600 jobs on the line as car Autocare Services calls in administrators after big losses
A national car transport firm employing 600 people at 20 sites across Australia has called in administrators after racking up losses in excess of $50m in the past three years.
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NATIONAL auto transport company Autocare Services has called in administrators after a slide in car sales caused losses in excess of $54m in the past three years.
About 600 jobs are at risk at the 60-year-old company, a wholly owned subsidiary of the LINX Cargo Care Group, with auditors raising concerns about its financial stability last year.
The Melbourne-based company has reported consecutive losses over the past three years with the COVID-19 pandemic exacerbating its already shaky finances.
The company, which operates 20 sites across the country transporting vehicles from ports to dealerships, has been forced to rely on the financial support of its parent company over the past few years to ensure it could continue operating as a going concern.
Autocare has faced a three-year downturn in the auto industry with vehicle volumes not forecast to return to sustainable levels.
FTI Consulting administrators Christopher Hill, Joseph Hansell and Ross Blakeley will now attempt to restructure the business so it can emerge in a “sustainable and viable position.” Creditors will receive a detailed report on the company’s future in March. The company said it would continue operating across Australia during the administration.
Founded in 1961 by Bill Winton, the company was acquired by logistics group Patrick in 1996 before becoming part of the LINX group in 2016.
The company’s auditors Deloitte raised concerns about the financial stability of the company last year as revenue declined 10 per cent to $215.7m in the year to the end of December 2019. Losses grew from $8.1m in 2018 to $46.76m in 2019.
According to its 2019 financial statement lodged with ASIC, the company received a letter of support from LINX confirming it would not seek early repayment of any related party loans. LINX also had offered access to additional cash through a working capital facility.
The financial statement said the COVID-19 pandemic had had a negative impact on the transport and processing operations of the company.
The Federal Chamber of Automotive Industries warned last year that the industry was going through an “extraordinarily difficult time” highlighted by the recent departure of Holden. The market has been battered by a horrendous bushfire season and drought.
LINX Cargo Care Group chief executive officer Anthony Jones said Autocare Services continued to be “significantly impacted” by the slide in the vehicle logistics market.
Mr Jones said that since a record year in 2017, there has been a sustained decline in the car market driven by weakening economic conditions, shifting market and supply chain requirements and changing consumer preferences.
COVID-19 had exacerbated the decline with a 22.9 per cent fall in new cars sales since 2017. In 2020 alone, results were down 13.7 per cent on calendar year 2019.
Mr Jones said voluntary administration could provide the company with a pathway for the “tough, but necessary, change” it needed to make.
The business had been exposed to the automotive industry market downturn for three consecutive years and vehicle volumes were not forecast to return to levels that can sustain the business in its current structure.
“The appointment of an administrator is an unsettling time for our people, customers and stakeholders, for both Autocare Services and LINX Cargo Care Group,” said Mr Jones. “However we are confident in this process as the best chance for a profitable and sustainable Autocare Services on the other side.”
Mr Jones said the financial difficulties of Autocare was not indicative of wider financial instability for LINX.
“As an operating Group, LINX Cargo Care Group remains unaffectedand is in a sound financial position with the strong support of our shareholders and financiers,” he said.
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Originally published as 600 jobs on the line as car Autocare Services calls in administrators after big losses
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