Key Highlights

  • Turners Automotive Group (ASX:TRA) has retained its FY27 target of $65 million in net profit before tax, despite more challenging trading conditions.
  • Group profit for the four months to July was 4% ahead of the corresponding period in FY26, supported by growth in the Finance business.
  • Higher fuel prices have reduced Demand for diesel and larger-engine vehicles, while vehicle Margin pressure has lasted longer than previously expected.
  • Turners continues to target $100 million of NPBT by FY31, although management acknowledges increased short-term risk to the FY27 target.

Turners Automotive Group (ASX:TRA) has maintained its FY27 net profit before tax target of $65 million, while acknowledging that market risks have increased since its previous outlook. The company said trading conditions during the first half of FY27 have become materially harder than those experienced in the corresponding periods of FY26 and FY25.

The weaker environment has been linked to reduced consumer confidence and higher fuel prices. Turners said demand for diesel and larger petrol-engine vehicles has been materially affected, creating additional pressure across its automotive retail operations.

Despite these challenges, group profit for the four months to July was 4% ahead of the same period in FY26. The diversified nature of the Business has been important, with growth in Finance more than offsetting the reduction in Auto Retail profit.

Vehicle Margins Face Longer Pressure

Turners has also reported greater pressure on vehicle margins than anticipated earlier in the year. The company moved quickly to reposition its inventory, but the impact on margins has persisted for longer and has been more significant than expected in May.

The market for diesel utilities and SUVs has experienced price reductions, affecting the willingness of vendors to sell vehicles at current market levels. This has contributed to lower sales volumes of ex-lease vehicles.

Consignment units were down 14% on a July year-to-date basis. Turners characterised this as a timing issue, with Lease vendors expected to adjust pricing expectations before the vehicles can move through the sales process.

Finance Business Provides Earnings Support

The Finance division continues to provide an important counterbalance to weaker Auto Retail conditions. Turners reported that its Loan book increased a further 7.5% since March 2026.

Loan growth has continued despite pressure on New Zealand consumers, while arrears have remained at levels the company described as performing well. The continued expansion of the finance book is therefore providing earnings support while automotive sales conditions remain difficult.

Insurance and Credit Management operations were broadly in line with the previous year, adding further Diversification to the group's earnings base.

Consumer Confidence Remains a Key Variable

Turners said the ongoing Middle East conflict has slowed New Zealand's economic recovery and affected consumer confidence. Higher fuel costs have added another layer of pressure, particularly for buyers considering diesel and larger-engine vehicles.

Management expects these factors to remain relevant to trading during the first half of FY27. The company said a resolution to the Middle East situation and an improvement in consumer confidence could support a faster recovery in vehicle demand and margins.

Conversely, continued weakness in these areas could make the $65 million FY27 NPBT target more difficult to achieve.

Long-Term $100m Target Reaffirmed

While short-term uncertainty has increased, Turners has maintained its confidence in its longer-term strategy. The group continues to work on Auto Retail branch expansion opportunities and remains focused on growing its diversified financial services model.

Management has reiterated its target of achieving $100 million in NPBT by FY31. The company said it remains on track toward the medium-term objective, despite the more difficult conditions facing the automotive market in the current financial year.

Conclusion

Turners Automotive Group has retained its $65 million FY27 NPBT target despite increased pressure from weaker vehicle demand, higher fuel prices and longer-lasting margin impacts. The 4% increase in group profit for the four months to July and 7.5% growth in the loan book demonstrate the contribution of its diversified business model, although Auto Retail remains exposed to consumer confidence and vehicle pricing conditions. The FY27 target therefore remains in place, but management has acknowledged greater near-term uncertainty before the expected return of stronger momentum in FY28 and progress toward its $100 million FY31 objective.