Australia's biggest car retailer buys two Manukau dealerships for $7.5m

The Perth based company will acquire a Hyundai and Mitsubishi dealership.

ASX-listed Automotive Holdings Group, Australia's biggest auto retailer, has bought two dealerships in the Auckland suburb of Manukau for $7.5 million, expanding its footprint to nine franchises in the country's biggest city.

Perth-based AHG has agreed to acquire co-located Hyundai and Mitsubishi dealerships near its existing Holden and Nissan sites in Manukau, and will subsume the operations into its existing New Zealand business, the company said in a statement. The Australian firm will pay $7.5 million for goodwill plus stock and assets, with the deal expected to settle late next month.

"This acquisition adds two important volume brands to our New Zealand portfolio and aligns with our automotive growth strategy to acquire and aggregate dealerships in and around existing AHG dealerships," managing director John McConnell said. "These are well-run businesses and brands that can be rolled into an existing AHG hub with a number of initiatives that we can put in place to drive both incremental revenue and cost synergies across both dealerships."

AHG's New Zealand holding company LWC reported a profit of $6.7 million in the June 2017 year, on revenue of $472 million. That compares to a profit of $6.6 million on sales of $438 million in 2016.

New Zealand's auto sector has been enjoying a purple patch with record sales of new car purchases as a strong kiwi dollar cuts the cost of vehicle imports, an expanding population needs private transportation, and a robust tourism sector stoked demand for rental.

AHG shares slipped 0.1 percent to A$3.685 on the ASX and have declined 5.5 percent over the past 12 months.

(BusinessDesk)


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They must have great faith in the dealer retail network, I think you will find dealers will be a lost cause in the end, Musk has the right idea and selling direct to the public, which cuts out the middle man, American dealers are starting to panic for what Musk is achieving setting up his own Tesla centre's, he is opening a new centre in Auckland buying direct.

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I think direct selling will work well for high-end vehicles, but for the likes of Nissans and Toyotas with many models, visits to show-rooms will be de rigour for decades to come.

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Will be interesting to see how Aussies used to a highly protected market cope with NZ's much freer one.

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They've apparently already acquired 7 such dealerships, so I guess they are coping OK.

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No doubt the Hyundai dealership has been affected by Rick ARMSTRONG's Botany flop. Much like Benz opening in Botany - it's a case of no growth in sales , but more a carve up of current sales split between the yards. Complete flop for both brands

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When Armstrong was setting that dealership up, I was wondering whether that would make money, he's probably using his other dealerships to prop it up,let's just see what happens.

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My hubby is on the periphery of the motor industry and he reckons what AHG really wanted was the dedicated *Service Centers* for both these dealerships. With Hyundai and Mitsubishi, it's a never ending goldmine.

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