The administrators of collapsed automotive repair chain Midas Australia could hardly have chosen a worse day to formally launch their campaign to sell the troubled business.
An advertisement calling for expressions of interest in the chain appeared in The Australian Financial Review this morning. According to the advertisement, the company had annual turnover of about $11 million in 2007-08.
The first meeting of Midas creditors is also being in held in Melbourne today. Administrator George Georges of Ferrier Hodgson says unsecured creditors are owed around $2 million, while the company’s banks (secured creditors) are owed an as-yet-undisclosed amount.
Georges and many of Midas’s franchisees and managers are confident of finding a buyer or new investor for the company, but the latest automotive industry data reveals an industry struggling for survival.
New vehicle sales fell 3.6% in Australia in 2008 to 1,012,164 units, but most worrying for the industry was the sharp 11.3% fall in sales in December, despite dealers offering sharp discounts to try to attract buyers.
Sales of cars produced by local manufactures slumped by 14.5% last year.
The Federal Chamber of Automotive Industries expects vehicle sales to fall by 12.5% in 2009, with total sales forecast to be 880,000 units.
“We must be realistic about the outlook for the year ahead, and acknowledge the impact that the global financial crisis is having on the broader economy,” FCAI chief executive Andrew McKellar says.
McKellar was also quick to point out that the 3.6% fall in Australian car sales was nowhere near as bad as the 40% fall in sales in North America, where giant General Motors and Chrysler are struggling for survival.
But Australia’s industry is not going to be insulated from the woes of the global car industry.
This morning General Motors dumped plans to make an SUV based on Holden’s ute platform, and Australian car dealers have been rocked by the withdrawal of US-based finance companies GE Money and GMAC.
Industry expects say the problems at Midas Australia highlight the difficulties that are also facing the vehicle repair sector of the automotive industry.
Stuart Charity, executive director of the Australian Automotive Aftermarket Association, whose members supply accessories and replacement parts to automotive repairers including Midas, says competition and rising costs (particularly of the complex diagnostic equipment required for modern vehicles) has made life tough for repairers.
“There has been and is expected to be significant rationalisation across the repairers. It’s becoming more and more cost prohibitive.”
However, he says there may be some light at the end of the tunnel for repairers as falling new car sales will result in an ageing of Australia’s vehicle population.
“There should be an upswing in demand for repairs from independent repairers.”
Charity says members are faring reasonably well given the economic conditions.
“The aftermarket generally is holding up pretty well. We did some surveying of our members late last year and the majority of them are saying sales are holding up quite well.
“It’s probably one of the few profitable areas of the automotive sector at the moment.”
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