Turners ‘getting stronger’

Turners Automotive says the decline in the number of registered dealers is good for its business as it expands its branch network and gobbles up a larger share of the used-vehicle market.

Todd Hunter, chief executive officer, has highlighted how the government’s clean car programme has impacted the number of used imports coming into the country, which in turn has affected smaller operators.

Sales for the used-vehicle sector have also fallen in recent times and dropped by 10 per cent between the 2022 and 2023 financial years, he told an NZX Virtual Investor Event on May 10.

“Transactions have definitely been coming off and one of the key drivers of that reduction, particularly over the last couple of years, has been the introduction of the clean car standard and the clean car discount,” Hunter noted.

“The impact of it is that fewer used imports are coming into the country. That has definitely put a constraint around supply and that’s made it difficult for fringe operators to continue to operate in the market

“We’ve seen registered dealer numbers decline and they’re declining by about one per cent a month but are down almost 20 per cent from their peak in 2017.

“We see that as a good thing for our business. The strong get stronger and it’s a good position for us.”

Hunter, pictured, told the online event that in a market going down, Turners’ sales have increased 14 per cent year-on-year. 

At the same time, he noted consumer demand has shifted towards lower-value price points because of current economic conditions.

Turners credits much of its market share gains with brand promotion and retail optimisation initiatives. New branches are also performing well and a pipeline of work to build new dealerships and upsize existing ones is “developing well”.

Hunter explained the push to grow the company, particularly in retail, is largely centred on its branch expansion plans and a focus on increasing its vehicle sourcing capability.

“We’re buying a large number of cars locally and effectively recycling those into the used car pool … and opening and being in more places becomes critical to our strategy. The closer we are to customers, the more likely they are to use us.”

Bosses are also looking at opportunities to transfer sales from its wholesale auctions and into the retail consumer channel in order to boost margins and yield.

“Nearly half the cars we sell are still down the auction lane and are still being bought by dealers,” added Hunter. 

“A large portion of those are ex-lease cars, so we’ve got a big opportunity to help shift those sales into retail channels and get those cars sold to end users.”

Damaged vehicles

He predicted damaged vehicle sales will continue to increase year on year, partly because of extreme weather events this year but also as the New Zealand fleet continues to age.

“As the fleet gets older, there are more cars being written off as they become uneconomic to repair,” he said.

“One in five cars [in New Zealand] is over 20 years old so there’s a big cohort of cars that need replacing in the short to medium term, so we feel very confident about future growth across the Turners business.”

Hunter said Turners was fortunate none of its branches or people were significantly impacted by the January floods in Auckland or Cyclone Gabrielle when it hit large parts of the North Island 

“We’re probably a net beneficiary of those events in that we have probably sold over 4,000 flood-damaged cars in Auckland and we’re working through numbers in Hawke’s Bay and Gisborne.”

As for the rising demand for electric vehicles (EVs), he told the webinar being able to source such cars remains the main challenge for the industry.

Japan is the main source market for New Zealand, but only about 40,000 of the four million vehicles sold there each year are EVs.

“They’re a very hard thing to source at this stage,” he noted. “I think we will see the fleet transition but at a much lower rate than the commentators make out.”

Turners also expects to deliver another record result across the business for the 2023 financial year and for that growth to continue in the current reporting period.

“We’ve had a very strong April result,” added Turner. “Super performance out of our auto business, arrears are performing at expected levels and finance has recovered well from the typical seasonal, Christmas spike. The insurance and credit businesses are performing strongly as well.”