Australia has a rich and illustrious history of producing automobiles. Australia is one of the very few countries in the world that can manufacture an automobile from conception to delivery, according to the Federal Chamber of Automotive Industries. The automotive sector in Australia is capable of taking a car and all of its systems and subsystems from the design stage to prototype testing for durability and safety, production, end-of-life servicing, and material recycling.
Similar to governments in other countries that produce automobiles, state and federal governments in Australia have backed the automotive sector because they understand the positive effects it has on manufacturing and technology.
95,980 motorcycles and other hand-held vehicles (OHVs) found new owners in 2023, down 3.1% from the year before, according to data released by Australia's automotive industry peak body, the Federal Chamber of Automobile Industry (FCAI).
Road motorcycles saw a 3% decline (35,122 units) over 2022 figures, while off-road motorcycles saw a 3.7% decrease (40,138 units).
Reference: The Federal Chamber of Automobile Industry (FCAI).
Let’s look at the five best ASX companies in the automobile and components industry group listed on the Australian stock exchange (ASX). These are as follows:
[Note]: The market cap and the share price of the selected ASX companies below are mentioned as of 15 January 2024.
ARB Corporation Limited (ASX: ARB)
Market cap: $2.77 billion
CMP: $33.72
The company has invested significantly in maintaining its long-term competitive advantage and is working on the development of new products and applications, some of which will be released to the market in 2023. The company has launched a full range of accessories for the Landcruiser 300 Series and an expanded range of accessories for the Toyota Hilux, Isuzu D-MAX, and the updated Toyota LC79 models. It is in the process of releasing over 160 new ARB products for the Ford Ranger and Everest models. ARB predominantly sells into the 4x4 wholesale markets in the USA, and the distribution network, unlike Australia, is fragmented and lacks a strong national aftermarket retailer. The sale and subsequent restructuring of a number of key accounts in the USA, including the 4 Wheel parts, continue to impact ARB USA’s business performance.
Autosports Group Limited (ASX: ASG)
Market cap: $480.39 million
CMP: $2.39
On 23 August 2023, Autosports Group Limited announced its full-year FY23 results. During the reported period, the company achieved notable financial success across multiple areas. New vehicle revenue has surged by an impressive 25.9%, with a substantial like-for-like increase of 16.2%. Used vehicle revenue also saw significant growth, increasing by 22.4%, with an 8.5% like-for-like improvement. The service and parts segment demonstrated exceptional growth, with combined revenue increasing by 34.6% and a like-for-like increase of 20.6%.
Eagers Automotive Limited (ASX: APE)
Market cap: $3.71 billion
CMP: $14.43
APE is one of the largest automotive retail groups in Australia and New Zealand, has a strong market presence in prestige and luxury brands, and holds the largest franchise operator role in the transition to a new energy vehicle. The significant capex built up could be seen as the business confidence to remain in momentum. Investment in specific automotive segments, such as expensive purchases in trucks and light trucks, is increasing road freight costs. The strong available liquidity position of $758.1 million, the up-scaled cash position of $353 million, the reduced net debt position of $118 million in HY2023, and the low gearing of 0.23 times provide adequate strength to the balance sheet. The company is currently offering a decent ROE of 27.15% and has been poised to pursue further growth opportunities.
Peter Warren Automotive Holdings Limited (ASX: PWR)
Market cap: $406.52 million
CMP: $2.36
The company achieved impressive sales revenue growth of 21.1% in FY2023 compared to the previous fiscal year, totaling $2,073.1 million. EBITDA also saw a healthy increase of 13.9%, reaching $139.7 million, indicating improved operational performance. However, there were notable challenges, with the gross margin percentage declining by 110 basis points to 18.9%, signalling potential cost pressures or other operational issues.
Supply Network Limited (ASX: SNL)
Market cap: $681.09 million
CMP: $16.22
Supply Network has demonstrated substantial health and value, partly due to the developments in the company’s operational capacity but also because of its financial performance, since there has been consistent and corresponding growth across the company’s revenues, profitability, and cash flows. Further, the company holds great monetary safety and security due to its healthy leverage and high liquidity. The cash balances relative to the company’s year-on-year net cash changes, despite sustained investments, dividend payouts, and debt repayment, also contribute to ensuring monetary security.
Reference: *All Data has been sourced from Company announcements and Refinitiv, Thomson Reuters
Frequently Asked Questions (F.A.Q)
What are the top 5 ASX automobile companies?
• ARB Corporation Limited (ASX: ARB)
• Supply Network Limited (ASX: SNL)
• Peter Warren Automotive Holdings Limited (ASX: PWR)
• Eagers Automotive Limited (ASX:APE)
How does Australia support the automotive industry?
Over many years, the Australian government has supported the automotive sector extensively with budgetary assistance, government procurement agreements, and import tariffs and quotas. In 1988, the government reversed protective measures in an effort to increase industry competitiveness.
Reference: The Federal Chamber of Automobile Industry (FCAI).
What are the fundamentals of Eagers Automotive Limited?
The strong available liquidity position of $758.1 million, the up-scaled cash position of $353 million, the reduced net debt position of $118 million in HY2023, and the low gearing of 0.23 times provide adequate strength to the balance sheet. The company is currently offering a decent ROE of 27.15% and has been poised to pursue further growth opportunities.
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