"We have about 6,000 cars (coming off lease) every 6 months which we need to sell into the used car market, and when we can't sell them that gives us liquidity issues. We expected to have a large inventory buildup on our balance sheet due to the virus. Instead, we've seen a re-emergence in the used car market, driven by trends we didn't expect: there's a large demand for used cars, especially for the car market around the two to three year olds which we typically sell into, driven by people's fear of going back into public transport..."
And what wasn't mentioned in that interview is the fact that, with international travel still on hold for a considerable time to come, holidaying will be exclusively domestic, involving millions of more km of car travel across the country.
With cars that are going to be used a lot more, and in turn, require more maintaining, servicing, repairing and cleaning, it bodes well for demand for BAP's products over the next few years.
With almost all the discussion - a mere few months ago - involving the path to obsolescence of the internal combustion engine, who would possibly have been able to predict that car-related stocks (BAP, CAR, GUD, TCL) would , instead, be enjoying renewed tailwinds today?
.
BAP Price at posting:
$5.90 Sentiment: Buy Disclosure: Held
A personalised tool to help users track selected stocks. Delivering real-time notifications on price updates, announcements, and performance stats on each to help make informed investment decisions.
(20min delay)