THE listed dealership groups: Eagers Automotive (ASX: APE), Autosports Group (ASX: ASG), and Peter Warren Automotive Holdings (ASX: PWR) all saw revenue growth in FY25, up 16.4 per cent, 8.2 per cent, and 0.3 per cent respectively. 

Average inventory days continued to lengthen, however average new car inventory days decreased across the groups, suggesting an increase in used car and parts inventory. Average inventory days’ supply increased across the board, rising from 63.1 to 70.2 days for APE, 74.1 to 79.0 days for ASG, and 74.6 to 82.2 days for PWR. 

While revenue growth was experienced across the board, Net Profit Before Tax (NPBT) as a percentage of revenue continued to slide across all groups. 

• APE generated 2.8 per cent (down YOY from 3.7 per cent)
• ASG recorded 1.4 per cent (down YOY from 3.3 per cent)
• PWR at 0.8 per cent (down YOY from 2.2 per cent). 

With inventory turnover slowing further and finance costs remaining elevated despite recent rate cuts, the burden of carrying stock is expected to remain a significant profitability headwind throughout FY26.

How auto retailing fared in FY25

FY25 marked a softer year for Australia’s new vehicle market, with total deliveries easing to 1.11 million units for the 12 months to June 2025. This was a 5.9 per cent decline on the previous corresponding period, according to VFACTS. 

The year began on a subdued note, with the March quarter posting the sharpest year‑on‑year falls as higher borrowing costs and cautious consumer sentiment weighed on demand. Momentum improved modestly in the June quarter, aided by stronger SUV and EV uptake, but volumes remained below FY24 peaks.

Steve Bragg

While the prestige and electric segments recorded double‑digit growth, mainstream passenger and light commercial sales softened, reflecting a market in transition from post‑pandemic highs to more sustainable, demand‑driven conditions. 

The RBA’s cash rate currently sits at 3.60 per cent following its August 2025 cut, the third reduction of 25 basic points this year. While earlier in 2025 markets had priced in a steady path lower, stronger-than-expected GDP growth and a rebound in household spending have tempered expectations of rapid further easing.

The RBA has signalled that additional cuts will be dependent on data, and a sustained lift in consumer demand could delay or limit further reductions. As it turned out the RBA held rates steady at its November meeting, with the potential of cuts now coming later in the latter part of the first quarter of 2026, only if inflation can track within the 2-3 per cent targeted by the RBA.

All of this is before any impacts of the current trade and tariff ‘wars’ taking place since the inauguration of President Trump in the US. 

Despite the market headwinds, Pitcher Partners maintains its forecast of new vehicle sales of 1.2+ million units in CY25 (after a subdued start), reflecting a decline from 2024 levels as demand normalises following the pandemic-era new vehicle sales volume highs.

We believe new vehicle sales will continue to set annual records due to population growth alone and driven higher due to intense competition from new entrant brands (primarily the Chinese brands jockeying for market share). 

Year to date volumes of 624,130 (down slightly from 633,097 last year) keeps the market ahead of Pitcher Partners full year forecast of 1.2m units. Barring an economic shock, we believe the market will continue to grow riding population growth tailwinds.Listed company results summary

The Good

Revenue growth: 

Despite sustained challenges resulting from economic headwinds, all three listed dealer groups (PWR, APE, and ASG) reported revenue growth. As a combined group revenue increased $1.95B AUD YOY, moving from $15.62B to $17.58B AUD, or up 12.5 per cent. 

The revenue growth was driven by acquisitions combined with sales volume tailwinds from population growth. Australia’s population has grown by ~1.6m people in the past three years alone. 

The long-term average ratio of new car sales to population is 4.5 per cent, meaning 45 people per thousand buy a new car every year. With the population in 2025 trending to 27.8m, we can expect 1.25m new vehicles sold excluding any market or economic forces.

Managing the increasing cost base:

Pitcher Partners has been reiterating the importance of cost base management since the industry became distracted by the higher-than-average Covid-19 margins. 

Dealerships throughout Australia didn’t prioritise minimising cost base due to the substantial amount of profit being generated, however as this well continues to dry up, dealers have been forced to act. While there is still work to be done, it is a significant step in the right direction. 

The listed groups have placed a priority on reducing operating costs through efficiency and reductions in headcount while remaining focused on reducing occupancy costs.

• AP Eagers:
  • OPEX as a per cent of sales declined to 12.68 per cent from 13.13 per cent in 2024.
  • Operationally, achieved $1.48m of revenue per employee (up from $1.36m FY24, $0.91m FY19)
• Autosports Group
  • Entered into a new debt facility saving $1.7m interest vs the previous corresponding period
• Peter Warren
  • Headcount down 4 per cent YOY
  • Half-on-half costs reduced 3.3 per cent, or $4.9m of savings (per management commentary at investors presentation)

Focus on new inventory management

All three groups have reduced new inventory days’ supply, as follows:

• AP Eagers 58 days 1H25 vs 64 days 1H24,
• Autosports 94 days FY25 vs 96 days FY25, and 
• Peter Warren 59 days FY25 vs 61 days FY24. 

There was clear messaging within each of the investor presentations of the three listed groups, new inventory levels cannot be maintained at this level going forward. The listed groups are focused on maintaining momentum in reducing inventory.

The Not So Good

Gross profit compression – a return to the mean

With competition intensifying due to the introduction of new entrants, discounting has returned to pre‑pandemic norms. OEM incentives, dealer rebates, and sharper retail pricing are squeezing front‑end gross margins, particularly in mainstream passenger and light commercial segments. The pressure is compounded by rising operating costs, making the shift toward higher‑margin revenue streams such as Finance & Insurance, aftermarket, and fixed operations more important than ever.

Inventory management challenges continue

While new vehicle inventory days eased slightly as supply chains normalised, overall stock levels swelled. Average total inventory days’ supply across the listed groups reached 79.5 days in FY25 (FY24: 77.3), driven by slower sales and cautious consumer spending. This imbalance is inflating floorplan interest costs and tying up working capital, with the used segment in particular showing signs of oversupply.

Pressure on used car values

After experiencing years of beneficial upside as a result of Covid-19 constraining new car supply, the used car market is beginning to return to industry norms. As new car supply has returned, the influx of leased and fleet vehicles and lower demand is applying downward pressure on used car values. 

Dealers will need to return to strict purchasing approaches to maintain used car department profitability and avoid it contributing to the margin pressure experienced from new cars.

Finance costs remain high

Despite three RBA rate cuts in 2025, the cash rate remains high by recent historical standards at 3.60 per cent, and floorplan interest expenses remain a significant drag on profitability. Across the listed dealer cohort, average interest expense grew 19.4 per cent in FY25, reflecting both higher average stock levels and longer holding periods. 

This has eroded millions in potential profit and remains a key headwind heading into FY26.

The Interesting 

Chinese brands are the industry disruptors

FY25 market has proven to be a turning point within the Australian market, Chinese brands have now successfully captured 15.79 per cent of the market, up from 11.20 per cent in June 2024 per VFACTS. For reference, Chinese brands market share was only 2.7 per cent in June 2020. 

The rapid acceleration in market share acquisition by brands such as BYD, MG, GWM and Chery have not gone unnoticed with both ASG and PWR adding new Chinese brands in FY25. Peter Warren stated on their investor call that Chinese brands will make up 20 per cent of their portfolio in FY26.

Debt management was a focus

All three listed dealer groups made significant changes to debt levels and debt facilities. AP Eagers and Peter Warren reduced their net debt by 41 per cent and 23 per cent respectively, while ASG established a $350m syndicated debt facility. 

For the listed dealer groups, FY25 was a softer year for acquisitions compared to previous years and combined with actions taken by all three groups to strengthen their balance sheet indicates an active M&A market for FY26.

By Steve Bragg