2CC - 2 Cheap Cars Group

[lorraina]

I am buoyed by both CMO and TRA reporting an uplift in sales.
2CC's agm will be held in late September,and their outlook will be important,
At that time they will have started trading at their new super site at Sylvia Park.
I am expecting this new site will see 2CC's sales improve between 20% and 30%.
Off course the higher sales will also see commission revenue from finance and insurance increase.
2CC have an Auckland base for their compliance and logistics,so those costs as a % of sales will not increase greatly.
I am confident Sylvia Park will be a great success and expect 2CC will look at the prospects of a super site on the North Shore,to compliment  their already two sites there.
2CC has the financial capacity to do this without coming back to shareholders for more capital

[lorraina]

2 Cheap Cars Group Updates Performance Outlook for FY26

2 Cheap Cars Group Limited (NZX:2CC) today announced an update on its performance outlook for the 2026 financial year.
While vehicle sales still are projected to exceed FY25 levels, the company does not anticipate FY26 net profit after tax (NPAT) reaching the previous year's level, based on first quarter results.

The first quarter of FY26 saw performance below expectations, with both sales volumes and gross margins falling short of budgeted targets. The company successfully achieved cost savings, however these were not sufficient to fully offset the decline in gross margin.

The company has seen an improvement in sales performance in July and expects to exceed its monthly budget for the first time this financial year. However, the market remains uncertain and inconsistent.

As 2 Cheap Cars advances its vertical integration strategy, including expanding its internal reconditioning capabilities, there are short-term pressures on both its supply chain and workforce. As a result, maintaining optimal inventory levels across the network has become a challenge.

Measures are currently being implemented that are expected to increase car acquisition and boost reconditioning throughput. These initiatives include refining the operational structure, upskilling staff, and using reliable external partners to maintain throughput and flexibility while vehicle volumes exceed internal capacity.

The company's new flagship site at Clemow Drive, Sylvia Park, remains on schedule to open in August 2025 and is expected to boost performance in the second half of FY26.

While the Company's strategic direction remains unchanged, there is additional emphasis on enhancing supply chain responsiveness. This will assist the company to take advantage of opportunities in the market as it improves.

[ends]

[winner (n)]

Is that a profit downgrade lorriana

[winner (n)]

Guidance for FY26 has gone from 'uncertain' a few months ago to probably less than last year

So NPAT of $6.2m in F24 down to $3.2m in F25 to something less in F26 ...not going in right direction

Suppose one needs to keep the faith in these 'uncertain' times

[winner (n)]

Jeez, gross margin (exc the carbon credits) was down about 5% points in F25

Margins still declining they say .....so getting desperate?

[lorraina]

"Short term  supply pressures" will need to be fixed quickly as I expect Sylvia Park site will add between 20% and 30% to their total sales,when it opens in August.
Winter sales are usually weak so the new "super site" is opening at the right time.
Looks as though 2CC are following Turners by sourcing more cars locally,yet I did think sourcing from Japan meant you could buy what cars customers wanted rather than just having to make the most of what you were offered in NZ..

[winner (n)]

How many cars do 2CC sell in a year?

[Basil]

Keep in mind also that the $3.3m was generated with the tailwind of a net $600K of carbon credits from the previous year, which presumably is not repeating, so was really a normalized net profit after tax of circa $2.9m.  Extract from annual result follows:
"Included in the FY25 revenue is $1.7m related to carbon
credits generated and retained in prior reporting periods, but not previously
recognised due to uncertainty regarding their realisation. At the gross
margin level, this revenue is partially offset by $1.1m of carbon credit
costs associated with net credits attached to vehicles sold during FY25".

So Sylvia park (with all the costs that go with an expensive large site like that, that nobody is talking about) is unlikely to plug the gap from the non-recurring carbon credit tailwind they got last year.  That despite interest rates forecast to be about 200 bps lower over FY26 than FY25 and Turners saying overall market stat's of dealer to public sales rising significantly in early FY26.  Hmmm...make of that what you will.

[winner (n)]

2CC have said a few times that sales volumes are linked immigration

Net migration year March 23 was 74k, to March 24 was 100k and to March 25 was 26k

Yes, sales are linked to immigration

Since March annual number has fallen to 15k as at May

No wonder 2CC struggling big time ...their customer base declining

Better keep an eye on those monthly migration releases from Stats NZ

Or get your local MP to push for more migration

[lorraina]

Hmmmmm.?
Need the following immigrants.
panel beaters
spray painters
 mechanics

Google Buyer Ratings today confirms the excellent service my granddaughter experienced recently when she bought a lovely car from 2CC Christchurch.

"Overall, 2 Cheap Cars seems to be a popular choice for car buyers in New Zealand, with a strong focus on customer service and a high percentage of satisfied customers."

[winner (n)]

Market Close report madevannnteresting observation

2 Cheap Cars Group shares were down 1.56% to 63 cents after it told the market that while it expects vehicle sales to exceed those in 2025, it anticipates net profit after tax (Npat) to fall year-on-year.

Goodson pointed out that the guidance contrasted with an update from The Colonial Motor Company last week, in which it signalled "pockets" of recovery in the "wider vehicle market".

Suppose Mr Goodson didn't consider that Golden Visa dudes or whatever they are called go for new cars while run if the mill immigrants just want a set of wheels

[lorraina]

Goodson may have a point here;
He put this down to 2 Cheap Cars being highly exposed to Auckland, where economic recovery has been slower.

[winner (n)]

I think they said that volumes in last quarter were below budget. Did they mention v last year?

Whatever you can't say number of sales is growing ....or even looking healthy

Here are the sales numbers for the last few half year periods -

Sept-20   3,911
Mar-21    4,296
Sept-21   3,864
Mar-22    4,018
Sept-22   4,281
Mar-23    4,080
Sept-23   3,776
Mar-24    4,393
Sept-24   4,119
Mar-25    3,556

Real worry is that Oct24/Mar25 (the last half year) sales were down 19% on the pcp. Full year sales were down 6% and that's not inspiring either

Industry data shows that Dealer to Public sales Jan to June are >10% up on previous year. The Apr/June period up 12% on pcp.

Seems that 2CC being taken to the cleaners in what seems to be a very competitive market (NZ Cheap Cars included)

Along with their other problems I'd be worried if I was management (and a shareholder)

Forgive me for having a morbid fascination with what be an impending train wreck

PS - in FY20 they reported 11,019 car sales ... now running at 7,625 (March 2025). Seems they have closed down some yards

[winner (n)]

I mentioned NZ Cheap Cars in above post

Some on here berated the NZ Cheap Cars Tiktok campaign that started in May just as social media hype

Over 150,000 followers and millions of likes not too bad for a marketing campaign

And some of the content seems to targeted at immigrants as well

Maybe that's where 2CC customers have gone

[lorraina]

I think they said that volumes in last quarter were below budget. Did they mention v last year?

Whatever you can't say number of sales is growing ....or even looking healthy

Here are the sales numbers for the last few half year periods -

Sept-20   3,911
Mar-21    4,296
Sept-21   3,864
Mar-22    4,018
Sept-22   4,281
Mar-23    4,080
Sept-23   3,776
Mar-24    4,393
Sept-24   4,119
Mar-25    3,556

Real worry is that Oct24/Mar25 (the last half year) sales were down 19% on the pcp. Full year sales were down 6% and that's not inspiring either

Industry data shows that Dealer to Public sales Jan to June are >10% up on previous year. The Apr/June period up 12% on pcp.

Seems that 2CC being taken to the cleaners in what seems to be a very competitive market (NZ Cheap Cars included)

Along with their other problems I'd be worried if I was management (and a shareholder)

Forgive me for having a morbid fascination with what be an impending train wreck

PS - in FY20 they reported 11,019 car sales ... now running at 7,625 (March 2025). Seems they have closed down some yards

This is what they said;
The first quarter of FY26 saw performance below expectations, with both sales volumes and gross margins falling short of budgeted targets. The company successfully achieved cost savings, however these were not sufficient to fully offset the decline in gross margin.

vehicle sales still are projected to exceed FY25 levels,

The company has seen an improvement in sales performance in July and expects to exceed its monthly budget for the first time this financial year.

As 2 Cheap Cars advances its vertical integration strategy, including expanding its internal reconditioning capabilities, there are short-term pressures on both its supply chain and workforce. As a result, maintaining optimal inventory levels across the network has become a challenge.

ie.They know what needs fixing.Now they have to do it.They have the financial capacity to do it..They need to do it quickly as I expect the new Sylvia Park site will see strong sales when it opens shortly.
,