TRA - Turners Automotive Group [previously TNR - Turners Limited]

[BlackPeter]

Should the current lock down continue for a year or two, I would expect Turners will be the last car dealer left standing before being "toasted."
Think most Mall retailers will be lucky to survive just a few months.
A lock down of under 2 or 3 months will see Turners coming out and going gangbusters.

I don't think the lock down will take longer than 2 or 3 months (hopefully shorter 4 to 6 weeks), however I'd expect afterwards still some months with less human contacts and socializing.

To predict what might happen for the NZ car market, it might be worthwhile to monitor the China vehicle market (which is 20 times larger than just Hubei province which had a total lock down). Data are here: https://tradingeconomics.com/china/total-vehicle-sales

China car registrations.JPG

This are total vehicle sales per month in China. February (which would be April in NZ) looked pretty devastating. Will be interesting to see how their March numbers look like when they are released.

[percy]

I don't think the lock down will take longer than 2 or 3 months (hopefully shorter 4 to 6 weeks), however I'd expect afterwards still some months with less human contacts and socializing.

To predict what might happen for the NZ car market, it might be worthwhile to monitor the China vehicle market (which is 20 times larger than just Hubei province which had a total lock down). Data are here: https://tradingeconomics.com/china/total-vehicle-sales

China car registrations.JPG

This are total vehicle sales per month in China. February (which would be April in NZ) looked pretty devastating. Will be interesting to see how their March numbers look like when they are released.

Not good new for new vehicle sales.
However.
Turners expects its proportion of consignment sales is likely to grow in the period post the lockdown as certain businesses seek to downsize and liquidate vehicle fleets and consumers consider down grading or lower cost vehicles. Approximately 50% of cars sold currently are consignment vehicles and this is a part of our business we can easily scale.

[kiora]

A lot to move!
https://www.stuff.co.nz/business/120...-in-queenstown

[Beagle]

A lot to move!
https://www.stuff.co.nz/business/120...-in-queenstown

Yeap, I foresee a real glut of used cars coming to the market. Turners already started massive discounting. https://www.driven.co.nz/news/how-ca...t-lockdown-nz/ I reckon if you're in the market, haggle REALLY HARD. If you're not getting a really screaming bargain, you paid too much !

[Jaa]

Yeap, I foresee a real glut of used cars coming to the market. Turners already started massive discounting. https://www.driven.co.nz/news/how-ca...t-lockdown-nz/ I reckon if you're in the market, haggle REALLY HARD. If you're not getting a really screaming bargain, you paid too much !

So Turners will take a bath on their current stock but will be run off their feet with supply coming from rental companies (de-fleeting!), corporates and joe public trying to raise some quick cash. Buyers will snap up the bargains if the price of supply falls far enough. That's economics 101.

Not a bad place to be for a ticket clipper. Even better for NZ's largest dealer with the most capital, online bidding and space to store cars.

[Beagle]

Well positioned eh Percy

[percy]

Approximately 50% of cars Turners sell currently are consignment vehicles.
Usually used vehicle sales slow during winter,so I would expect Turners had already started to wind down their imports.
A huge number of ex lease, and ex rental cars, with be coming onto the market when lock down finishes.
Any one looking to buy a car,boat or plane should get a bargain.
I think Turners will be run off their feet with auctions,and sales for a few months.
After that I think the used car market will be challenging, and there will be fewer dealers.

Well positioned.? Who would know how long this lockdown will go on for.? The longer it goes on for, the longer any recovery will take.And what that recovery will be like in 6 months,a year or two years I would not hazard a guess.However people will be trading vehicles with Turners.A great number of people will be forced to traded down,while others will trade up.Life goes on.

[macduffy]

Yes, I doubt that anyone can define "well positioned " at the moment. Equities, well at least most of them, are subject to violent swings in quoted values and increased risk; bonds have taken on an added element of risk; and even cash in the bank worries us at times as to its safety in the worst circumstances. Perhaps Beagle's go-to Kiwibonds are the "sleep at night" alternative? I'll take my chances on a well diversified share portfolio and a bigger than usual weighting towards cash.

[Snoopy]

Well positioned eh Percy

From

https://www.driven.co.nz/news/how-ca...t-lockdown-nz/

"We’d already figured out to sell online and deliver a car - we’ve had a Buy Now function for a few years,” says Turners general manager of marketing Sean Wiggans. “But we’ve never really pushed it."

" “When Covid-19 started happening, we thought if people really are worried, there’s a way that we can do this: [sell and deliver] without anybody touching anything."

Turners, the only car dealer able to operate under COVID level 3 restrictions?

Sounds good!

"As an essential business, Turners can still sell and deliver a car to essential workers during the lockdown,"

Jacinda recognises Turners as an essential business. I like it!

They sold a vehicle to a doctor the other day. Turners doing their bit for the recovery!

Well positioned? I think so!

SNOOPY

[Beagle]

Yeah, YAWN...I've heard it all before, countless times. I won't quote really old posts as that's not really cool but if you go back to 14 September 2017 when the shares were ~ $3.20 you'll see quite clearly I was starting to really lose faith, while others were talking of 25% per annum eps growth and some even of $5 by late 2019.

I think some people really don't get it that the used vehicle market is, and always has been, and probably always will be, an extremely tough low margin business with no moat to entry with its market share being steadily eroded by private sellers and buyers on Trade Me.
The receivables ledger was going from bad to worse in boom times before this virus with bad and doubtful debts steadily heading up indicating systemic issues with their approvals and collections process. I believe that's the reason they couldn't sell it. Now we're in a severe recession, (possible global depression), they are going to get smashed with bad debtors in their finance division, as sure as night follows day.

I believe they are actually very poorly positioned to weather this deep global recession, possible great depression because they have recently expanded their retail footprint with lots of expensive long leases. Very good stock to avoid, in my opinion.