Fuel prices impact sales
Turners Automotive Group reports demand has dropped because of “fuel shock” as conflict in the Middle East continues.
In an update ahead of its annual general meeting on August 19, the company adds this has slowed New Zealand’s economic recovery and has dented consumer confidence.
Higher fuel prices have materially reduced demand for diesel and larger petrol-engine vehicles. This has resulted in trading conditions that were “materially harder” in the first half of the 2027 financial year than in the two previous corresponding periods.
“Vehicle margin impact has been more pronounced,” says the company. “We repositioned inventory quickly, but the effect on margins has been longer and larger than we anticipated in May.”
There have been lower sales volumes of ex-lease cars. “The reduction in prices for diesel utilities and SUVs has reduced the level of sales as vendors take time to meet market prices.
“Consignment units sold were down by 14 per cent to July year to date. This is a timing issue. As lease vendors’ pricing expectations adjust, these units will sell through.”
While the market for selling cars in the first half of 2025/26 was “challenging” for the company, conditions improved throughout the second half.
“Our sourcing initiatives, pricing optimisation and stock management discipline during the first half set us up for margin expansion in the second half.”
There was “strong” performance from the commercial divisions with damaged and end-of-life revenues up 10 per cent on financial year 2025. Trucks and machinery revenues climbed by eight per cent, while Turners’ commercial division “benefited from increased liquidations and receiverships, particularly in the second half”.
What hasn’t changed at Turners is that net profit before tax (NPBT) is tracking ahead of last year. “The diversification in the group continues to deliver where finance growth has more than offset the reduction in auto retail profit.”
NPBT for April to July in financial year 2027 was four per cent ahead of the same period in 2025/26. There has been momentum in finance. Strong loan-book growth continues and is up by a further 7.5 per cent since March 2026, with arrears holding up “extremely well” despite the pressures on New Zealand consumers.
“Insurance and credit management are broadly in line with last year. We remain extremely confident in the long-term strategy and work continues at pace on our auto retail branch expansion opportunities.”
The group’s targets remain unchanged, but short-term risks persist. “We continue to target $65m NPBT in financial year 2027. Without a resolution to the Middle East situation and a recovery in consumer confidence, sales of large engine vehicles and diesel product are likely to remain challenging.
“This short-term uncertainty creates some risk in achieving that target in financial year 2027 before momentum returns in FY28. Conversely, a faster recovery in confidence and margins would work the other way.
“Nothing has changed management’s conviction in the medium-term plan. Turners is tracking well towards its $100m NPBT target by financial year 2031.”
