Company hit by downturn

The business performance of 2 Cheap Cars has been “negatively affected by the prolonged economic downturn” for the four months ending July 31.

While anticipating the recessionary environment will continue for the rest of the financial year, the company remains committed to delivering a result close to its stable year-on-year profit guidance. 

It notes inflation and exchange-rate volatility have had some impact on pricing, while the cost-of-living crisis has resulted in falling finance and insurance penetration rates. 

In addition, due to major health and safety concerns stemming from a substantial landslide risk at a neighbouring property, 2 Cheap Cars’ site in Smales Road, East Tamaki, has been “compelled to shut down”. 

“Although it is hoped the closure is temporary, the timeline for addressing issues at the adjacent property to guarantee the site’s safety remains uncertain,” says the company in a statement to the NZX on July 26.

“All vehicles and staff have been relocated to other Auckland branches. However, there will be an impact on trading until the site is able to reopen.”

David Sena, chief executive officer, says that despite these difficulties, the underlying business continues to make good progress with strategy implementation. 

“Our focus remains on delivering gross margin expansion and prudent cost management,” he adds.

“We have increasing control of the value chain at our Auckland hub and some exciting property developments will be announced shortly when finalised. 

“While it’s a tough trading environment for many businesses right now, we are working hard to ensure we deliver steady net profit after tax.”

The company will provide a further trading update at its annual shareholders’ meeting in September.