Eagers Automotive Limited (APE)
HOLD

Tie-up with MMS?

 16 Jun 2023
Sector: Consumer Discretionary

STAKE ACQUIRED IN MMS

Need To Know

  • APE and associates acquire 5.7% stake in MMS
  • APE has exclusive dealership for BYD brand EVs in Australia
  • Stake could lead to tie-up with novated lease company, MMS

Eagers Automotive, one of Australia’s largest motor vehicle dealership groups, has announced it has acquired a 5.7% stake in novated vehicle leasing company, McMillan Shakespeare (MMS).

APE is likely a supplier of vehicles to MMS, so this equity stake could indicate a closer relationship between the companies. Specifically, with government discount policies on Electric Vehicles becoming more prevalent, both APE and MMS have an interest in taking advantage of this trend.

APE has exclusivity in Australia for one of China’s fastest growing and largest EV manufacturers, BYD.

MMS has a core business in novated leases for businesses and government entities who are likely to be favouring EVs for future deals.

While it is not clear why APE needed an equity stake in MMS to pursue such an arrangement, if this is in fact the purpose, the outcome could be a win-win for both.

The Federal Chamber of Automotive Industries’ May release showed that sales of electrified vehicles (battery electric vehicles, plug-in hybrids and hybrids) made up 15.6% of the new vehicle market. 

Investment View

APE is the leading auto retailer in Australia but has not been sitting in neutral. The transition to EVs may be a slow burn in Australia for now, but APE has prepared well for the future.

As the gap between orders and delivery of new vehicles improves, and vehicle turnover more generally continues to thrive, APE is in a strong position within the industry.

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Stock Overview

Share Price

Company Overview

Eagers Automotive is one of Australia’s largest new and used car dealership groups with approximately 11% market share. It also has dealership groups in New Zealand.

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