Supply chain disruptions and weaker than expected consumer spending has forced NZ Automotive Investments (NZAI) to downgrade its full year earnings forecast.
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The automotive retail and vehicle financing company now expects its underlying profit to be between $2.3 million and $2.7m, compared with $3.8m a year ago.
NZAI said the ongoing presence of the virus and changes in consumer behaviour had hampered sales, particularly in the Auckland region.
"Although November's results were in line with expectations, management is not seeing the expected bounce back in sales previously experienced following the first Covid-19 lockdown," it said.
The company said its costs had also been rising as a result of the shortage of semi-conductor computer chips in the motor industry.
This had the effect of slowing down the production of new vehicles, which in turn had driven up prices for secondhand cars.
Adding to its cost pressures was the ongoing disruptions to global shipping lines, it said.
"The company remains in compliance with all bank covenants and is in a solid financial position with cash balances of $5.8m and net debt of $5.4m as at 26 January 2022," it said.
Furthermore, NZAI's sales had been dealt a blow after the government defered the start date for its Clean Car Rebate from 1 January to 1 April.
The company had increased imports of low emissions vehicles in an anticipation for the earlier start date, as it expected this would flow through to a lift in demand for these types of cars.
Recent changes to Credit Contracts and Consumer Finance Act had also affected sales of its finance and insurance products, as compliance with now took more time and consumers were still adjusting to the new requirements.
"Management have adapted to the challenges presented and have taken key actions to address the issues outlined," the company said.
"These include adjusting buying parameters, reviewing vehicle pricing, amending the vehicle stock mix on dealership and refining the finance and insurance processes."
NZAI was opening a new dealership in February, which it expected to deliver better sales volumes, and had completed the relocation of its vehicle processing hub which would create new efficiencies.