If you bought shares in ASX 200 stock Eagers Automotive Ltd (ASX: APE) at the start of the year, you've had quite a ride.
The company's share price has climbed from around $11.74 at the start of January to a current share price of $31.03 at the time of writing, turning a $10,000 stake into roughly $26,000. That's a 160% gain in just nine months.
So what's been driving this extraordinary run for a car dealer?
Image source: Getty Images
Riding the electric vehicle wave
A huge part of Eagers' success has been the rise of BYD, the fast-growing Chinese electric vehicle brand shaking up Australia's car market.
Eagers operates most of the dealerships that sell BYD cars in Australia and has benefited from its rise as BYD's models have hit the sweet spot for buyers who want an electric vehicle at an affordable price tag.
By some estimates, as much as 80% of all BYD sales in Australia flow through Eagers-run dealerships. That's given the company a front-row seat (and a new growth engine) in one of the most explosive growth stories in the automotive world.
A shift towards used cars
At the same time, the cost-of-living crunch has reshaped buyer behaviour. With new car prices still elevated and interest rates biting, more consumers are turning to used cars. That's where Easyauto123 chain comes in.
Eagers owns Easyauto123 (a used-car retailer), which has quietly become a powerhouse in its own right. Its model is simple but effective: buy quality trade-ins (including from Eagers' dealership network), recondition them, and sell them at transparent, no-haggle prices.
Its popularity has surged with consumers looking to purchase a used car, helping Eagers to profit from this shift towards used cars.
Next stop… Canada
With all its success, Eagers isn't stopping at Australia. Earlier this month, the company announced a $1 billion acquisition of CanadaOne Auto Group, a top-five dealership network in Canada. The move gives Eagers exposure to a larger market and one step closer to the large US market.
To fund the deal, Eagers raised $452 million and brought in Mitsubishi Corporation as a new strategic partner. Mitsubishi is also taking a 20% stake in Easyauto123, signalling ambitions to help scale the used-car business.
Foolish Bottomline
Eagers has reinvented itself from a domestic dealer network into a diversified auto platform with global reach. Between the EV revolution, a strong used-car tailwind, and a new international expansion, the company has multiple growth engines firing at once.
Whilst the stock isn't cheap after a 160% run, few ASX 200 stocks have had such a stellar year as Eagers Automotive.
