Fleet sales compensate for auction slide

Turners Auctions' profits are bouncing back - even as auction sales continue to slip - because of healthy growth in the fleet and finance divisions.

Chief executive Graham Roberts says a drop of 4.7 per cent in the car auctioneer's vehicle sales in the first quarter - about 900 vehicles - reflected a softer Auckland market dating back to last year.

The company is confident, however, that the auction sales drop can be pegged back later in the year, he said yesterday after the annual meeting in Auckland.

"The automotive industry still has a bit of shaking-out to do, I believe, but I feel good about where we are and optimistic where we are going to end the year."

Net profit for 2005 had fallen 28 per cent to $5 million, but profit for the first quarter of 2006 was up 9 per cent on last year at $1.47 million.

Turners Fleet, which imports vehicles and sells them predominantly through the auction division, posted increases of 18 per cent in unit sales and 30 per cent in average gross margin.

The division was benefiting as supplies in the market began to tighten up, Roberts said.

"There was a huge flood last year of Japanese imports, mainly because of the strong dollar, and there was just a complete oversupply."

The company was committed to the future of the fleet operation, which protected the supply of vehicles to the auction business, Roberts said.

"We don't want to get in a situation where we are being dictated to, or our customers are being dictated to, by just a few vendors, which is what the situation was before."

In future, the company would focus on importing higher-quality cars, he added.

Turners Finance continued to grow, with 399 new loans in the quarter, up 45 per cent on last year.

"Our average conversion rate of private customers who use us for finance last year was 5 per cent ... In the first quarter it's up to 6 per cent - that's a huge jump."

Roberts said another area showing improvement was the commercial and industrial division, which tended to do well in an economic downturn when businesses had to sell off stock and fittings.