Vehicle auctioneer Turners Auctions slashed its full-year net profit forecast yesterday but chief executive Graham Roberts was more confident about next year, thanks in part to what he calls "the Kazakhstan factor".
Net profit for the year ending December 31 was expected to be between $3.2 million and
$3.4 million compared to August's prediction of $4.7 million to $5.1 million.
Competition had intensified for Japanese used export vehicles with half the available stock going to Russia, the company said.
Japanese imports to New Zealand had been running at about 5000 vehicles a month compared to a more typical 14,000 to 16,000 level, Roberts said. "Some of these guys [car importers] are not just missing out by $50 or a $100 in the auction process in Japan," he said. "They're missing by up to $1000 which is obviously significant in one vehicle."
New registration of ex-overseas vehicles - a sector which accounts for more than 30 per cent of Turners' revenue - had dropped 13 per cent in the first half, and so far was down 26 per cent in the second half compared to 2005 "which wasn't a huge year anyway".
However a ban by Kazakhstan - which had also been importing about 5000 Japanese cars a month - was a positive signal, Roberts said. The ban is due to kick in at the start of next year.
"So that market could all free up," he said. "I certainly don't believe that it's going to be worse than what it is this year. It can only be better with the Kazakhstan factor."
A similar ban had been rumoured earlier this year in Russia, where right-hand drive cars were technically illegal, he said.
Turners' share price closed down 21c yesterday at $1.55 a share.
First-half net profit had already slipped from $3 million last year to $2.3 million and a market recovery expected in the third quarter didn't happen, Roberts said.
The slowing domestic economy had also reduced used-cars sales as people examined their disposable income.
Following the collapse of other finance companies, stricter credit criteria had been adopted by Turners Finance, improving quality but reducing the volume of new business.
