High-revving motor firm flashes brake lights

HAMISH MCNICOL
Last updated 05:00 21/08/2014

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An accelerating motor vehicle industry has shifted Colonial Motors' full-year net profit up to $20.2 million.

But the Wellington-based listed company has advised there are increasing signs of the brakes being put on, after five years of successive profit increases.

Net profit for the year ended June 30, 2014, was 37 per cent higher than in the previous year, the company said yesterday.

Revenue had increased by about 14 per cent to $700m.

Chairman Jim Gibbons said it had been a very successful year for Colonial, which achieved a record profit and was pursuing expansion.

The new-vehicle industry had continued to grow in the first half of this year, with new passenger registrations increasing by 11 per cent, compared with the same period a year ago.

Light commercial registrations had also increased by 21 per cent and heavy vehicles by 20 per cent.

"The company continues to have desirable products in growing segments within this growing industry," Gibbons said.

"However, there are increasing signs that the favourable conditions are easing."

He said operating efficiencies had improved, with all of Colonial's car dealerships, heavy truck and tractor companies performing strongly.

It owns 12 mainly Ford and Mazda-focused motor vehicle dealerships across the country, but also bought Jeff Gray BMW late last month. Those four dealerships would operate as a "stand-alone cluster".

It also bought two new properties, near Auckland Airport and in Gore, as it looked to expand operations.

At the annual general meeting last year, Gibbons said new vehicle sales had consistently risen since 2009 but it was reasonable to consider how large they could grow.

An ageing fleet of 3 million vehicles had created a "very pronounced bubble" of 16-year-old to 18-year-old cars which would soon need replacing, he said.

Economic research firm Infometrics has said total car sales would close in on 200,000 this year, up from 191,249 in the year to March this year.

Car sales last bumped the 200,000 mark in 2006, after a historical high of 230,313 in the previous year.

Colonial announced a final dividend of 22 cents a share, to be paid on October 20.

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- The Dominion Post

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