Mega merger of fossil fuel car dealers plays down electric vehicles, automation

Among the biggest news in the business world in Australia late last week was the proposed “mega-merger” of AP Eagers and Automotive Holdings Group to create by far the biggest car dealership in the country.

It’s a deal worth around $2 billion, and is going to make some people a lot of money. But you had to dig deep into the documents to find any reference to the clear and present dangers that exist to their existing business model, namely the arrival of electric vehicles, automation and shared ownership.

There was no reference to EVs in any of the media reports on the merger which, in the great tradition of modern Australian business journalism, was all golly gosh about a proposed merger likely to deliver huge fees to the bankers behind it and job losses elsewhere (the merger document cutely describes this as “redefining the workforce”, but it hasn’t yet “quantified” the “synergies”).

But it’s the lack of any reference to the electric vehicles and automation that sticks out as the threat that dare not be spoken.

Electric vehicles get a cursory single mention in the media release and in the presentation to investors and analysts, and readers need to go all the way to page 74 of the 119-page bidder’s statement for a one page alert to the potential risks to the business. i.e.the threat to their sales channel and the profits they get from maintenance.

“The growth of electric and hybrid vehicles may reduce considerably the requirements for servicing (as they have fewer parts) and the timing for servicing (as they are likely to need servicing less frequently),” it notes.