AUTOCARE Services, a wholly owned subsidiary of LINX Cargo Care Group, was placed into voluntary administration today (4 February).

Autocare services specialises in finished vehicle logistics. It provides on-wharf and off-wharf pre-delivery inspection services. The company said it processes more than 500,000 vehicles a year across Australia and handles more than 1 million vehicle movements per year.

According to a statement from LINX, the decision to place Autocare Services into voluntary administration was necessary due to successive years of operating amongst volatile market conditions, declining vehicle volumes and increasing operating costs, which have significantly impacted Autocare Services’ ongoing financial viability.

DCN understands that no decisions have been made about staffing.

Christopher Hill, Joseph Hansell and Ross Blakeley of FTI Consulting have been appointed as the administrators.

A statement from FTI Consulting said the administrators would conduct an independent assessment of the financial position and ongoing viability of Autocare Services.

“The administrators indent to work with management and staff in continuing to trade the business while the review takes place,” the statement said.

“The administrators will seek to maximise the chances of Autocare Services exiting the voluntary administration process in a sustainable position.”

Vehicle logistics market downturn

LINX Cargo Care Group CEO Anthony Jones said Autocare Services continues to be significantly impacted by the vehicle logistics market decline across the business’ portfolio of processing, storage and transport services.

“Autocare Services has been working closely with its customers, and the wider supply chain, to evolve the business in alignment with the changing market conditions; however, the material movement and volatility has been heightened by the ongoing COVID-19 pandemic,” he said.

“Voluntary administration can provide Autocare Services with a pathway for the tough, but necessary, change it needs for the evolution of its business model to keep delivering services valued by customers today, and into the future, to the Australian automotive industry.”

Mr Jones said LINX Cargo Care Group values Autocare Services as part of its wider group portfolio and is hopeful for the future of the business post the administration process.

“The appointment of an administrator is an unsettling time for our people, customers and stakeholders, for both Autocare Services and LINX Cargo Care Group, however we are confident in this process as the best chance for a profitable and sustainable Autocare Services on the other side,” he said.

“Importantly, Autocare Services’ current financial difficulties are not indicative or reflective of wider financial instability for LINX Cargo Care Group. As an operating Group, LINX Cargo Care Group remains unaffected by the appointment of voluntary administrators to Autocare Services and is in a sound financial position with the strong support of our shareholders and financiers.”

60 years in Australian automotive market

The statement from LINX said Autocare Services has been a major player in Australia’s automotive industry for 60 years, with almost 600 employees currently working at 20 sites across Australia to deliver vehicle logistics services for its customers.

The business has been exposed to the automotive industry market downturn for three consecutive years now and vehicle volumes are not forecast to return to levels that can sustain the business in its current structure.

Despite slight increases in sales in November and December 2020, Australia’s new vehicle market continues to remain depressed.

Since a record year in 2017, there has been a sustained decline driven by weakening economic conditions, shifting market and supply-chain requirements and changing consumer preferences.

This decline along with the impacts of COVID-19 has seen a 22.9% fall in new car sales since 2017. In 2020 alone, results were down 13.7% on calendar year 2019, according to the Federal Chamber of Automotive Industries.

Autocare Services intends to continue operating and servicing its customers across Australia during the administration process under administrator management.