Tough ride for car dealer

FALLING house prices and a muted reception for the new Holden Commodore mean a soft year looms for Australia’s biggest car dealership group, industry experts say.

Analysts at investment bank UBS say Automotive Holdings Group, which trades as AHG, will come under pressure as broader issues weigh on the industry.

The prognosis came after AHG last week revealed its net profit tumbled more than 40 per cent in the year to June, to $32.6 million. Posting the fullyear results, AHG said in a statement that it had been a challenging year.

In a report for investors, UBS analysts said the AHG bottom line would have been “substantially worse” had AHG not sold an insurance business the previous year.

“Falling house prices have only recently started to impact car sales and could continue for an extended period,” the analysts said.

Car sales slumped 34 per cent last month, compared with June, according to the Federal Chamber of Automotive Industries.

Based in Perth, AHG has a network of more than 100 dealerships across Australia.

UBS said the group’s 11 Holden dealerships were also likely to affect earnings after demand tumbled for the new European-made Commodore.

AHG shares fell 1.3 per cent, or 3c, yesterday to $2.34.