Turners sees big potential in online car sales

Turners chief executive Todd Hunter sees the vehicle retailer’s new website Cartopia as a potential winner.

Reporting a half year profit up 15% to $8.5 million, NZX-listed Turners noted the launch of Cartopia and said “momentum is building in this new channel.”

The website allows customers to select a vehicle online and have it delivered. If it doesn’t meet their approval they can return within a week and get their money back.

Mr Hunter says the inspiration came from the United States, where similar websites are already operating.

“Carvana is the one we particularly took interest in but there are others,” he says. “You’re seeing similar models start to emerge in Australia as well.

“We felt it was something we should start. Our feeling is the sooner we do it the sooner we get better at it. It is going to be the way people want to buy going forward.”

The online model could become the dominant sales channel in future, he says.

“It seems to me it’s potentially a lot more convenient for people. But in the end it’ll be a balance. If you look at the way people consume other products and services it’s always a mix of bricks and mortar and online. It’s just about appealing to as wide a customer base as possible.”

Turners is mainly known for its vehicle auctions which take place up and down the country each week and in July acquired South Auckland second hand car dealership Buy Right Cars for $15.3 million plus stock.

The company also offers finance and insurance alongside its car sales operation, as well as a debt collection unit EC Credit Control.

The combination delivered group revenue of $115 million for the six months to September 30, up 36% on the same period a year earlier.

Vehicle retail produced operating profit of $6.9 million for the half year while finance was the next most profitable segment with $4.9 million.

New Zealand debt collection produced a profit of $3.3 million.

Turner shares last traded at $3.55, valuing the company at $264 million.

Mr Hunter sees the strong vehicle sales market continuing for some time.

“I can’t see any major impact that would cause it to drop like it did through the GFC in the next five years, barring any unseen event.”

Little stands in the way of Turners tapping into that market strength, he says.

“Like all businesses, it’s how you adapt to the changing needs and behaviours of consumers. Cartopia’s an example of that. Our business needs to keep evolving digitally in terms of how people access the information they want when they’re in the process of buying and financing vehicles and trucks.

“I think we need to maintain, and may have to step up, our investment in technology and how we’re configuring the customer experience both physically and digitally.”