Only strongest will survive, says Turners

Michael Dossor says the sales trough won't last forever. Picture / Dean Purcell

Industry rationalisation may see off up to 20 per cent of vehicle traders and importers this year, Turners Auctions chief executive Graham Roberts says.

"Only the stronger importers with the lowest-cost supply chains will actually survive in this environment," Roberts said yesterday.

His comments followed a fall in profits for the vehicle auctioneer for the half year as market conditions deteriorated. But the company said the second half was looking brighter.

The tough environment, in which total industry sales of fresh overseas imports fell 13 per cent, was likely to continue in the short term.

Chairman Michael Dossor said he was reasonably confident for the second half of the year.

"The car market at the moment is in one of the biggest troughs it's been in and it won't stay in the trough forever," he said.

Turners' unit sales at auction slipped 8.3 per cent to 36,700 units compared with the previous year - a drop of $900,000 in revenue for that division.

More than half of the drop was attributed to one customer who had moved 80 per cent of its auction volume away from Turners to an internal tender process.

Roberts said no other individual customer could inflict a similar impact and some of the lost business had already returned.

"We're in ongoing discussions ... and are confident we will eventually be able to win back another significant amount of their business," he added.

Market conditions, which had been favourable earlier in the year, changed in April when the value of the dollar shifted, making it more difficult to import cars from Japan.

Fleet unit sales remained at 2700 but with an average sale price of $6500 - down 4 per cent - the revenue from this division fell $800,000.

Roberts said residual car prices had fallen and uncertainty in the used market, partly driven by petrol prices, had led people to postpone their purchases.

The full-year forecast for net profit was $4.7 million-$5.1 million, compared with $5 million previously.

Revenue at Turners Finance division was up $500,000 at $1.5 million with a conversion rate of 5.6 per cent, up from 4.9 per cent.

Turners Live - where online bidders can compete with those in the auction room - was attracting up to 30 dealers at a typical trade auction.

Turners' share price closed down 1c at $1.84 yesterday.