IN A move that reverses the property strategies of its former – and now incorporated – automotive retail rival Automotive Holdings Group Ltd, Eagers Automotive Ltd is planning to buy up some of the former AHG dealership sites it operates around the country.

Eagers has allocated $105 million to buy eight car yards from property trust Charter Hall after the company obtained $225 million in capital to cover both these costs and future similar acquisitions.

The capital for the property purchases comes from Toyota Financial Services ($175 million) and Volkswagen Financial Services ($50 million).

In addition, Eagers has outlined a plan of how its properties are to be consolidated while at the same time maintaining franchised outlets.

In a statement to the Australian Securities Exchange (ASX), Eagers managing director Martin Ward said the property purchases “will reduce the company’s annual occupancy costs on an ongoing basis”.

Eagers makes a point of buying the land on which its dealerships are located. AHG, which it bought last year for $2 billion, preferred to lease the land and where it acquired the property as part of a dealership purchase, would sell it to a property trust, usually Charter Hall.

Now Eagers is buying back the farm, including Big Rock Toyota (Balcatta, WA); South Morang Toyota (South Morang, Victoria); Sutherland Mazda (Kirrawee, NSW); and five properties at Zupps dealerships in Mt Gravatt, Queensland.

“The purchase of the five properties in Queensland will facilitate the consolidation and reconfiguration of 10 existing dealership properties into eight locations by December 2020, reducing further to six locations by early 2022,” Mr Ward said in the statement.

“These changes will achieve additional savings to the company’s cost base without impacting sales volumes and turnover.”

Mr Ward said that maintaining a balance of leased and owned properties “with a focus on ownership in key strategic locations, provides greater flexibility for Eagers Automotive to implement its omni-channel retail approach over an expedited time frame”.

The plan works with the strategy to combine a number of franchises within Eagers’ sites in the Brisbane Auto Mall at the Brisbane airport, and the Albion service hub in Brisbane.

Eagers purchased a Bunnings store in Albion in early 2019 to become a 50-bay workshop with the ability to cater for 12 brands, each with their own service advisors and check-in counters.

In its recent half-year financial report, Eagers said that its property portfolio was valued at $260 million.

Images: Google

By Neil Dowling