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

[Beagle]

Thanks so much for coming on here and clarifying things Todd and to you and your team for your hard work. The new advertisement with Tina is really good stuff, top marks !

https://www.nzherald.co.nz/business/...OHJKR7XK752FA/

Interesting anecdotal story opining that the chip shortage could cause economic pain for years to come. (Paywalled)
The relevant part for Turners is this is very supportive of used car values. I've read one or two articles about how the European manufacturers are coping... and for instance BMW are taking important features like adaptive cruise control out of some of their models due to the unavailability of some chips.
I find it hard to imagine buying a high end BMW without adaptive cruise control that is standard fit on, (for example), every Toyota Corolla.
I also wonder where are all the batteries going to come from for the tidal wave of new EV' models set to be released in the next few years...but apologies, I digress.
I think used car values will stay "stronger for longer".

[Getty]

The caution I see is that if new vehicles are held up due to chip shortage, then less trade in stock become available, to flow on down through the used car sales chains, including Turners.

Nobody who would otherwise be a new car buyer, will roll into Turners to buy a used one instead, they will wait till new stock arrives in franchise dealerships.

The same dynamic will play out overseas, affecting Turners supply of import stock.

[winner69]

Hope the share price smashes through the 4 buck today ....or at the latest tomorrow

Last thing we want is somebody calling it a double top on the chart

[LaserEyeKiwi]

The caution I see is that if new vehicles are held up due to chip shortage, then less trade in stock become available, to flow on down through the used car sales chains, including Turners.

Nobody who would otherwise be a new car buyer, will roll into Turners to buy a used one instead, they will wait till new stock arrives in franchise dealerships.

The same dynamic will play out overseas, affecting Turners supply of import stock.

This is the opposite of what’s happening in reality - demand for used cars has exploded higher all over the world as the supply of new cars has decreased, highlighted most strikingly by the rapid increase in used car prices.

[Getty]

Be that as it may, its going to lead to a shortage of good used stock to replace what is sold.

[Beagle]

https://www.driven.co.nz/news/what-a...r-2021-so-far/

New vehicle sales going gangbusters so far... excerpt "The new-vehicle market is booming in New Zealand, with record sales for both February and March".

Maybe ordinary vehicles don't have so many chips as their fancy European counterparts

Mrs B might be selling her 2017 Honda Civic soon and I know where we'll go to get a fair sale price, (and its not Honda Cars Newmarket).

[sb9]

Turned out to be one of best performing stock for me over last year since Covid hit, almost a bagger. Who would've thought a boring second had car dealer would deliver this kind of return. Good on ya Todd and team and also Baker.

[winner69]

WHOOPEE -- 4 bucks broken and on our way to 5 bucks

Next year Todd will have to have a slide Pathway to $7/share

[Beagle]

WHOOPEE -- 4 bucks broken and on our way to 5 bucks

Next year Todd will have to have a slide Pathway to $7/share

LOL I love it. #1 post of the day

As mentioned yesterday, an argument can be made that they're worth $6.20 using my modified value filter Ben Graham investment model so I've very magnanimously put up a few for sale at $6.15

[BlackPeter]

Morning everyone...good to see so much discussion on our company! Couple of things I wanted to clarify...

...

4. I would argue that this business is not a cyclical business at all...maybe it used to be Black Peter but not anymore. The used car market continues to demonstrate resilience no matter what is happening in the broader economy. Most people change their used car out of necessity not whim. 20% of the vehicle fleet is older than 20 years ... there is still a huge replacement program to happen. With used cars comes the need for finance and insurance. We are very confident we can continue to target and win market share in the high quality borrower segment. The combination of our activity revenues (Auto Retail and Credit) + a bigger proportion of annuity revenues (Finance and Insurance) results in far more consistency of earnings.

...

Thanks Todd

Hi Todd,

First let me thank you for another great post and clarification. I think your way to communicate with investors (and some traders ) like us is quite innovative (and as far as I know) quite unique. Efficient and addressing real concerns and issues. Great stuff!

Maybe one question re the cyclicality of the business ... it took markets in the 1920'íes less than a decade from 80% horse carts on the roads to 80% cars with combustion engines on the road - and in some markets the swap went even faster. I recon that this was a tough time for the sellers of horses and preloved carts ... and I recon that there was a high percentage of new vehicles on the road, given that due to the demand there would have been not many used vehicle with combustion engine available.

Now - this was 100 years ago, and nobody cares anymore - however I would expect a similar dynamics when EV's ultimately take over (and I don't think we will need to wait another decade to see that happening).

I do understand as well, that Turners can sell EV's as easy as cars with combustion engine. However - isn't it likely that there will be in the beginning of the EV tsunami just not enough used EV vehicles available but many more new cars (in percentage) on the roads? What happens if you can get a new and much more economical EV car for say $15,000 instead of the combustion engine version for 30,000? Would this cut into Turners business?

Anyway - just my thoughts ... and obviously - congratulations to Turners and its team for the recent results. Long may they continue!