A colleague recently asked me for my comments and opinions on likely developments in the transport sector, and most importantly how the motor vehicle industry will evolve. But I must admit that my crystal ball needs a good polish before I can make any predictions with confidence. I’ve been involved in the vehicle industry for well over 40 years, and have experience across a number of different roles: Motorcycle and car sales, finance and insurance, managing a branch of a family-owned group of dealerships, establishing an international e-commerce auction business for a Japanese multinational, and for the past 16 years running VIA.

I was an office-holder of the old MVDI and its Fidelity Fund, and currently have appointments to the Government’s EV Leadership Group and as chair of ITS NZ.

So, over the years I’ve been involved in or had exposure to most facets of the industry, and during that time I’ve tried to identify trends that will affect our businesses.

In particular, I was able to successfully predict that there would be dramatic changes in the logistics services that the used vehicle import industry relies on.

Going back 20 years or so, every individual importer had to take responsibility for all aspects of the vehicle import supply chain: Travelling to Japan, going to auction, appraising and buying stock, buying foreign exchange, arranging de-registration, inspections, insurance, shipping, Customs, GST, compliance, preparation and delivery.

I predicted that there would be a consolidation of these functions, and that service providers would increasingly offer total end-to-end logistics services. And that all the importer would have to do would be to choose and buy the stock, and everything else would happen seamlessly: The vehicle would be delivered to the dealer’s yard, complied and prepared, ready for sale. And this is largely what has happened.

As the logistics companies have developed their fully integrated services, they have squeezed all the inefficiencies out of the process, saving both time and money.

They have become very efficient and very competitive, with the result that that there are now really only four main channels for importing used vehicles; the day of the independent importer doing it all for himself has largely gone.

This was a relatively easy prediction to make, but when I’m now asked to look to the future, it’s a bit different. I’ve dragged out my old crystal ball, but it’s a bit murky, and the picture I’m seeing is not at all clear.

I do know that we are facing a range of issues that are going to influence and affect the industry, but I’m not able to identify the resultant trends with any certainty.

I agree with Yogi Berra, the famous Yankees baseball player and coach who was known for his homespun philosophy, when he said: “Predictions are always difficult, particularly about the future”.

Some of the changes we’re facing are the result of technological developments, such as EVs and intelligent transport, but I think that the industry and the public will just adapt and accept these changes.

The issue that may have the greatest influence on our industry is the way people own and use vehicles, rather than the vehicles themselves.

The external influences are likely to be driven by legislation as well as by social pressures and trends.

In terms of legislation, there are a couple of significant government interventions that are going to affect vehicle import and sales businesses, and the public.

The first is the implementation of the final stage of the ESC Rule on March 1 next year. This will markedly limit the range of compliant vehicles available, so we’re expecting the numbers of used vehicles imported to be seriously reduced, initially by up to 50%.

Instead of importing 150,000 units, as we will this year, I’m predicting that our volumes could be down to as low as 75,000 units next year.

This will mean that logistics channels, importers and retailers will have to review their business models, to allow for such a severe reduction in volume. This will particularly impact on those businesses whose business models are based on high volumes of lower value vehicles, so we’re going to see a significant change in the selection and number of fresh used imports available for the public. Average prices are going to increase!

So, my answer to the question about the future of the industry is, in a word, “change”.

But I have no clear idea of the eventual outcome of the changes, when they might happen or what the tipping points might be. My crystal ball is murky on the detail.

(http://autotalk.co.nz/columns/my-murky-crystal-ball)