‘Conflict’ hurting group’s shares

The chairman of NZ Automotive Investments has warned its share prices are unlikely to improve until the company’s two main shareholders resolve their “conflict”.

Michael Stiassny made the comments at a presentation of the annual results for the parent company of 2 Cheap Cars on May 29.

His remarks follow a turbulent past year for the business following a fallout between the co-founders of 2 Cheap Cars, David Sena, who holds 49.6 per cent of shares in the business, and Eugene Williams, who with a trustee company has a 37.3 per cent holding.

In July last year, Williams and three non-executive directors resigned en masse citing a breakdown of trust and confidence with major shareholder Sena.

Stiassny says the current board is confident the turnaround it promised is well under way after NZAI increased its sales and underlying net profit after tax in the year to the end of March 2023.

However, he says the breakdown of the Sena-Williams working relationship and uncertainty over the latter’s plans continues to weigh on NZAI’s share price.

“Eugene Williams is no longer involved with the company. His plans for his shareholding remain unclear,” says Stiassny, pictured.

“The conflict between two major shareholders will continue to impact the share price until it’s resolved.

“Over 70 per cent of the shares are held by two individuals who are not working together. In those circumstances, I think it is not surprising the share price has not increased.”

On how the current board found working with Sena, Stiassny adds it is “working harmoniously and the results show we’re making steps in the right direction”.

“David has as much interest as anyone else to make this business successful and we have found working with him to be positive and we have no issues with that relationship.

“He is definitely trying his best and we have no issues with that relationship, and we have to thank David for that, and his ability to listen, and to learn, and to take on board comments.

“Whilst we have righted the ship…there is more to do. I believe the steps we have taken and continue to take are moving this company forward in a positive direction.”

‘Reset and rebuild’

Chief executive Paul Millward joined the company in January and says decisions taken to stabilise the business are beginning to take effect and this was particularly evident in the first three months of this year.

He also told the presentation that NZAI is in the throes of changing its corporate identity and the group will be renamed as 2 Cheap Cars because “it makes sense to connect that brand at every opportunity”.

“It’s a small but important change and the team are working through the formalities and will update the market in due course.

“It’s been a year of reset and rebuild and much has been achieved but there’s still much to be done.”

After the presentation, Millward told Autofile Online the change will be a work in progress for the next few months. 

“2 Cheap Cars is the market leader in affordable cars, we have 135,000-plus followers on social media and a brand – New Zealand Automotive Investments – which sounds like we’re corporate nerds,” he adds.

“It doesn’t say anything about what we really do. Our brand is about giving New Zealanders a better deal every day on quality, affordable cars – that’s what we should be shouting.

“Brands are powerful things. For me it shows we're a humble organisation that’s proud of its brand and is taking every opportunity to keep our brand front of mind. 2 Cheap Cars says what we are.”

Asked if events of the past financial year had influenced the decision to rebrand, he says: “We’ve done a reset, the past is past and we want to be judged on our performance from this point forward.”

Other changes taking place include NZAI closing its NZ Motor Finance division to allow it to focus on automotive retail and improving its vehicle supply chain by bringing compliance activity for imported vehicles in-house.

“This will deliver good cost savings but more importantly greater control over our supply chain so we can ensure cars are in yards quicker,” explains Millward.

“We’re focused on delivering a national dealership that delivers profits. Economic headwinds are there but we anticipate the used vehicle market will stay buoyant.”