Eagers looks to sell franchises

Eagers Automotive is looking to sell its franchised automotive businesses in New Zealand to the Armstrong’s Motor Group.

In addition, the Queensland-based company will retain and grow easyauto123, its used-vehicle operation in this country.

It says the divestment of its franchised dealerships, which comprise nine retail and service locations and seven brands, is expected to be completed in the fourth quarter of this year. It tops about NZ$355 million in annual turnover.

In Auckland, Eagers has North Harbour Ford and North Harbour Mazda on the North Shore and John Andrew Ford & Mazda in Grey Lynn. 

In Manukau, its franchises include Nissan, Hyundai, Isuzu, GMSV, MG, Nissan and Suzuki. It also has a servicing centre with Davie Holden and a trade parts operation.

A report filed by Eagers with the ASX describes the status of the potential deal with Armstrong’s as “entry into a non-binding term sheet”, and such a transaction will release capital and simplify its portfolio.

Eagers adds it will retain the easyauto123 operation in New Zealand and says the changes will enable “the allocation of capital to other strategic growth initiatives”.

The used-car business, which it’s looking to expand, has two branches in Auckland and one in Christchurch. Eagers describes this division as a “scalable independent used-car platform”.

The combination of selling its franchised automotive businesses and keeping easyauto123 means Eagers has a “continued presence” on this side of the Tasman. Its strategy also “simplifies the New Zealand portfolio and reallocates capital to higher-return opportunities”.