Colonial well placed to take advantage of ageing car fleet

AN AGEING fleet of 3 million vehicles has created a ‘‘very pronounced bubble’’ of 16 to 18-year-old cars which will soon need replacing, an outlook getting Colonial Motor Company revved up.

The Wellington-based listed company, which owns 12 primarily Ford and Mazda focused dealerships nationwide, achieved a record after-tax profit of $13.8m last year.

But after four years of successive profit increases, up 17 per cent in the past financial year alone, the company’s annual meeting yesterday questioned whether the brakes were about to be put on.

Chairman Jim Gibbons said new vehicle sales had consistently risen since 2009 but it was reasonable to consider how large they could grow.

This year’s sales were tipped to be the highest of the last two decades, he said.

Motor Trade Association figures showed 7272 vehicles were sold in September, up 10 per cent on the same month last year.

The market was described by the MTA as being ‘‘on fire’’, and new commercial vehicle sales for the year to September were the highest since 1982.

Gibbons said it was helpful to assess the current state of the vehicle fleet to determine if the growth was sustainable.

Passenger vehicles currently had an average age of 13.8 years, but there was a ‘‘very pronounced bubble’’ of cars aged between 16 and 18. ‘‘Clearly there is a large replacement market out there.

‘‘Our fleet of three million vehicles is getting older.’’

As such, CMC was confident sales would continue to grow as more and more vehicles needed to be replaced.

Sales were already ahead during the first three months of the current financial year, versus the same period last year.

‘‘We have had a record year on top of last year’s record year.’’

CMC also has dealerships selling trucks and tractors, from which sales of Dutch truck brand DAF and American brand Kenworth had helped haul the company’s result up.

Bumper demand for heavy trucks, light commercial vehicles and SUVs had bolstered CMC’s trading revenue by 13 per cent to $612.5m for the year to June 30.

In the light commercial market, the Ford Ranger was one of the more popular models, outselling the Toyota Hilux during September.

Next year the company would develop a new tractor facility at Lorneville, near Invercargill.

Director Ian Lambie retired from the board after 50 years at the company, and replaced by Matthew Newman, from CMC’s South Auckland Motors.