Number of motor vehicles

The total number of motor vehicles licensed in New Zealand is forecast to increase by 1.3% in 2025-26, to reach 4.72 million motor vehicles. Growth in the population aged 18 and older is expected to push up demand for motor transport, supporting an increase in the total number of motor vehicles in 2025-26. However, population growth rates are set to be more modest than over the past two years, driving expectations that motor vehicle growth rates will slow. Growth will be backed up by an anticipated improvement in consumer sentiment and the first significant increase in household discretionary income since 2020-21. Both these factors will combine to increasingly allow consumers to afford new cars. An expected decline in retail petrol prices over the course of 2025-26 will also promote more motor vehicles on the road. As private motor transport becomes more affordable, people who had let their registrations lapse will re-register vehicles, driving up motor vehicle numbers. Despite this positive outlook, the potential implications of US tariffs on foreign trade partners threaten to drive up motor vehicle prices in 2025-26, particularly if traditional manufacturers in China and Thailand become less competitive. However, a decline in US demand for foreign cars could drive down prices in the New Zealand market, as an excess supply forces manufacturers to offer more favourable terms to buyers. These highly volatile factors are likely to underpin the attractiveness of new motor vehicle purchases in 2025-26.

Growth in the number of motor vehicles typically follows population growth. An increase in the size of the population of driving age increases the potential market size and demand for motor vehicles. New Zealand has a graduated licensing system, with drivers able to obtain a restricted license from 16.5 years of age. However, over the past few years, one-off events have induced fluctuations in demand for new and used vehicles. The pandemic and related issues in the global automotive supply chain led to a decline in new car registrations, as waiting times at dealerships soared and distributors struggled to deliver cars to the New Zealand market. In addition, the Central Government's travel restrictions severely limited international tourism over the two years through 2021-22, leading to a decline in the number of taxis and rental cars licensed over that period. On the other hand, monthly new car sales reached a record high in June 2023. Pent-up demand from delayed purchases during the pandemic and delayed deliveries due to supply chain issues contributed to these spikes in sales at the end of lockdowns. 2023-24 also saw the largest recorded increase in the population aged 18 and older, further supporting strong growth in the number of motor vehicles in use. While population growth slowed slightly in 2024-25, it was still higher than average, contributing to the 1.4% expansion in motor vehicles over the 12-month period.

Over the past five years, a key growth sector for new car registrations has been commercial and electric vehicles. Although the pandemic disrupted demand for commercial vehicles, this trend turned around over the two years through 2023-24. As tourists flocked back to New Zealand, a surge in the number of international visitors reignited demand for taxis. This trend also underpinned a sharp rise in the number of rental cars in operation in New Zealand. The number of electric vehicles in New Zealand more than tripled between 2020-21 and 2024-25, supported by a combination of government initiatives and overseas manufacturers releasing new electric models on the New Zealand market. During the pandemic, subsidies for both Battery Electric Vehicles and Plug-In Hybrid Electric Vehicles accelerated growing demand for new electric vehicles, driving strong growth throughout 2021-22 and 2022-23. However, electric vehicle uptake has slowed over 2023-24 and 2024-25, as government subsidisation programs concluded and cost-of-living pressures made electric vehicles less attractive, given their high price tag, on average, compared to petrol cars. Climbing electricity prices exacerbated this trend, with households looking to avoid high energy costs associated with owning an electric vehicle. Overall, IBISWorld anticipates the number of motor vehicles to rise at a compound annual rate of 1.3% over the five years through 2025-26.