They have only stopped auctions because of the lock down.
I would guess they will have no need to import Japanese cars for some time.
Consignment stock will keep them flat out,when they come out of lock down..
Assuming there are buyers. Punters will be looking carefully at discretionary purchases, especially largish capital expenses. Relative to their spending/budgets.
Carly put on the never never as well, that's only a couple of mill $AU invested, but who'd rent a car right now when you're not even allowed out to drive it, except for the groceries.
Troublesome times but you wouldn't know it from the company updates, all good, nothing to see here, she'll be right. Yeah Nah, imho.
We haven't even been in lockdown for one whole week yet and their balance date is today. Less than one week and the effect is that they were at the top end of guidance but are now just meeting guidance. Reads between the lines. Just 6 days of lockdown has made a meaningful difference. How do they go in FY21 if the lockdown ends up being for another 6 weeks ?
I'm sure I recall you saying they were well positioned a few years ago at $3.90 :p Still... I suppose that's better than saying THL were well positioned at over $6, so its all relative isn't it and to be fair I thought AIR were well positioned at around $3 last year :) They could see a big influx of campervans !
So guidance for H121 at this stage is Turners expects adverse impacts on 1H21.
Not quantifiable
Let’s see how this pans out
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
Attachment 11190
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.
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 !
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.
Well positioned eh 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.
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.
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
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.
They've come up with a novel solution in Florida to deal with the excess of rental cars...
https://edition.cnn.com/2020/04/05/u...rnd/index.html
... so true, beagle. There is nothing in this picture which would encourage me to consider this stock:
Attachment 11221
Sure - the company will either survive (and than it might bounce at some stage) or it might crash. I don't see however any indication that the bottom might be in.
What are the odds for TRA surviving? I don't know, but a lot of debt on the balance sheet are not normally a positive sign.
And sure, while trading of cars might be essential ... there is nothing special about Turners (anymore). They are not a one stop shop, but just another used car dealer. The barriers for market entry into this market are probably the lowest for any industry in NZ - anybody can set up a used car business in their backyard, neither qualifications nor special premises required. It is much tougher to open a fish & chips outlet than a used car business.
Add to that that we can expect now for some time a huge surplus (lots of unused rental cars and company fleet cars which loose value every month) on the supply side coupled with weak demand (no job, no car) will make the months to come really tough for any dealer. It is a buyers market.
Ah yes, and the quality of their loans won't improve from a large number of Kiwis loosing their jobs ...
Lots of risks and not that many potential rewards.
So much for TA .... I think our perfect inverse bell curve pattern is a bit munted.
I think what many have forgotten here is that, despite the name, Turners is actually a finance company. It is the old Dorchester with a car retailing add on to provide a steady stream of customers to sign up to finance deals. We know from 'competitor' Sir Jeffrey's presentation at the Heartland AGM that motor loans are a high margin part of the finance sector. It isn't true to say that Turners couldn't sell Oxford finance. There were bidders. It is just that Turners management decided there was more value in holding than selling at the price offered.
Turners had certainly tightened their lending criteria well before the Covid crisis. I don't doubt there will be more bad loans than expected now. But maybe not as many as you think?
The alternative of Turners selling Oxford would IMO have been much worse. The new owner might have run scared or gone possum in the headlights still, with no new funding available! A bit like when PGW sold their finance division to Heartland and new loan approval proved difficult because Heartland did not know their PGW loan customers. At least as it is now, Turners has a finance company that will back their car sales with loans.
Oh, and all these cars that Turners are selling below cost. That doesn't mean an overall loss for the company. Because the real money is to be made in the accompanying finance deals.
And EC Credit gets the job of recovering what they can from the loan (ticket clipped). And the repossessed car gets sold on through Turners Auctions (ticket clipped).
SNOOPY
Shake those rose coloured glasses off your snout and have a look at how bad and doubtful debt provisioning was steadily climbing during strong economic times leading up to the Corona virus, then think if they were not under control and increasing at a bad rate previously, how are they going to go in a very deep recession ? I haven't forgotten they're a finance company, (others probably have), and I haven't forgotten that finance companies do really badly in a global financial crisis. Remember all the finance company failures in the GFC ?
Anyway...I can't be bothered with any sort of new campaign...if you and others want to look on the bright side, good luck.
That's a shame. I was looking forward to a stimulating exchange to brighten this dreary lockdown!Quote:
Anyway...I can't be bothered with any sort of new campaign...if you and others want to look on the bright side, good luck.
:(
The field is wide open for you to take up the mantle macduffy.
Another 150 pages of the same old .?.I can't be bothered.
Perhaps you could start by stating neither Marac or MTF had large motor impairements during GFC.
Marac lost their shirt on property development lending.
I'm a keen observer of TRA, percy, rather than a current or potential investor in the company. I exited a small holding several years ago and counted myself lucky at the time to emerge, capital intact. It's been a fascinating read since, the sole listing with a finance co. flavour left on the lists now that UDC are no longer there. Mind you, there are some who would mutter that HGH is really one - I couldn't possibly comment!
Cheers
I see an email I got from Driven (the motoring arm of The NZ Herald ) was using a photo of a Turners car yard and talking about how they are able to sell cars contactlessly, and how they have sold a few to essential workers, and so are revving up for any lowering of restrictions on business activity.
https://www.driven.co.nz/news/how-ca...?ref=drivenEDM
Obviously all this government interference in conducting enterprise is a problem but at least it is stimulating customer service developments.
It seems to me to be a good time to have a rest. Many people are doing just that so its more acceptable than ever ; the extreme volatility of the markets is passing somewhat - I feel like it is mainly time that will heal the economy's wounds and time will take its time.
Actually I have been keeping a close eye on the increasing proportional trend for the provision of bad debts here:
https://www.sharetrader.co.nz/showth...ighlight=Story
See "An Investment Story Chapter 6: Impaired Asset Position(s)"
Yes there was a large jump in the impairment provision for FY2019. I didn't fully get to the bottom of that at Turners. But there was an interesting disclosure on the effect of what would have happened at Heartland had the new NZIFRS 9 accounting standard been adopted a year earlier in FY2018. I quote the salient point below.
"1b/ IFRS9 adopted in FY2019 has resulted in a change to the way the 'provision for impairment' is measured. This is due to the adoption of the 'Expected Credit Loss' (ECL) model. For FY2018, this has resulted in an increase from the former $29.671m to $57.756m (details AR2109 p26)"
This shows that the adoption of NZ IFRS9 alone increased the impaired asset provisioning by:
$57.756m / $29.671m = +95%
When you look through this one off reporting standard change, you will see that the increase in the provision for bad debts from FY2018 to FY2019 has barely changed. I expect that the 'apparent' similar jump in impairment provision from FY2018 to FY2019 at Turners can be explained in the same way.
SNOOPY
All the recent negativity that comes out on here re Turners has driven the share price back into the 140’s
Happens quite often ....say they useless share price goes up.
If the US market is any indicator things will be ugly for Turners
https://wolfstreet.com/wp-content/up...20-apr-05-.png
From a buyers perspective, buying a car is not a 'monthly thing'. The chances are that if your old car was not worth fixing up a month ago, then it is still not worth fixing up. The need for a newer car has not gone away, COVID or no COVID. It seems more likely that sales at TRA 'lost' under the lock down are sales deferred. That is more than you can say about takeaways from the local fish and chip shop!
SNOOPY
Needing to replace the old car not worth fixing is only going to make up a certain percentage of TRA's sales though isn't it? I'd suggest a much higher proportion of sales would be more the discretionary want buys, which would surely take a huge hit when the realities of a recession take hold.
Fair point Cyclical. But 'zoom out' and the macro picture of the NZ car market has not changed. The average car is old and getting older. At some point the need to de-age the fleet must come. And in a recession a 3-4 year old used car is more likely way to do that than buying new. I am not saying the next few months won't be tough. But I don't see the big picture has been derailed by Covid-19. In fact with the need for 'spatial distancing', some who can afford it may choose to buy their own car rather than 'risk' public transport.
SNOOPY
I did not imply that NZ or the US is better. I was merely pointing out to the alarmist that US sales have plummeted then that is due to the initial lock downs. Ie sales are not plummeting because people do not want to or cannot afford to buy cars. Its because they physically cannot. Once lockdowns reverse those figures will be back to even or thereabouts.
Really, those countries will be in lockdowns and economic issues longer than anybody, NZ will have it under control until either a cure or vaccine is invented with minimal disruption compared to those that didnt.
Back to the topic turners also generate revenue from insurance which is ongoing during lockdowns and finance which is also ongoing. New sales I suspect will take a hit but will not show up on the financials for a while yet.
My understanding is that this is just a new strain of the cold virus and there has never been a vaccine developed for any cold virus and there are over 200 strains.
If we are successful in stopping C19 spreading I can see a scenario where the bulk of the worlds population will have immunity through being exposed to the virus and NZ will be stuck in a time warp for years to come, still waiting in "hope" for a vaccine.
Still wrong thread so suggest moving discussion to:Potential adverse effects from coronavirus on NZ economy
Here is an opportunity!! :p:mellow::confused:
https://www.odt.co.nz/regions/queenstown/locked
That is with not even any campervans in the photo. Have seen it bigger, after the ski season in about October.
When the restrictions are lifted, would say plenty of no-cost one-way hires will be available......
And here is another opportunity. With their expertise in 'container buildings' I would like to see Todd and team build up some 'hospital bed containers'. Then if there was a COVID-19 outbreak in some region, they could truck the container beds in so that the COVID patients could be isolated. Possibly the COVID-19 victims could be retained in the existing Hospital Building to easily access the 'built in equipment' while the 'other' patients could go outside into the containers. It might be a way to get some on-sellable work out of those clever container transformers who are at home on gardening leave? Plus Turners could probably use some 'in stock trucks' to haul the containers around. What about it Todd, if you are at home reading this, in amongst what must be now a quite magnificent garden at your place?
SNOOPY
Sorry Snoopy I got you a little confused in the Covid blur with Percy! Apologies to you both! Todd H
No problem Todd. We did get into a little shareholder huddle for a while Percy and I. He bought into 'my' Turners Automotive Group. I bought into his 'Heartland'. Then he bought into my 'PGG Wrightson' and 'Skellerup' as well (although I think he has since sold the latter). I was going to propose a full merger. We could have called ourselves 'Persnoop' (even if that does sound a bit like Parsnip). So not surprising you got us confused! Glad to hear the garden is going well. All the best to you are your family.
SNOOPY
For those that are interested, I would be happy to run a Zoom call giving an update on life in lockdown at Turners Auto Group and how we see the business emerging. Aaron Saunders and I have been running a series of these with the major wealth advisor firms and institutional investors over the last two weeks. Perhaps if you could give me some sense via feedback to the post whether this would be of interest and if there is I will set it up. Thanks Todd
Always enjoy your and Aaron's presentations,so would look forward to it.
Will need [simple] instructions how to connect with Zoom.
I will join as well. Thanks
Yes me too thanks.
Great idea Todd, we need all the updated info that is out there.
Great idea Todd, all in.
You might want to offer this zoom call to the New Zealand Shareholders Association (NZSA) as well who could email their members with a zoom link for those that are interested. The NZSA has a large membership of whom quite a few would be shareholders. If you want me to get in touch with them or get some details to you, PM me. Cheers.
I'd be keen to join in as well thanks Todd
well you only need to look as far back as the share buyback to see who benefited most from that.
Now they are overloaded in debt in a very depressed car market and economy , if you assume what happened overseas for same market will happen here things could be tough going forward.
Which is why I have offered the opportunity up for all here Jaa. We are very careful what we say and we are always conscious of our continuous disclosure obligations.
I would think the number of listed businesses offering up a Q&A session via this forum could be counted on one hand...I might be wrong of course and I am sure someone will tell me if I am!
And of course any shareholder is welcome to call me anytime ... and many do (021722818 todd.hunter@turners.co.nz) I am waiting to hear back from the NZSA and then will book the time in and send around the zoom web link. Thanks Todd
I personally haven't seen many listed companies offering much Q&A on here, so I'd definitely like to say you've gone far and beyond what other companies have done. I'm sure its without saying that many shareholders appreciate and are very thankful for your efforts =)
[QUOTE=forest;731717]Posted on page 212.
We are now on page 412.
200 pages and we are back there.!
Come on Bull move on.
Lets hear Todd's and Aaron's plans for coming out of lock down.
What are their prospects.?
Going back and flogging a dead horse we learn nothing.
OK here are the details for the Business Update / Q&A with myself and Aaron Saunders.
Thursday 30th April 9am - 10am
https://turners.zoom.us/j/9547808117...VLcEtOZGJidz09
Meeting ID: 954 7808 1176
Password: 823719
Dial by your location
+64 4 886 0026 New Zealand
+64 9 884 6780 New Zealand
Meeting ID: 954 7808 1176
If you email me confirmation of your attendance I will add you to the calendar invite which will have all the information in it.
Thanks
Todd
Would like to add my appreciation of you doing this Todd. Unfortunately I will not be able to join the call but congratulate you for offering this to Sharetraders. blackcaps idea to let the NZSA send out an email is a good one and hope it gets taken up. Well done.
Sorry, if it is a dumb question - is it possible to record for viewing later??
will try RRR
Thanks Todd. Really appreciate your offer.
Cheers
TRUSTED BRANDS NZ 2020.
Category ;Used Vehicle Dealership.
Winner;Turners Cars.
Well done Todd and the team at Turners.
https://www.stuff.co.nz/business/121...en-to-the-wall
Rental Vehicle Association chief executive Pim Borren said he had been advised that second-hand car prices could fall by as much as 30 per cent as the country came out of lockdown.
https://home.nzcity.co.nz/news/article.aspx?id=310729
Famous last words?
Time for me to take the opportunity to upgrade to a newish ex-rental SUV, I think.
Well, international tourism is not going to be back up and running for a while yet so what choice do the rental car companies but to sell as many of their vehicles as possible?
Holding & servicing costs are going to be horrendous.
Up to 50,000 rental cars alone in NZ to be offloaded in a big hurry to avoid financial disaster - so ‘buy one, get one free’ could be more like it.
https://finance.yahoo.com/news/hertz...164219427.html
Hertz in talks with banks and Treasury to avoid bankruptcy.
Wonder how many vehicles Hertz will have to sell to avoid receivership (Chapter 11).
So what does the above inevitable flood of ex-rental cars into a weak market in the year ahead do to the value and margins of used car dealers?
Car sales including second hand,are a lot slower in winter.Always the best time to buy as prices are lowest.
So I think you will get the ex rental SUV at a "never to be repeated " price,but selling your Merc may be a chellange.
Thanks Todd and Aaron for the zoom time, much appreciated.
Thanks Todd and Aaron. A very informative and encouraging meeting. I feel that the company is in excellent hands. Cheers