Eagers Automotive Ltd

APE: XASX (AUS)

Morningstar Rating for Stocks	Fair Value	Economic Moat	Capital Allocation
	A$75.70	Fczgpws	Zdgnzycq

Eagers Automotive: Normalizing Profits as Competition Among Dealers Returns

Angus Hewitt

May 22, 2024

Following a few favorable years, conditions are rapidly normalizing for narrow-moat Eagers Automotive. Supply constraints during the pandemic have abated and demand for new vehicles is declining amid cost-of-living pressures. The order bank is also drawing down. Year-to-date new vehicle volumes are up 14% on 2023, according to the Federal Chamber of Automotive Industries. Consequently, competition among dealers has returned. Along with inflationary pressures on Eagers’ cost base—much of it labor—profitability is taking a hit.

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