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Eagers profit booms as demand leaves dealers short of stock

Business

The newly reformed Eagers Automotive was forecasting to double its full-year profit as the shift from public transport to private continues to spur car sales and cause a shortage of second-hand vehicles.

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Eagers said that its first full year of operations following the merger with Automotive Holdings would result in underlying profits of about $209.4 million, compared with $100.4 million for the previous corresponding period.

This exceeds the guidance given in December of $195 million to $205 million.

The Federal Chamber of Automotive Industries said 95,652 new motor vehicles were sold nationally in December, an increase of 13.5 per cent compared to the same month the prior year.

It followed a 12 per cent rise in November but before that there had been almost three years of declining sales and total sales for 2020 were down.

Price for second hand vehicles have also surged by as much as 30 per cent, according to some reports.

A factor in the demand has been a shift in attitudes against public transport during the pandemic, but consumers also have more discretionary cash to spend because of government stimulus and the inability to travel overseas.

Dealerships were claiming there was a shortage of stock and had no idea when supply would recover to meet demand as the pandemic disrupts car manufacturing and supply chains globally.

One dealership in Cairns said it has 400 fewer vehicles in stock than this time last year and the Australian Automotive Dealer Association said it was unclear when the issue would be resolved.

Cairns’s largest car dealership, Trinity Auto Group principal Richard Jaska said enquiries had “gone through the roof”, but it could not convert them to sales due to not being allocated enough stock by manufacturers.

“This time last year we would probably be holding another 400 cars normally,” Jaska said.

“We can only sell what we can see at the moment and what we can see is probably 30 or 40 per cent down on what we would normally receive.”

“We’re hearing there are some dealers around the country that don’t actually have a new vehicle in stock to show a customer,” he said.

The Australian Automotive Dealer Association’s James Voortman says the impacts are not uniform across all makes and models.

‘There’s not much we can do,” he said.

“I think the chief determining factor was where was that car manufactured and if it was manufactured in a country or in a region that has been affected by COVID-19 to the extent that a factory has had to close or had supply disrupted,” he said.

“I’ve heard from one dealer in an extreme situation where he’s only been able to secure 20 per cent of the same level of stock he had a year ago.”

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