2 Cheap forecasts profit dip
2 Cheap Cars is predicting its annual profit for the 2026 financial year will be down on the previous 12 months despite an expected increase in vehicle sales.
The company broke the news on July 28 as it delivered an update to the NZX on its performance outlook for the year to the end of March 2026.
“While vehicle sales are still projected to exceed FY25 levels, the company does not anticipate FY26 net profit after tax [NPAT] reaching the previous year’s level, based on first quarter results,” it says.
“The first quarter of FY26 saw performance below expectations, with both sales volumes and gross margins falling short of budgeted targets.
“The company successfully achieved cost savings, however, these were not sufficient to fully offset the decline in gross margin.”
2 Cheap recorded NPAT of $3.3 million in the year to March 31, 2025, amid a “turbulent market”. That total was down 46.8 per cent from $6.2m in the 2024 financial year.
Despite forecasting another drop in profit, the group notes that sales performance has improved in July and it expects to exceed its monthly budget for the first time this financial year. However, it adds, the market remains uncertain and inconsistent.
“As 2 Cheap Cars advances its vertical integration strategy, including expanding its internal reconditioning capabilities, there are short-term pressures on both its supply chain and workforce,” the announcement continues.
“As a result, maintaining optimal inventory levels across the network has become a challenge.
“Measures are currently being implemented that are expected to increase car acquisition and boost reconditioning throughput.”
It explains that initiatives include refining the operational structure, upskilling staff, and using reliable external partners to maintain throughput and flexibility while vehicle volumes exceed internal capacity.
The company also notes its new flagship site at Clemow Drive, Sylvia Park, Auckland, remains on schedule to open in August and is expected to boost performance in the second half of the current financial year.
“While the company’s strategic direction remains unchanged, there is additional emphasis on enhancing supply chain responsiveness,” it says.
“This will assist the company to take advantage of opportunities in the market as it improves.”
