Peter Warren Automotive Holdings has slashed its profit forecast for FY26, warning that underlying profit before tax will fall to between $12 million and $15 million amid deteriorating trading conditions.
The ASX-listed dealer group says the substantial reduction follows intense pressure on new car trading margins caused by external factors including rising fuel prices, interest rate increases, and heightened competition from new market entrants.
The profit downgrade represents a significant retreat from earlier expectations, despite what the company describes as solid first-half growth.
External pressures mount
Peter Warren attributes the margin squeeze to rapid shifts in customer demand, exacerbated by conflict in the Middle East driving up fuel prices and three Reserve Bank of Australia interest rate rises creating cost-of-living pressures.
The company says new car buyers are increasingly favouring smaller, more fuel-efficient vehicles over higher-margin models that are often purchased with accessories.
Significant competition in the Australian market from new entrants competing with existing brands for market share is further impacting new car margins, according to the trading update.
The rapid change in demand is also affecting vehicle availability and year-end deliveries of certain high-demand models, with order banks increasing substantially as a result.
Company response strategy
To mitigate these external factors and drive performance into FY27, Peter Warren says it is continuing to optimise brands within its existing property footprint to meet evolving customer preferences, including expanding its portfolio of new energy vehicle (NEV) brands.
The dealer group is also focusing on growing service and parts revenue, both of which are expected to achieve records in FY26, along with continued acceleration of used car results that will also deliver a record for the financial year.
Despite persistent high levels of inflation, cost-management initiatives have been implemented, including leveraging the company’s scale and property footprint.
CEO Andrew Doyle says trading conditions in recent weeks have been unprecedented, with customer preferences changing rapidly due to increased fuel prices and cost-of-living pressures.
“When coupled with some uncertainty in vehicle supply chains, we will enter FY27 with a much higher order bank,” Doyle says.
“The competition in the Australian marketplace has never been greater. We have been increasing the pace of change in the company, continuing to add new brands to our portfolio. Our overall order intake is up significantly, with exceptional growth in our recently added Chinese brands. We are well placed as new and attractive models continue to come to market.”
Doyle says the company is focused on strengthening revenue and cost efficiency within areas of the business it can control, including further leveraging its existing asset base as it expands representation of newly introduced brands while continuing to grow used vehicle, service and parts operations.
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