The Sleuth’s Guide to Colonial Motor’s Financial Turnaround

Alright, fellow spending detectives, grab your magnifying glasses. We’re diving into the financial mystery of Colonial Motor Company (NZSE:CMO), a New Zealand automotive player that’s just pulled off a financial heist—turning around its 2024 slump with some slick moves in 2025. The numbers? A whopping NZ$0.56 earnings per share (EPS) compared to a measly NZ$0.14 the year before. That’s not just a bump—it’s a full-on financial makeover. But how did they do it? Let’s crack this case.

The Used Car Caper

First stop: the used car lot. Turns out, Colonial Motor’s secret weapon was its pre-loved ride division. While new car sales were stuck in neutral, the used car segment revved up like a turbocharged engine. Why? Well, folks, when new car prices skyrocket (thanks, supply chain chaos), people start hunting for bargains in the used market. Colonial Motor capitalized on this trend, raking in higher margins by focusing on what was hot—secondhand wheels.

But here’s the twist: revenue actually dipped by 1.1% to NZ$1.00 billion. So how did profits soar? Simple—Colonial Motor wasn’t just selling more; they were selling smarter. By trimming costs and focusing on high-margin used cars, they turned a profit margin of 0.4% in 2024 into a sleek 1.8% in 2025. That’s the kind of efficiency that makes even the most frugal shopper nod in approval.

The Half-Year Hiccup

Now, let’s talk about the first half of 2025. EPS took a nosedive from NZ$0.28 to NZ$0.21. Ouch. But before you start crying over spilled petrol, remember—this was expected. The market was rough, expenses were up, and Colonial Motor was still fine-tuning its strategy. The real magic happened in the second half, where they tightened their belt, streamlined operations, and—boom—profit margins bounced back.

Looking back at 2024, the numbers were brutal. EPS plummeted from NZ$0.85 in 2023 to NZ$0.14. That’s a drop that’d make even the most seasoned investor wince. But Colonial Motor didn’t just sit there. They adapted, pivoted, and came roaring back in 2025. CEO Ash Waugh even called out the tough market conditions, making the used car segment’s performance all the more impressive.

The Investor’s Dilemma

Now, here’s where things get interesting for the money sleuths. While the EPS growth is sexy, there’s a catch: returns on capital. Analysts over at Simply Wall St. are raising eyebrows, wondering if Colonial Motor is really making the most of its cash. Sure, profits are up, but are they sustainable? And how does Colonial Motor stack up against its rivals, like PGG Wrightson (NZSE:PGW) and General Capital (NZSE:GEN), who also posted solid earnings in 2025?

The automotive world isn’t just about selling cars anymore—it’s about electric vehicles, sustainability, and tech. Colonial Motor’s ability to keep up with these trends will decide if this turnaround is a one-hit wonder or the start of a long-term success story.

The Verdict

So, what’s the final verdict? Colonial Motor pulled off a financial comeback worthy of a detective thriller. They leaned into the used car market, trimmed the fat, and turned a profit where others might’ve stalled. But the case isn’t closed yet. Investors need to keep an eye on capital efficiency, industry trends, and whether Colonial Motor can keep this momentum going.

For now, the numbers look good, the strategy seems solid, and the used car segment is the unsung hero of this financial mystery. But in the world of spending sleuths, we know one thing: the best detectives never stop digging. Stay sharp, folks.