Australian Listed Dealer Comparison 2022

We are delighted to have released the first iteration of the Australian Listed Dealer Comparison and it reveals that it is a very interesting time to be a part of the motor industry.

The listed groups Eagers Automotive (ASX:APE), Autosports Group (ASX:ASG) and Peter Warren Automotive Holdings (ASX:PWR) have so far weathered the COVID-19 pandemic and supply shortage ‘Chipdemic era’ with relative ease.

Revenues and volumes may be down on pre COVID-19 levels (2019) but gross margins are elevated and profits are double and triple what they have been in the past, up to 3.43% (profit % on sales, PoS) – a 6.84% improvement on the previous corresponding period (pcp).

New vehicle sales in the six months to June 2022 were down by 5.2% in comparison to June 2021 per VFacts for the Australian market. This is a significant 11.1% decline since June 2018. That’s 67,000 less new vehicle sales in only the first half of the year for the Australian market.

Despite this, the automotive reporting season was dominated by commentary around the improved performance by previous acquisitions, as well as the listed’s plans to continue to grow in a supply constrained market. With most analysts not expecting the supply issues to be resolved in the coming year, how do the big listed groups get bigger without overpaying and over capitalising on dealership assets trading at inflated earnings?

Throw into the mix the two biggest disruptions to dealerships in the last 100 years; Electric Vehicles (EVs) along with the significant infrastructure spend that is required and the agency sales model, the future is a bit cloudier and more uncertain than the relative sunshine (and profits) of today.

Our analysis covers:

1. 2022 sales results and 2022/23 outlook including impacts from agency, EVs and continued aggregation
2. Key macroeconomic conditions that will provide headwinds for dealers in the next 12 months
3. Listed dealer groups consolidated snapshot
4. Comparisons of the Australian Listed Dealer Groups from several perspectives, including by ranking, financial performance, capital structure, funding ratios, management efficiency ratios and liquidity ratios as well as market share.

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