‘Consolidation’ looms for market

Colonial Motor Company’s outgoing director Ash Waugh has warned the number of new-vehicle brands flooding the New Zealand market is unsustainable and predicts consolidation in the future.

In his final speech as chairman, Waugh spoke at the company’s annual meeting about how the business can navigate the “rapidly changing external world of brands and international players”.

He told shareholders that as part of Colonial’s annual strategic planning, the board and management had for some years identified China as a significant potential disrupter at all levels of the global automotive market. 

“We felt strongly that, if only for our part of the globe, China would be another supply base for vehicles in our region,” he says. 

“Initially we had seen the arrival of MG and Great Wall Motors in New Zealand – not great product in those early years but cheap. 

“Being a global brand, Ford was actively operating in China and we surmised they would eventually diversify their vehicle manufacturing base for Australasia. That strategy has taken some time to be realised but is now taking shape with the announcement of the Ford Transit City Van and Ford Bronco coming in 2027. 

“Mazda has leveraged its ‘Changan Mazda’ joint venture to bring to market new EVs.” 

Waugh, pictured, welcomes two of Colonial’s major brand partners taking strategic steps and adapting to the rapidly evolving market by producing new vehicles and diversifying their manufacturing capabilities.

He encourages those brands to “keep the accelerator down” as this helps the company’s dealers to remain competitive in New Zealand. 

“With battery technology on the rise, it was clear new brands would enter the market to challenge the status quo,” continues Waugh. 

“However, I am not sure anyone predicted the sheer volume of new-entrant brands we are currently experiencing – the floodgates have truly opened. 

“The New Zealand market is unlikely to be able to sustain every brand in the long term, so there will be consolidation in the future.”

He predicts other near-certainties will include vehicles with a battery occupying significant market share and every brand needing to evolve their model range to remain competitive. 

Waugh told the November 6 meeting in Wellington that Colonial watched and learned everything it could about the Chinese industry and the key players as it made future plans.

“Whatever decisions were needed, we resolved to remain focused on what we are good at – retailing new vehicles and running dealerships. 

“We also remain mindful of respecting our long-term commitments to our existing brand partners, while at the same time not being afraid to take the tough decisions when necessary. 

“We are today where we set out to be strategically more than five years ago.” 

Colonial has entered the light-truck market with Chinese-sourced electric and diesel JAC trucks and secured a relationship with Ateco and the BYD brand in Christchurch and other regional locations. 

Other significant projects are being worked on in a “complex, uncertain and extremely competitive” market. 

“Our industry is evolving quickly and we cannot avoid all of its headwinds. As a result, life going forward is expected to continue to be very tough.”

Vehicle-demand patterns 

Waugh notes having a sound strategy is critical to supporting the long-term financial health of the business. 

“The Middle East conflict and its impact on the price of fuel, diesel in particular, was a major disruptor of our business in the second half of the last financial year and that continues. 

“We could not be expected to predict a conflict of the nature we are experiencing and the resulting impacts on vehicle demand. 

“There has been a seismic shift in vehicle-demand patterns because of the fuel price increases and as a result, demand for new energy vehicles has surged.”

He says demand for diesel utes and SUVs continues but their market share is down from when fuel prices were more palatable. 

“This presents a challenge for many of our dealerships and brand partners that have successfully operated in this space for an extended period of time. 

“New energy vehicles [NEVs] have been finding strong favour with buyers and are driving the solid growth in the total new light vehicle market. 

“While this will inevitably settle down from the initial surge in demand, I am of the view that this is a market dynamic that will continue now that NEVs have, for the most part, overcome the range anxiety issues that plagued earlier models.” 

Financial results

Waugh says Colonial delivered a hard-fought and solid result for the 2026 financial year in a challenging and changing market, and the balance sheet is in a strong and healthy position.  

Trading profit of $18.7 million was up nearly five per cent from the year prior and the company paid a 40 cent fully imputed dividend for the year. 

Meeting resolutions

Three resolutions put to the annual meeting were passed by shareholders, including the re-election of Graeme Gibbons and Stuart Gibbons as directors of the company.

Shareholders also supported the ongoing appointment of Grant Thornton as auditor and to authorise the directors to fix the auditor’s remuneration.