Australia’s three listed automotive dealer groups achieved strong revenue growth in 2025 but faced continued margin compression as competitive pressures and rising costs squeezed profitability, according to Pitcher Partners’ latest industry analysis.
Eagers Automotive (ASX: APE), Autosports Group (ASX: ASG), and Peter Warren Automotive Holdings (ASX: PWR) recorded combined revenue growth of $2.21 billion to reach $18.58 billion, representing a 13.5% increase year-on-year.
However, net profit before tax as a percentage of revenue remained largely stagnant, with APE achieving 3.0% (matching 2024), ASG recording 1.9% (down from 2.0%), and PWR at 1.0% (down from 1.1%).
The results reflect an industry grappling with structural challenges despite record new vehicle sales of 1,241,037 units in 2025, just 0.3% above the previous year.
Inventory management takes priority
All three groups prioritised inventory management to combat rising floorplan costs, with average inventory days’ supply decreasing across the board. APE reduced inventory days from 69.7 to 65.5 days, ASG from 82.8 to 82.0 days, and PWR from 79.5 to 77.9 days.
Despite these improvements, interest expenses continued to rise, increasing 4.5% on average from $98.18 million to $102.59 million year-on-year as the Reserve Bank of Australia lifted the cash rate by 0.5% in early 2026.
The report notes that dealerships are increasingly reliant on higher-margin back-end departments to offset front-end margin pressure. ASG and PWR’s back-end income grew by 62.8% and 35.7% respectively over the 2022–2025 period, while their front-end income grew by only 45.9% and 30.4%.
Chinese brands reshape market dynamics
Chinese automotive brands have emerged as a major disruptive force, now representing 18.3% of Australian new vehicle sales in December 2025, up from 3.3% in December 2020.
BYD led the charge with a 31,957-unit increase year-on-year, followed by Chery with 22,286 additional units and GWM with 10,027 more sales. For the first time in Australian automotive history, China became the number one source of vehicles sold, representing 12.6% of vehicles sold in February 2026.
However, the rapid expansion has created growing pains, with new owners of Chinese-made vehicles reporting servicing issues and parts availability problems, with some repair timelines stretching over six months.
Economic headwinds intensify
The Australian economy has faced mounting pressures since December 2025, including two interest rate increases, inflation running at 4–5% above the RBA’s target range, and escalating geopolitical conflict in the Middle East.
CBA analysts forecast a further rate increase to 4.35% in May, with rates expected to remain elevated through to 2027. These conditions are driving higher borrowing costs and reducing household disposable income.
Fuel prices have surged dramatically due to Middle East tensions, with petrol reaching 256 cents per litre (up from 183 cents in early January) and diesel around 311 cents per litre (from 185 cents). This has led to a substantial increase in electric vehicle enquiries as consumers seek to avoid inflated fuel costs.
Market outlook
Despite the challenging operating environment, Pitcher Partners forecasts new vehicle sales of 1.25 million units in 2026, supported by cumulative population growth of 362,000 people in 2025.
The report suggests that 4.44% of the Australian population bought a new car in 2025, with population growth alone contributing to 16,000 additional vehicle sales.
However, the first half of 2026 is expected to be impacted by constraints in global oil supply arising from Middle East conflict, potentially boosting EV adoption as consumers consider prolonged high fuel prices.
The full report is available for download at https://www.pitcher.com.au/insights/australian-listed-dealer-comparison-calendar-year-2025-seventh-edition/
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