Earlier this week the Australian Bureau of Statistics released its latest monthly new motor vehicle sales which revealed a surprise uptick.
After a weak start to the year, in May new motor vehicles sales rose a seasonally adjusted 2.9% month-on-month or 4.9% year-on-year to 100,476 vehicles.
Does this mean it is time to buy these beaten down auto shares?
The AP Eagers Ltd (ASX: APE) share price has lost a third of its value in the last 12 months. This has left its shares changing hands at just over 14x trailing earnings. Furthermore, at the current price the automotive retail company's shares provide investors with a trailing fully franked 4.4% dividend. I'm a big fan of AP Eagers and think that if new motor vehicles sales continue to rise it could prove to be a bargain buy. I would suggest investors wait for June's data before making an investment.
The Automotive Holdings Group Ltd (ASX: AHG) share price is down 15% in the last 12 months. Last month the auto retailer's shares fell sharply after it downgraded its full-year profit guidance due to weak trading conditions. Much like AP Eagers, improved trading conditions in the auto retail industry would be a big boost for the company. However, until the turnaround of its Refrigerated Logistics business is complete, I would stay clear of Automotive Holdings. EBITDA in the segment fell 33% in the first-half of FY 2017.
The Bapcor Ltd (ASX: BAP) share price has tumbled 11% year-to-date. I think this has left the shares of the automotive aftermarket parts retailer trading at an attractive level, especially if new vehicle sales have rebounded. The company has grown its bottom line at an impressive rate over the last couple of years. This growth has been achieved organically and through acquisitions. One notable acquisition that I believe will add significant value is the Hellaby's acquisition which opens the door to the New Zealand market.
