With a decent amount of money saved up as a result of the pandemic, people are choosing to tick some big items off their bucket lists. For some, that means buying that dream car—preferably used. The luxury car market in Aus is expected to bring in over $200 million by 2027, and companies like luxury car retailer Autosports Group Limited (ASX: ASG) are taking the lead on that opportunity.
The Company has entered into an agreement to acquire the business and assets of Motorline BMW, Motorline MINI, Motorline Bodyshop, Gold Coast BMW and Gold Coast MINI. These businesses are privately owned by Eastcoast Automotive, Eastcoast Asset Services and Motorline Bodyshop, and will also expand BMW and MINI’s representation in Queensland.
The deal is valued at $60 million for goodwill, plant and equipment, and Autosports will fund this agreement with a combination of cash reserves and a debt facility.
The CEO of Autosports Group, Nick Pagent, commented, “Having only recently expanded our partnership with BMW Group in New Zealand with our acquisition of Auckland City BMW, securing the Motorline and Gold Coast BMW/MINI dealerships, scales up our representation of BMW and MINI. The transaction aligns with our strategy of representing luxury brands in key metropolitan areas.”
Launched in 2006, Autosports Group has over 50 retail businesses across Australia. On August 1, the Company forayed into international waters by entering the New Zealand market with the $66 million acquisition of Auckland City BMW Limited. The Company is home to multiple brands, from BMW to Audi, Rolls-Royce, Subaru and more. Besides that, it also provides used luxury cars, and parts and services for luxury cars.
The latest acquisitions give Autosports access to revenue streams from new locations. Motorline BMW, MINI and Bodyshop are located in Logan City, which is approximately 23km south of the Brisbane CBD. This dealership is undergoing a facility upgrade to bring it in line with the latest BMW corporate identity, similar to Autosports Group’s recent Melbourne BMW Kings Way upgrade. The Gold Coast BMW dealership represents the BMW brand in the Gold Coast and Northern NSW regions. The Motorline Bodyshop also provides an additional complementary revenue stream to the core South Brisbane and Gold Coast dealerships.
In FY22, Motorline Businesses reported revenue of approximately $261 million and its net profit before tax was approximately $12 million. In the same financial year, Autosports Group reported a normalised net profit before tax of $92.8 million. However, its revenue declined by 5.2% on the prior year to $1,876 million. This reflects supply chain constraints that hit multiple industries in the past year. Plus, new vehicle sales revenue decreased by 10.5%.
That said, the Company did witness increases in other segments. Used vehicle revenue increased by 2.6% while the service and parts segment revenue were up 8.9% to $247 million.
Autosports is aiming to complete the acquisition agreement by January 31, 2023. It is contingent on the BMW group giving its consent, Autosports getting a QLD motor dealer licence, the release of encumbrances and finalisation of the fit-out costs for the facility upgrades.
If things remain as they are—with supply chain constraints out of the picture, in H1 FY23, Autosports Group expects to deliver normalised net profit before tax in the range of $48-50 million.
Alinda is a Business Reporter for The Sentiment
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