Eagers Automotive Ltd
APE: XASX (AUS)
Morningstar Rating for Stocks | Fair Value | Economic Moat | Capital Allocation |
---|---|---|---|
A$14.10 | Ddvvq | Mtfdvszm |
Eagers Automotive: Normalizing Profits as Competition Among Dealers Returns
Following a few favorable years, conditions are rapidly normalizing for narrow-moat Eagers Automotive. Supply constraints during the pandemic have abated and demand for new vehicles is declining amid cost-of-living pressures. The order bank is also drawing down. Year-to-date new vehicle volumes are up 14% on 2023, according to the Federal Chamber of Automotive Industries. Consequently, competition among dealers has returned. Along with inflationary pressures on Eagers’ cost base—much of it labor—profitability is taking a hit.