Tourism Holdings Ltd (thl) is reducing its US fleet by 17 percent to deal with poor performance from the company’s North American arm.
In an NZX update, the company said that the USA vehicle sales market had declined. It estimated that the wholesale market was down 40 percent in the last six months, and the retail market was down 10 percent in volume.
Retailers, manufacturers and rental companies had been heavily discounted, which created a lot of margin pressure. thl believe this pressure will continue for the next year. However, the company explained that this didn’t justify the results.
“Despite the current market conditions, our USA performance for (Financial Year) 2019 to date is unacceptable,” said Grant Webster, CEO of Tourism Holdings Ltd.
“At thl we are of the view that we should be able to deliver regardless of what the broader market conditions are doing, given our relatively small size compared to the total size of the market.
“Given today’s market conditions, we expect that our USA FY2020 result will also be impacted.”
Webster was optimistic that thl’s drop in the US market is isolated and is not likely going to be a long-term problem.
“There is nothing that indicates our fundamental Build/Buy, Rent and Sell model is broken or that we have a poor business. We do not see the current performance being a long-term issue.”
In 2019 thl had approximately 2400 vehicles in its US fleet. By the end of FY20, it expects to remove 2000 vehicles from the fleet.