobile has led to New Zealand having more cars per head of population than anywhere in the world. The car industry is very different to how it once was back in the late 1980s. The significant changes to regulations around importing vehicles have influenced New Zealanders’ consumption of cars.
For a mere $708m (or about $165 each) we all took proud ownership this week of one slightly used rail and ferry network. Add to this cheque, the money needed for track maintenance and upgrades of rolling stock and the public investment will be well in excess of $1 bn.
Many financial analysts view the currentslide in the ‘Baltic Dry Index’ as indicative of an upcoming collapse incommodity prices, however we do not believe the story is quite that clear cut.
As you stand at the petrol pump watching the dollars clickingover on the counter, think about what it’s really costing you to drive aroundin your car. It’s not the petrol. The big latent cost is depreciation – whatyou paid for your pride and joy will in many cases turn into a lot less whenyou come to sell it or trade it in. In very broad terms, fuel purchasesaccount for around 10% of the total annual cost of owning and running anear-new car.
Road freight transport operators were slugged with a nasty one-two combination over the first six months of this year. A slowdown in economic activity weighed heavily on demand for road freight transport services, while soaring diesel prices and surging wage costs put the squeeze on margins. But after a tough start to the year trading conditions appear to be improving.
The fall in fuel prices over the past six weeks will be adding some fat to some pretty lean margins in the trucking industry. How much further will prices fall? Not much in our view. Although there are some conspiracy theories floating about that suggest the Saudis will pump enough oil to drop prices leading into the November mid-term elections in the US to help George Bush. An interesting theory, but one we don’t subscribe to.
The Audi A10’s win at this year’s Le Mans 24 hour endurancerace was the most significant victory yet for a diesel-powered car in a majorracing event. Moreover, not only did the Audi win, but it was also thecleanest and quietest car in the race. Diesels are also enjoying success offthe track. Underpinned by lower running costs, diesel cars’ popularity in Europeis now such that they are expected to out-sell new petrol cars during 2006.