Why the Automotive Holdings Group share price is crashing today

Talk about a Christmas crash! The Automotive Holdings Group Ltd (ASX: AHG) share price tumbled lower to be the worst performing stock on the S&P/ASX 200 (Index:^AXJO) (ASX:XJO) this morning.

| More on:
a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Talk about a Christmas crash! The Automotive Holdings Group Ltd (ASX: AHG) share price tumbled lower to be the worst performing stock on the S&P/ASX 200 (Index:^AXJO) (ASX:XJO) this morning.

What's more, it may not even be the company's fault that sparked the 4.3% reversal in AHG's share price to $1.42 when the ASX 200 is hovering around breakeven during this shorten Christmas eve trading session.

Fingers are pointing at a profit warning by its peer Autosports Group Ltd (ASX: ASG), which revealed it will take a $3 million hit to its first half earnings before interest, tax, depreciation and amortisation (EBITDA).

The irony is that the illiquid ASG share price is untraded at the time of writing. The lack of panic signals that the bad news was anticipated and factored into its record low share price.

On the other hand, fellow car dealer AP Eagers Ltd's (ASX: APE) share price has managed to chalk up a 0.5% gain to $5.73 while online auto classifieds Carsales.Com Ltd's (ASX: CAR) share price slipped 0.4% into the red at $10.69.

If the slump in the housing market wasn't enough of a drag on the sale of luxury cars, the devasting Sydney hailstorm and stricter quarantine rules are new headaches that Autoports must deal with.

"The quarantine issues have arisen as a result of heightened surveillance by the DAWR (Department of Agriculture and Water Resources) upon the discovery of the Brown Maromated Stink Bug on several transport vessels," said Autosports in a statement to the ASX this morning.

"This impact is likely to be temporary but will affect customer deliveries through December. The affected brands include Audi, Mercedes Benz, BMW, Volkswagen and Volvo."

The storm that hit our largest city on December 20 has also been blamed for the profit warning as vehicles were damaged from hail.

This has led to delays in the delivery of vehicles that were scheduled this month.

It's a case of guilt by association as the market is anticipating bad news from Automotive Holdings. It's not a great way to end the year as ASX-listed automotive dealers are among the worst performing stocks this calendar year.

The outlook is unlikely to improve much for most of 2019 as our housing market is unlikely to recover until 2020.

Falling property prices have a negative effect on household wealth and affects consumer sentiment. Households are reluctant to spend on big ticket discretionary items when the value of their homes (often their largest asset) is falling.

Motley Fool contributor Brendon Lau has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Automotive Holdings Group Limited and carsales.com Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on 52-Week Lows

A businesswoman exhales a deep sigh after receiving bad news, and gets on with it.
52-Week Lows

Guess which ASX 200 stock is sinking to a new 52-week low today following an update

This stock is having a poor finish to the week. But why are investors hitting the sell button?

Read more »

A woman sits with her hands covering her eyes while lifting her spectacles sitting at a computer on a desk in an office setting.
52-Week Lows

Market slump drags 26 ASX 200 shares to multi-year lows

Heavyweight ASX 200 companies like CSL and Wisetech are among them.

Read more »

a man holds his arms out and shrugs his shoulders as if indicating he doesn't know the answer to a question he's been asked.
Materials Shares

Why is this ASX 200 mining stock crashing 28% today?

Investors are rushing to the exits in large number. But why?

Read more »

Piggy bank sinking in water symbolising a record low share price.
52-Week Lows

16 ASX 200 shares that hit multi-year lows on Friday

Markets are nervous as US President Donald Trump winds back tariffs on some Canadian and Mexican imports.

Read more »

Investor looking at falling ASX share price on computer screen
Earnings Results

2 ASX All Ords shares crashing 16%+ on earnings updates

It's a red day for the market on Friday.

Read more »

Woman disappointed at share price performance with her hands on her face.
52-Week Lows

The Sayona Mining share price just hit a 4-year low

Things have gone form bad to worse for this lithium stock.

Read more »

Three people skydiving.
52-Week Lows

These ASX tech stocks just hit multi-year lows! Are they cheap?

A cheap share isn't always a bargain...

Read more »

Dollar sign in yellow with a red falling arrow in front of a graph, symbolising a falling share price.
Materials Shares

Ouch: The Pilbara Minerals share price just hit a multi-year low

It's been a tough day for lithium investors.

Read more »