Since the beginning of the pandemic, where trust in the public transport network sent Aussies towards new and used cars in droves, Autosports Group (ASX: ASG) is continuously brought upon by their excellent sales, adding dealership John Newell Mazda to their network via acquisition.

The deal will secure 80% of the Mazda dealership for $12 million, as well as $4 million for its net assets. Key to the acquisition is the strategic positioning of the dealership which is located opposite Autosports Group’s existing Rolls-Royce, Aston Martin, McLaren, Bentley, Jaguar and Land Rover dealerships at Alexandria, New South Wales.

John Newell Mazda is forecast to generate approximately $89.9m annual revenue and is profitable with EBITDA margins in line with Autosports Group.

The greater value is tipped to be realised via its strategic location where the dealership provides opportunities for Autosports to buy and sell vehicles at the other end of the spectrum, somewhat a new market for the group in the area. Additional opportunities to cross-refer between the Group’s existing new and used vehicle sales, servicing, finance and insurance, parts sales and fleet services will also be realised in the long-term.

The vendors will retain the 20% minority interest in John Newell Mazda with the Dealer Principal remaining with the business.

Settlement will occur on 1 July 2021 with no earning to be accretive in FY21 with the acquisition funded entirely from existing cash reserves.

Between January to May 2021, the Australian new car market grew by 37.5% compared to the previous corresponding period. This was driven by unexpected demand and a semiconductor shortage within the global manufacturing market.

In their latest market update, Autosports Group expects their Full Year revenue to be around $1.92 billion which would represent a 13% increase from their previous year.