Company gains market share

NZ Automotive Investments (NZAI) increased its used-car market share to seven per cent in its third quarter to December 31.

That’s despite the overall New Zealand market for used cars dropping by 9.5 per cent over the same timescale, it has reported to the NZX.

The company notes its 2 Cheap Cars brand market positioning is “increasingly relevant in the tough economic environment”, resulting in its estimated year-on-year market share of used-vehicle registrations growing by 0.4 per cent.

“2 Cheap Cars has also strengthened its position as the largest Japanese used-vehicle retailer in New Zealand in terms of total used imports,” says chairman Michael Stiassny in a trading update issued on January 31. “2 Cheap Cars’ year-to-date vehicle sales were 6,296 to December 31, up six per cent on the 2021 year.”

He adds sales of electric vehicles (EVs) and hybrid EVs have almost doubled year on year to 41 per cent of total sales as the company “continues to lead the market in this competitive and increasingly valuable segment”.

Meanwhile, cost-and-value focus has seen NZAI make “steady progress” in reducing internal costs. Despite inflation, its vehicle-hub operation costs have reduced quarter on quarter, and an integration and centralisation strategy has seen support staff relocated to the facility in Onehunga, Auckland, to enable the sub-lease of office space surplus to requirements.

Stiassny, pictured, adds: “Profitable growth in its core business remains a priority for NZAI. Therefore, it’s pleasing to note that in the face of competitive pricing during the third quarter, 2 Cheap Cars has maintained vehicle margins. 

“Reducing costs by directly controlling more of the value chain will further improve process efficiency and increase speed to market. Opportunities in this area remain a key strategic focus and continue to be actively pursued.”

Internal changes

Paul Millward started as chief executive officer on January 9 with his immediate focus on understanding the core business of car retailing to “step-change growth and delivery” at NZAI.

“The 2 Cheap Cars brand is more relevant than ever and is the leader in its market segment,” he says. “Historically, our success was due to being disruptive, growth focused and financially disciplined. 

“That’s my starting point. We need to bring back that disciplined, focused approach. We have great foundations, but I can already see so much potential to realise, including in the customer experience area.”

Interim CEO Gordon Shaw’s appointment into an executive role ended on January 31 before he rejoined the board as an independent director on February 1. He also started as chair of the audit, risk and remuneration committee on the same date.

Samantha Sharif’s term as co-opted director ended on February 1 and she resigned from the board on that date.

Looking ahead

The board says it’s focused on energising the retail business during the remainder of the 2022/23 financial year through sales capabilities and programmes to ensure its people deliver profitable growth, and improving third-party finance and insurance penetration.

The company is also aiming to improve core supply-chain capabilities – vehicle purchasing and in-sourcing of services – along with the targeted expansion of its dealership network, as well as investing in brand marketing and digital-engagement campaigns.

In addition, it will be seeking to secure replacement finance facilities for retail trade post-April 30 and for NZ Motor Finance after October 1, and finalising the appointment of new auditors.

Stiassny says: “The board has retained the existing business strategy but with a permanent CEO now in place, an update is likely in coming months.”