Address and Presentation to 2022 Annual Meeting

___________________________________________________________________________

PO Box 6159 Level 6 Telephone 04 384-9734 E-mail cmc@colmotor.co.nz
Wellington 6141 57 Courtenay Place DX SP21009 Website www.colmotor.co.nz
NEW ZEALAND Wellington 6011





CHAIR’S ADDRESS TO THE 104
th
ANNUAL MEETING



Ladies and Gentlemen,

It gives me great pleasure today to celebrate the Company’s record result that was announced
to shareholders in August. Trading profit after tax for the 2022 financial year was $33.3
million, up 19% on the prior year. A record dividend of 62 cents per share was paid to
shareholders, which equates to 61% of the trading profit after tax. Overall, this represents an
exceptional and rewarding result for the Company and our shareholders and the credit belongs
to our staff across the Group.

The market and trading environment for cars and light commercials, as well as trucks and
tractors, was favourable for a good portion of the last financial year. However, the obstacles
that needed to be overcome to capitalise on this strong demand were numerous and
substantial.

The reality is that our people have worked incredibly hard, remained optimistic and as a result
they excelled. Our DPs and their dealership staff have served the Company exceptionally
well. This was particularly so during the very trying and testing covid affected periods and the
cascading global impacts on supply and labour shortages. Alex and the new CMC leadership
team have done an outstanding job, hitting the ground running from day one and bringing with
them a gust of fresh air and enthusiasm.

Leadership Transition
It has been challenging and ultimately pleasing for the Board to see through a 3-year program
of leadership succession. Whilst trading conditions have been positive during this period, this
in no way diminishes the enormity of the challenge for a new team to take over the reins of a
large and complex business. At the end of the day, it is they and our DPs who lead the
business and are charged with delivering the results. I want to personally congratulate Alex,
Paul and June on their first year in their respective roles and thank our DPs for their support of
these changes.

The cyclical nature of the auto business will bring us more difficult times but I am confident our
new leadership team will respond with the same vigour they have displayed this past year.

Focus and Direction
The Company has a robust balance sheet, a substantial property portfolio and long-term
strategic partners in PACCAR, Ford, Mazda, Case New Holland Industrial and Kubota, along
with some newer brand associations that we value highly and continue to foster. The new
relationship with Case New Holland Industrial has developed well since they assumed direct
distribution from Australia of the New Holland and Case tractor brands directly into our
Agricentre South dealership.

The Colonial Motor Company has a well-developed strategy and a focused management team
with an eye for growth and who embrace change. Pursuit of growth and change are not
sought at the expense of earnings quality and our long-term goal of delivering sustainable
profits and dividends. We take a cautiously optimistic approach that prudently manages the
balance sheet, allowing the company to grow alongside our existing partners, to take on new
opportunities, while maintaining strong financial discipline, should we encounter more
challenging times.

The Changing World
Our world is always changing and without sounding too pessimistic, the mid-term economic
outlook appears increasingly fragile. This is against a backdrop of sustained global unrest and
stubbornly high inflation. These both have potential consequences for New Zealand and the
global economy.

Economic stimulus, global events, low unemployment and restricted supply have provided
favourable trading conditions for the last two years. Consequently, the social and economic
price for persistently high inflation will eventually fall due. When this might happen and the
severity of any impacts remain the topic of much debate, but history tells us the tide can turn
quickly.

Electrification
The global shift in direction to electrified vehicles is as much about reducing emissions as it is
about competing and ultimately dominating a new era of technology. The race, to secure
supplies of raw materials and increase production capacity to manufacture EVs, will continue
to play out over the next decade. This race will likely, and frankly is, seeing the emergence of
a number of Chinese brands as credible alternatives to traditional names, particularly in the
value segments.

This search for value is not surprising, as the entry price for a new EV vehicle continues to be
a significant step up from an equivalent internal combustion engine vehicle. This price ‘shock’
was expected to be moderated by improving technology and the benefits of scale as
production ramped up. However, this expected reducing price scenario has been swallowed
up by key raw material scarcity and its attendant increasing prices.

The brands we are partnering with are all investing in next generation product and
technologies that will continue to come online over the course of the next few years and
beyond. There will continue to be supply challenges, particularly on the availability of electric
product globally and that will cause a few bumps on the road. However, for our staff and as a
company, it is an exciting time embracing and preparing for a new era of automotive
technology.

The New Zealand automotive industry is having to contend with targeted intervention via the
clean car tax and the soon to be implemented, clean vehicle standard. The existence of clean
vehicle policies is of benefit in the quest to secure a supply of electric vehicles. However, the
haste to activate this new legislation, combined with very ambitious targets, has created a
number of unresolved challenges for a small automotive market like New Zealand. This is
proving a particular challenge in a world competing for a limited pool of EVs.
Risk remains around even further legislative changes to the just introduced clean car
framework that might impact on the near term. This could affect the light commercial vehicles
that tradies and farmers favour and rely on. The political climate is uncertain in this area and
any move that impacts New Zealand’s productive sector will eventually flow through to
consumer confidence.

Near Term Outlook
At this time in 2021, we forecast continued strong demand with the potential for disruption and
ongoing uncertainty.

In September, when Alex wrote his Chief Executive’s report, we were still in the aftermath of
the clean car tax that came into effect on the 1
st
of April this year. The introduction of this tax
inevitably front-loaded registrations of ICE vehicles into the first quarter of 2022.

As predicted, we have seen the new car market recover as the industry continues to fulfill a
backlog of orders. From the 1
st
of January 2023, we are expecting to see-in the Clean Vehicle
Standard (Importer side scheme). This will create another incentive to register vehicles before
the deadline. We anticipate further disruption as importers grapple with the consequences of
the legislation and adjust the vehicle mix and associated vehicle prices over the coming year,
as they endeavour to strike the right balance and avoid the consequences of hefty penalties.

At present, demand for desired vehicles exceeds available supply and monthly sales are
dictated by shipping arrivals. While enquiry remains strong, it is less than it was. This trend is
expected to continue into at least next year, with the difference being the likelihood of an
economic shock now appearing greater and the cost of doing business is on the rise. The
increasing cost of living and rising interest rates are expected to further impact consumer
confidence and take some wind out of the auto industry’s sail. This as discretionary incomes
come under increasing pressure.

Add to those pressures a weaker New Zealand dollar leading to significant retail price
increases and early 2023 looks likely to be a more challenging trading environment.

Back to today and earnings for the first quarter of this year remained robust. With greater
headwinds and continued uncertainty, it is not unexpected that we are tracking behind last
year’s record result. If we continue to avoid any major shocks then we anticipate a solid result
for the current half year.

Directors
Earlier in the meeting we dealt with the election of a new Director, John Hutchinson. This was
brought about by the retirement of Matthew Newman from the Board with effect from the close
of this meeting.

Matthew has served CMC for 36 years and been guiding our South Auckland Dealership
representation over those near four decades. This was initially for Ford, then adding Mazda
and more recently including Isuzu, Citroën, Peugeot and Suzuki. He has brought to the board
table his energy and enthusiasm, experience and empathy. Always a strong performer at the
dealership level gave Matthew the credibility to contribute significantly on matters of strategy,
financial performance and people development.

Matthew, thank you for your contribution to CMC. You will long be recognised as an integral
part of our history and DNA.

Let me finish these comments by passing on my personal thanks to the Board in my first year
as Chair. Most importantly, thanks also to our shareholders for your support in remaining loyal
to our company.

I’ll now invite our CEO Alex Gibbons to address the meeting.



A J Waugh
Chair
The Colonial Motor Company Limited

11 November 2022

---

The Colonial
Motor
Company Ltd
104
th
Annual General
Meeting Presentation
11 November 2022

Report from the Group Chief Executive
Alex Gibbons, CEO, CMC

Government
intervention
has directly
impacted new
vehicle
registrations
Source: MIA, September 2022
The outcome has been phenomenal but the journey to
achieve success has been a rollercoaster for our dealerships

Evolving Product Mix
Supply and price are the greatest barrier
to EV uptake.
Limited existence and availability of
practical light commercial EVs is slowing
the transition in that segment.
Data Source: MIA, August 2022

Climate Change:
three factors
influencing
demand in the
automotive
industry

Passenger and SUV
emission targets:
ambitiousand
aggressive for a
small automotive
market like NZ
Data source: MIA, November 2021
Clean Car Policies are designed to force rapid
reductions in CO2 emissions

Light Commercial
emission targets:
gapbetween
government
aspirations and
product
availability
Data source: MIA, November 2021
Few light commercial EV models are available and
those that are remain in globally short supply

CMC dealerships have great new EV product
Ford Mustang Mach-E (BEV)
Available to order
Mazda CX60 (PHEV)
Coming soon
An example of an upcoming BEV and a PHEV that compliments the range
ofsolutions our dealerships offer customers.EV models are available, or in the future
pipeline for all brands we partner with.

PACCAR
Mazda CX60
2023
Modern trucks with increased power, capacity and fuel economy. Advanced driver
assistance technology is standard in both to enhance vehicle safety. The XG represents a
new model range coming to New Zealand.
Kenworth K220
DAF XG

DAF: Next Generation
Mazda CX60
2023
Southpacare expecting to begin taking orders for a new range of DAF CF and LF
battery electric trucks from late 2023. Giving customers a choice of solution that
best meets their needs.
Kenworth K220
DAF XG
Hydrogen
intercity distribution
Battery Electric
city distribution

Redevelopment Projects 2022-23
New facilities carefully take into consideration future EV requirements

Focus: People and Development
Electric Vehicle
Technical Training
Preparing the next
generation of leaders
Health & Safety
Complimenting our investment in facilities is our ongoing belief that our people are
our greatest asset.

Quick recap
•I am incredibly proud of the team and our dealers
ability to adapt to uncertainty and change.
•The product mix is evolving and we have competitive
product now and coming in the future.
•The road to achieve the governments emissions
aspirations is daunting for the industry but we are
embracing change and on the journey.
•Investment in our people, partnerships and
dealerships remains a core focus.

Shareholder
Dealership
To u r
in
Christchurch
•Date:April-May 2023*
•Starting:1:00pm @ Team Hutchinson Ford, 186TuamStreet
•Transport will bearrangedfrom Team Hutchinson Ford to
Avon CityMotorsand returning to the Christchurch CDB in
the late afternoon.
•RSVP:cmc@colmotor.co.nz
, 04 384 9734
* The date will be confirmed in early 2023 once we have a clearer picture
around the completion date of Avon City Ford’s new showroom.

The Colonial
Motor
Company Ltd
104
th
Annual General
Meeting Presentation
11 November 2022