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The company behind 10 per cent of all Australian new car sales is predicting lower profits this year due to economic conditions and increased competition.
Australia’s automotive industry has been warned it could be entering a period of turmoil, with the nation’s largest car seller forecasting a significant drop in profit due to a slowdown in consumer spending.
At its annual shareholder meeting, Eagers Automotive said it was expecting a 15 per cent drop in underlying profit in the first half of 2024.
Eagers Automotive is the parent company of 361 dealerships across Australia, representing approximately 50 car and truck brands – accounting for roughly 10 per cent of the country’s new vehicle sales.
Eagers CEO Keith Thornton told shareholders an increasingly competitive marketplace – with the introduction of new car brands – along with cost-of-living pressures, interest rates, and increasing business costs have contributed to the downturn.
The forecast could cost the company approximately $32.5 million in half-yearly profit, following reported revenue of $9.9 billion in 2023.
The announcement sent Eagers shares crashing 19 per cent.
However, despite the expectation of lower profits, the company remains optimistic about the new-car market as a whole for this calendar year.
MORE: Global bank predicts price cuts amid new-car oversupply
“We remain disciplined in our focus across our operations and optimistic regarding the outlook for the remainder of 2024 despite macro headwinds,” Mr Thornton said.
“The new-car market remains on track for another record year as our order bank continues to be delivered supporting both revenue and margins, while the underlying order write remains solid.”
As reported by Drive in January, Toyota Australia – the best-selling automotive brand in the country – predicted the new-car market would shrink in 2024, following a record of 1.2 million deliveries in 2023.
This prediction followed earlier forecasts from the likes of Ford and Cupra back in September 2023, with the companies bracing for an economic downturn.
The post Australia’s largest dealer network warns of downturn appeared first on Drive.
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