• The Aussie automotive market has been surging
  • The aftermarket market has grown bigger since manufacturing plants closed down
  • Stockhead reaches to RPM Automotive CEO, Clive Finkelstein, to get his perspective on the market

Over the last several decades, ever-increasing production costs have practically killed the Australian car manufacturing industry.

Ford was the first to leave our shores when it shut down the Broadmeadows plant in Melbourne in 2016, ending a 91-year history in the country.

Toyota followed suit in 2017, closing down the Altona factory in Victoria where it used to produce classics like the Camry – marking the end of its 64-year presence.

The biggest sentimental blow however, came when Holden (a subsidiary of GM) closed down its plants in Elizabeth, SA, and other parts of Australia in 2017. Holden had made some of our most popular cars for decades including the perennial classic, Commodore.

It’s fair to say the industry’s death was gradual and inevitable, given that we’re surrounded by countries to our north with much cheaper labour costs.

In the end, it came down to simple economics as Australia eventually became flooded with foreign-made cars that are simply much cheaper to buy.

Since 2017 however, new car sales in the country have continued to grow year after year. The Federal Chamber of Automotive Industries (FCAI) said that in 2021, new vehicle sales in Australia climbed 14.5% over 2020 to 1,049,831 units – the highest number ever sold.

The demise of manufacturing has also sparked a boom in adjacent businesses, particularly in the aftermarket segment.

Aftermarket and car repairs are booming

According to the latest data from the Australian Automotive Aftermarket Association (AAAA), there are now 300 aftermarket manufacturing companies operating in Australia, which has increased from 260 in 2015.

The combined export revenue within the sector currently sits at $640m, with the US remaining the key export market, ahead of Europe, NZ and the Middle East.

“When the manufacturers announced they were leaving, everybody thought that was the end of the automotive industry in Australia. But actually, it evolved,” said Clive Finkelstein, CEO of RPM Automotive Group (ASX:RPM).


RPM Automotive CEO, Clive Finkelstein

Finkelstein said the aftermarket segment has instead boomed when those manufacturers left.

“People thought that companies who were supplying to Ford, Holden and Toyota would battle to survive, but they actually evolved and became bigger,” Finkelstein told Stockhead.

“The aftermarket segment became fragmented, and hasn’t been dominated by corporates or listed entities,” he explained.

“So the opportunity for consolidation is there for the likes of Bapcor, and to a lesser degree Repco, GUD, or maybe even ARB.”

A former scuba diver who started the original RPM business from scratch in South Africa, Finkelstein believes the Australian auto industry has never been in a better shape, with more cars being sold today than any other year.

“It’s happened because of a combination of things – growing population, people generally having more vehicles, and the ditching of public transport due to the pandemic.”

A sub-sector is also growing rapidly within the broader market, according to Finkelstein.

“It’s those grey nomads. They are the Baby Boomers, the biggest part of our population group, who are at different stages of retiring,” he explained.

“They’re selling up their assets to buy a caravan or a four-wheel drive, and off they go to retire by traveling around Australia.”

Could rising rates dampen business outlook?

Finkelstein argues that higher interest rates will slow down new car sales, but other segments will actually grow exactly because of it.

“If you can’t afford to buy a new car, you need to maintain and fix your old car,” he said.

“We definitely find from an accessorising point of view that people accessorise used cars or older vehicles more than they do new ones.”

“Older vehicles also need new tyres, new suspensions, new brakes, and new batteries. So there’s a maintenance consideration,” he added.

In the last quarter, RPM’s revenue grew by 48% on pcp to $21.5m, with a bottom line EBITDA growing by 77% on pcp to $2.3m.

The strong quarter led the company to upgrade its full year guidance to between $80 million and $85 million (from $78m previously), and EBITDA to between $7.2 million and $8.2 million (previously around $7m).

Apart from the aftermarket segment, RPM’s repairs and roadside business also saw a 55% increase on pcp to $7.1m in the last quarter.

“There is no business which is recession proof, but we find that there are swings and roundabouts,” Finkelstein said.

Could electric vehicles disrupt the industry?

The EV revolution is catching on in Australia, and in 2021 there was a 200% increase to 20,665 EV sales across the country.

Could this disrupt exisiting auto companies operating in Australia?

“For RPM, we’ve already changed our business model by divesting our exhaust business before we listed (in August 2019),” said Finkelstein.

“We identified the headwinds of EV, and the fact that combustion engines will only be around until probably 2050, and they’re even coming to an end from a manufacturing point of view by 2030.”

What Finkelstein has been focusing on instead is the tyre segment, particularly the commercial and industrial tyres where he sees low-hanging fruits.

“Whether a car is EV or uses a combustion engine, they all have to run on tyres,” he said.

“In 2016, when we got into the tyre industry, the commercial tyre industry (trucks and buses) was worth about $800 million annually in Australia. This is now worth about $1.2 billion,” he added.

“The share in the market demand from the Chinese also went from $160 million, all the way up to $350 million.”

“RPM is in a good position, and the latest metrics show our strategy is working. The bigger we get from a turnover point of view, the bigger will the percentage of our profitability will be.”


RPM Auto share price today:



Other ASX automotive stocks

Eagers Automotive (ASX:APE)

Eagers’ core business is motor vehicle dealerships, primarily in used cars, where it has operated for more than 100 years.

Its name was changed to Eagers Automotive Limited from A.P. Eagers in 2020, following the acquisition of listed Automotive Holdings Group (AHG).

Eagers’ sales revenue has increased massively from $500 million in 2000, to $8.7 billion in 2020.

In FY21, the company delivered a record profit before tax (PBT) of $401.8m on the back of $8.6bn revenue.


Carsales.com.au has been around since 1997, and was one of the first auto marketplaces out there.

It has a simple revenue model where it charges a fee for a seller to list their vehicle until sold. It also charges for advertising space on the website.

The platform now commands a market leadership position in Australia.

For the first half of FY22, its revenue grew by 16%, and adjusted EBITDA by 9% on pcp. The company said this was a good result considering the lockdowns in NSW and Vic in the first quarter.

Peter Warren (ASX:PWR)

Peter Warren is a also dealership network that has been operating in Australia for over 60 years.  The company now operates 82 franchise sites, and represents 28 OEMs.

For the first half of FY22, the company delivered underlying profit before tax of $36.3 million, up 35% on prior year. Its sales revenue for the period was $778 million, up 4% on the pcp.

The revenue is tracking around 5% above prospectus forecast.

In December, Peter Warren acquired 100% of the Penfold Motor Group for $106m. The acquisition is expected to expand PWR’s footprints across the eastern seaboard of Australia.

Autosports Group (ASX:ASG)

Autosports Group focuses on the luxury market, mainly the European brands. It has over 40 luxury and prestige car dealerships located in NSW, Qld and Vic.

The company started in 2006 with the establishment of the Audi Autosports Dealership as a greenfield site.

In the first half of FY22, ASG’s statutory revenue was $910.8m , up 0.8% on pcp, while bottom line NPBT grew 35.1% to $39.2m.

ASG saw its new vehicle order bank growing by over 100% since February 2021, but says new vehicle supply remains constrained by semiconductor shortages.

Sprintex (ASX:SIX)

Sprintex focuses on superchargers and clean air compressor engineering.

Its main product is the Sprintex twin screw superchargers for the aftermarket and OEM markets in Australia, Asia, Africa, the Middle East and the United States of America.

The company has manufacturing capabilities in China, after announcing the establishment of Sprintex Energy Technology in the city of Suzhou in Jiangsu Province.

The refurbished 1,500 sq metre facility will become the company’s new engineering centre and production base for Sprintex in China.

Sprintex China has obtained a series of subsidies from the Chinese Government for its high-tech operations and clean energy profile.

Other automotive (and automotive adjacent) stocks listed on the ASX include:

ARB Corp (ASX:ARB), AMA Group (ASX:AMA), Turners Automotive (ASX:TRA), Bapcor (ASX:BAP), and Advanced Breaking Tech (ASX:ABV).


Share prices today:



At Stockhead we tell it like it is. While Sprintex is a Stockhead advertiser, it did not sponsor this article.