Volatile market places Autocare Services into voluntary administration

Autocare Services Pty Limited (Autocare Services), a wholly owned subsidiary of LINX Cargo Care Group, has been placed into voluntary administration.

FTI Consulting executives Christopher Hill, Joseph Hansell and Ross Blakeley have been appointed as the administrators. 

The decision to place Autocare Services into voluntary administration was due to successive years of operating in volatile market conditions, declining vehicle volumes and increasing operating costs, which have impacted its ongoing financial viability. 

Voluntary administration allows the business to affect restructuring activities with the intent it can emerge post the voluntary administration process in a sustainable and viable position.

Autocare Services has been a player in Australia’s automotive industry for more than 60 years, with almost 600 employees currently working at 20 sites across Australia to deliver vehicle logistics services for its customers. 

The business has been exposed to the automotive industry market downturn for three consecutive years now and vehicle volumes are not forecast to return to levels that can sustain the business in its current structure. 

Despite slight increases in sales in November and December 2020, Australia’s new vehicle market continues to remain depressed. Since a record year in 2017, there has been a sustained decline driven by weakening economic conditions, shifting market and supply chain requirements and changing consumer preferences.

This decline along with the impacts of COVID-19 has seen a 22.9% fall in new car sales since 2017. In 2020 alone, results were down 13.7% on calendar year 2019.

LINX Cargo Care Group’s chief executive officer Anthony Jones says Autocare Services continues to be significantly impacted by the vehicle logistics market decline across the business’ portfolio of processing, storage and transport services.

“Autocare Services has been working closely with its customers, and the wider supply chain, to evolve the business in alignment with the changing market conditions however, the material movement and volatility has been heightened by the ongoing COVID-19 pandemic,” Jones says.

“Voluntary administration can provide Autocare Services with a pathway for the tough, but necessary, change it needs for the evolution of its business model to keep delivering services valued by customers today, and into the future, to the Australian automotive industry.”

Jones says LINX Cargo Care Group values Autocare Services as part of its wider portfolio and is hopeful for the future of the business post the administration process.

“The appointment of an administrator is an unsettling time for our people, customers and stakeholders, for both Autocare Services and LINX Cargo Care Group, however we are confident in this process as the best chance for a profitable and sustainable Autocare Services on the other side,” Jones says.

“Importantly, Autocare Services’ current financial difficulties are not indicative or reflective of wider financial instability for LINX Cargo Care Group. As an operating Group, LINX Cargo Care Group remains unaffected by the appointment of voluntary administrators to Autocare Services and is in a sound financial position with the strong support of our shareholders and financiers,” he says.

Autocare Services intends to continue operating and servicing its many customers across Australia during the administration process under administrator management.