ASX-listed car dealer Peter Warren Automotive is positioning itself to capitalise on Australia’s best-selling car, the Toyota HiLux, driving its growth plans.
Peter Warren has gained approval from Toyota to acquire a majority stake in two dealerships in NSW as part of a $45m deal, which also includes taking over a Volkswagen outlet.
Toyota – Australia’s most popular automotive brand – has a complex approval process, requiring dealer principals to have a minority stake in the individual outlets they oversee.
As a result, Peter Warren will acquire 80 per cent of Warwick Farm Toyota in western Sydney and 95 per cent of Toyota and Volkswagen at Bathurst.
Peter Warren shares surged 2.8 per cent to $2.60 on Wednesday, valuing the company at $447m. This compared with a 0.5 per cent fall across the broader sharemarket.
Chief executive Mark Weaver said the deals allowed the company to expand in a “highly fragmented market”.
He said new dealerships would “add substantially to Peter Warren’s order book, which continues to grow organically as new vehicle demand exceeds supply” and currently includes 27 automotive brands.
Peter Warren Automotive chief executive Mark Weaver.
“Without Toyota’s approval as a partner, it has precluded us from looking at things with Toyota in the past,” Mr Weaver said.
“We are a business that has got a consolidation pathway. We believe the OEMs (original equipment manufacturer or car brands) will support us on that journey.
“It’s great to now have Toyota in there and now look at opportunities that include the Toyota brand that could be an advantage to our group.”
Toyota dominated Australia’s new-car market last year, selling 21.4 per cent of the 1.08 million cars sold, making it the nation’s No.1 brand. Its HiLux ute was Australia’s best-selling car, with 64,391 units sold last year, outstripping Ford’s Ranger, which sold 47,479 units.
Toyota’s Rav 4 was Australia’s third highest-selling car, with 34,845 units, while it had two other models in the top 10 bestsellers: the Corolla and Landcruiser.
Peter Warren’s dealership acquisitions – which will be debt funded – comes as wait times for new cars have blown out to more than 12 months for some models thanks to pandemic-fuelled factory shutdowns and a global semiconductor shortage.
Mr Weaver said biosecurity checks, port and shipping congestion were also adding to delays.
He said the pandemic had changed the industry and car dealers no longer relied on myriad models on their lots and were increasingly adopting digital methods to sell vehicles.
“I do think there is a natural progression towards the inclusion of a digital pathway as well as a physical pathway,” he said.
“So maybe the research is done online, you visit a dealership for a test drive and then most of the transaction may resort back to a digital version again.
“My sense is that as we go forward, dealers and indeed OEMs in Australia will hold much less stock than they used to. We will see more of a version of each model; I won’t have it in every colour available.
“There will be an orderly wait time for vehicles. I suspect it will be something like six to 12 weeks depending on the vehicle.”