Australia’s biggest car dealer laments cash burn in Victoria
But it took a serious turn for the worse when the pandemic arrived, with the company having made close to 1300 staff redundant on March 23 before the JobKeeper program was announced by Prime Minister Scott Morrison.
Eagers Automotive said it benefited from $72 million in wage subsidies and rent relief or deferrals from landlords in the June half. The JobKeeper component was $62 million. It also accessed $4 million in similar wage subsidies in New Zealand.
The company won’t pay an interim dividend. Mr Ward said the JobKeeper program had been a lifeline and prevented another wave of large-scale redundancies.
“It is our view that it probably saved 2000 jobs,” Mr Ward said. “We are grateful for it. It is very important.”
While trading in states outside of Victoria had started to improve in July and August, Mr Ward said it was still soft. “It is not above last year,” he added.
The pandemic had come at a time when the new vehicle market was already subdued. Soft July new vehicle sales figures across Australia stretched the downturn in the industry to 28 consecutive months.
The company also booked $34 million in one-offs from the exit of the Holden brand from Australia after US group General Motors made the shock decision in February to scrap the brand.
Holden leaves sour taste
Car dealers across Australia have been left with a sour taste.
“We’ve moved on,” Mr Ward said. “I’m certainly not happy about the way any of it took place.”
Eagers Automotive has made cost cuts of $78 million as it attempted to wrestle with the severe economic downturn. The company sells most of the major car brands including Toyota, Ford, Mazda, Hyundai and Volkswagen.
Mr Ward said the EasyAuto secondhand vehicles business was starting to see an increase in customers willing to use a click & collect option, with about 10 per cent of total sales now coming via online transactions where people buy vehicles sight unseen.
The largest shareholder in the company is Rich Lister Nick Politis, who is also the chairman of the Sydney Roosters in the National Rugby League competition. Mr Politis holds 27 per cent of Eagers Automotive.
The company has reshaped its business by selling non-core assets, taking a $25 million haircut in the sale of the ailing refrigerated logistics business it inherited from Automotive Holdings Group. That business has been sold to private equity firm Anchorage Capital for $75 million, instead of $100 million.