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January 16, 2005
Inexpensive Cars are but a Law Away
“That can’t be right” was the first thought that went through my mind.
It was my first day in New Zealand and I was in an internet café across the street from our hostel. While catching up on emails I looked up at the various flyers put up by individuals selling used cars and was blown away by the prices. Yes, they were clearly used but they were also good looking automobiles for NZ$2,000 (US$1,400) and lower. The prices seemed considerably lower than the U.S. but that didn’t make sense given New Zealand’s size and location out in the middle of the Pacific Ocean.
I didn’t think much about it until the next day when I came across a foot note in an article I was reading [Market Reform: Lessons from New Zealand]. It turns out that in the 80’s New Zealand changed its laws to allow for “the commercial importation of second-hand autos,” making it one of the few countries in the where this practice was legal.
The result? People began to import used cars from Japan and with the increase in supply came a sharp decrease in prices. Not only were cars more affordable to people that needed them, it also had the side effect of decreasing the number of motorbike fatalities and injuries by over 75% as automobile ownership grew rapidly among young adults.
Makes you wonder why governments ban used imports in the first place?
Posted by Peter Mork at January 16, 2005 8:51 PM
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