Morningstar | Placing Automotive Holdings Under Review. See Updated Analyst Note from 30 Oct 2018
We are placing narrow-moat-rated Automotive Holdings under review. We are increasingly concerned about the declining new vehicle sales, which we attribute to falling house prices and consequential negative wealth effect. In our opinion, the pressure on house prices is a symptom of the Financial Services Royal Commission and tighter lending standards. This has impacted confidence, with consumers opting to delay large discretionary purchases such as vehicles.We had previously expected new vehicle sales volumes to grow by around 1%-2% per year on average, reflecting population growth and a stable 10-year average vehicle life. However, this is now an unlikely scenario in the near term, as new vehicle sales volumes declined by around 5% per month (on average) during the past three months, compared with the prior corresponding months. We expect the continued deterioration of the housing market is likely to further weigh on near-term earnings. We will review our earnings estimates and intend to reinstate our investment view on Automotive Holdings by the end of the week.
Automotive Holdings Group is an automotive retailing group in Australasia. Co. has two logistics divisions: Automotive, which operates passenger vehicle and truck and bus dealerships in Queensland, New South Wales, Victoria and Western Australia, and passenger vehicle dealerships in Auckland, New Zealand and Refrigerated Logistics, which provides cold storage and transport operations in every Australian mainland state through Rand, Harris, Scott's Refrigerated Freightways and JAT Refrigerated Road Services. As of June 30, 2016, Co.'s automotive segment had 188 motor vehicle franchises at 108 dealership locations operating within Australia and New Zealand.
Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. The company offer an extensive line of products and services for individual investors, financial advisors, asset managers, and retirement plan providers and sponsors.
Morningstar provides data on approximately 530,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on more than 18 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets. Morningstar also offers investment management services through its investment advisory subsidiaries and had approximately $185 billion in assets under advisement and management as of June 30, 2016.
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