2 Cheap Cars posts $3.2M NPAT with 7,239 vehicle sales and 61% EV mix
2 Cheap Cars Group maintained steady revenue and profit in FY26 despite softer vehicle sales and regulatory headwinds, driven by strong EV demand and record finance and insurance penetration.
- NPAT steady at $3.2 million, meeting guidance
- Vehicle sales down 6% to 7,239 units with 61% EV/HEV mix
- Opened Sylvia Park flagship yard, closed smaller sites
- Record finance penetration at 31%, insurance at 44%
- Clean Car Standard carbon credit costs trimmed profits
Profit Holds Firm Despite Regulatory Costs
2 Cheap Cars Group Limited (NZX:2CC) posted a net profit after tax (NPAT) of $3.2 million for the year ended 31 March 2026, matching its guidance and demonstrating resilience in a challenging market. The result came despite a 6% drop in vehicle sales volumes to 7,239 units and rising expenses linked to the Clean Car Standard carbon credit scheme, which shaved approximately $1.7 million from profits compared to FY25.
Strategic Retail Footprint Consolidation and Flagship Launch
The Group continued its strategic shift towards larger, more efficient retail locations by opening a new flagship yard at Sylvia Park in August 2025. This site quickly became the highest-volume branch, selling 849 cars in FY26 and surpassing 1,000 units by May 2026. Meanwhile, smaller underperforming yards in New Lynn, Westgate, and Palmerston North were closed, with volumes absorbed into larger sites such as the new Wellington branch in Petone. This consolidation aims to enhance operational efficiency and customer experience while reducing reliance on third-party listing platforms.
EV and Hybrid Vehicles Drive Sales Mix Shift
Reflecting a clear consumer preference for fuel-efficient vehicles, 2 Cheap Cars increased its hybrid and electric vehicle (EV/HEV) sales to 61% of total vehicle sales, up from 50% in FY25. The Group’s vertically integrated supply chain, including direct procurement from Japan, allowed it to adjust its inventory dynamically to meet demand and regulatory pressures. This shift underscores the company’s role in New Zealand’s transition to lower-emission transport.
Finance and Insurance Penetration Reach Record Levels
Finance and insurance revenues were standout performers, with agent commissions rising 17% to $7.9 million. Finance penetration climbed to 31%, and insurance penetration hit a record 44%, up from 27% and 36% respectively in FY25. This growth was supported by disciplined sales execution and a more stable consumer finance environment, contributing positively to margins amid a soft retail market.
Balance Sheet Strength and Dividend Continuity
The Group maintained a strong balance sheet with cash and equivalents of $3.8 million and reduced its NZ Motor Finance loan book substantially. Inventory increased to $18 million to support vehicle supply. Operating cash flow was $4.2 million, down from $6.7 million the prior year due to inventory investment. The Board declared a final gross dividend of 3.99 cents per share, bringing total FY26 dividends to 6.14 cents per share, reflecting confidence in the Group’s financial position and future cash flow generation.
Governance, Risk, and ESG Commitments
Governance disclosures highlight a three-member Board with two independent directors and ongoing commitments to risk management, diversity, and sustainability. The company continues to focus on reducing operational emissions, improving health and safety, and promoting ethical conduct. While diversity policy measurable objectives are yet to be implemented, the Group monitors gender diversity and inclusive hiring practices internally. The Group’s environmental efforts include sourcing low-emission vehicles and reducing emissions from logistics and operations.
Looking Ahead to FY27
Early trading momentum in FY27 appears strong, with the Sylvia Park yard expected to contribute fully. The Group plans to enhance its Christchurch operations with dedicated refurbishment capacity and increase operational leadership. It is also rebalancing compliance and refurbishment activities in Auckland to improve efficiency and speed to market. Opportunities remain in digital capability, direct-to-consumer marketing, and disciplined inventory management. The company’s direct purchasing strategy through its Japanese subsidiary has reduced reliance on third-party funding, preserving quality control over vehicle procurement.
While 2 Cheap Cars navigates ongoing regulatory and economic headwinds, its integrated supply chain, evolving retail footprint, and strong finance and insurance performance position it to manage margin pressures and capitalize on shifts in consumer preferences.
Bottom Line?
2 Cheap Cars’ FY26 results show steady profit and strategic progress, but regulatory costs and market softness will test margin resilience in FY27.
Questions in the middle?
- How will evolving Clean Car Standard regulations impact 2 Cheap Cars’ margins and pricing strategies?
- Can the Group sustain its record finance and insurance penetration amid potential shifts in consumer credit conditions?
- What role will digital marketing and direct-to-consumer sales play in reducing third-party platform reliance and driving growth?
