NZAI has announced plans to open a new vehicle hub in Auckland to process and dispatch more vehicles for sale through our dealership network. Our current site in Mt Wellington is nearing capacity and we are preparing a move to a larger vehicle-processing facility in Onehunga, pictured, in early 2022.
The move and rearrangement of our leases is expected to deliver a one-off non-recurring gain of about $800,000 pre-tax in the 2022 financial year. About 40 staff will relocate to the hub in Onehunga, including the executive team, finance, operations and marketing.
The new site will have a more functional layout and space for new equipment, which will enable NZAI to automate existing manual processes. The Onehunga location is also closer to a number of key suppliers and partners, creating further efficiencies, and is closer to a commuter rail network making it more attractive to staff.
NZAI has had a successful start to the current financial year in the lead up to the latest Covid-19 lockdown, and sales through 2 Cheap Cars have been solid. Revenues are up 37 per cent to $24.7 million to July 21, driven by vehicle sales which are up 28 per cent on the same period last year, through recapturing lost vehicles sales from Covid-19, and through stronger finance penetration.
NZ Motor Finance continues to grow the loan book, up 18 per cent to $4.5m since March 2021 and now has 576 loans. Revenues and income across the group are up 38 per cent to $25.2m to July 2021. The 2 Cheap Cars business continues to work to manage supply chain challenges caused by inflationary headwinds across labour, shipping and compliance in the current environment.
All 2 Cheap Cars dealerships and the current car-processing hub have been closed since the country moved into a level-four lockdown, and we will only be able to trade on a limited basis at alert level three.
Any prolonged extension of alert level four or three restrictions could have a material impact on financial performance over the rest of the financial year, depending on the duration and geographic scale of the restrictions.
The used car sector has proven very resilient in the past, and the purchase of a used car is less discretionary than a new car. We service a mid-range buyer, not the lowest price and not the highest price ranges of used cars, as such demand is less impacted by shocks.
Our priority in the current lockdown is to support staff, customers and suppliers, while in the mid to long-term it will focus on cost management, responding to inflationary headwinds across labour, shipping and compliance.
These along with executing on the move to the new hub, embedding lean processes and delivering efficiencies, while also working to deliver uplift in worker engagement and retention will be critical for us.
NZAI is well placed to respond to increasing demand for electric, hybrid and low-emissions vehicles under the government’s clean car discount program.
21 per cent of sales at 2 Cheap Cars in the last quarter of the 2021 financial year were electric or hybrid electric vehicles.
Based on the clean car discount rules, which kick in from January 2022, 68 per cent of all vehicles sold by 2 Cheap Cars last year would have been eligible for a rebate or be zero rated.
We have recently adjusted our purchasing schedule towards cleaner cars, and we anticipate that the percentage of cars eligible for the rebate or no penalty will grow to between 75 to 80 per cent over the coming year.
Overall, we see the move towards cleaner cars as a significant opportunity for the NZAI Group.