AUGSBURG -- German dealer group AVAG ended its 2008-2009 fiscal year with improved revenue and unit sales, helped by scrapping incentives. But an increasing shift toward cheaper cars in the under-10,000 euros ($13,600) price segment is hurting revenue.
"Volumes have risen appreciably, but the revenue per vehicle is down sharply," AVAG CEO Volker Borkowski said.
The Augsburg-based dealer group sold 81,812 new and used vehicles during the fiscal year that ended Aug. 31, 2009, up from 78,897 for the previous year. Its revenue was 1.23 billion euros ($1.67 billion), compared with 1.22 billion a year earlier.
The group sold 49,423 new cars in Austria, Croatia, Germany, Hungary and Poland. Germany's portion was 36,763 units, giving it a domestic market share of 1 percent.
The German government's scrapping bonus triggered a boom in sales. About 17,000 units, especially Opels, were sold during the incentive period that started in the spring 2009 and ended in September. During that period car buyers in Germany could get a subsidy of 2,500 euros for trading in an old car for a newer, more fuel-efficient model.
With a 58 percent share of revenue, Opel dominated AVAG's other brands as well as its business outside Germany this year.
AVAG's operating income rose to 8.9 millon euros, up from 8.3 million. Its profit margin was 0.7 percent, the same level as last year.
Successful Ford launch
Ford's entry as a new brand in mid-2009 went well. AVAG dealerships in Munich-Moosach; Eching; Augsburg; and Berlin have begun selling Ford vehicles, and other locations are to follow soon.
In the middle term, Ford is expected to contribute up to 20 percent of AVAG revenue.
The company is also looking into other brands. "In the process, 2010 will be more a year of discussion than execution," Borkowski said.