Bilia's Q3 Belongs to the Workshop, Not the Showroom
Service is now 73% of profit and the best Q3 on record — while a VAT-driven order peak and a quiet dismantling business tell the real story
BILI-A.ST · Earnings Call · 2026-10-23
Bilia's Q3 Belongs to the Workshop, Not the Showroom
Bilia is filed under Auto & Truck Dealerships, but on the third-quarter call the showroom was almost a footnote. Operating profit came in at SEK 380 million against SEK 310 million a year earlier, a 3.8% margin, and SEK 293 million of that — 73% — came from servicing cars rather than selling them. For a company with a SEK 12.5 billion market cap that still describes itself as a dealer group, that ratio is the whole investment case in one line.The workshop is now the business
CEO Per Avander was unusually direct about where the money comes from: “Our service business represented 73% of the earnings in the quarter, and we improved the result and the margin.” — Per Avander, CEO · 2026-10-23 The service business grew profit from SEK 233 million to SEK 293 million, lifting the margin from 10.2% to 12.0%, with 3.6% organic growth. Swedish operations ran a 14.2% service margin — above the group's own 14% target. The mechanism is structural, not cyclical, and management spelled it out: with the Swedish new car market in 2025 almost 20% below its ten-year average, the vehicle stock is ageing, so demand for service and maintenance keeps compounding even as unit sales shrink. The workshop booking levels were healthy despite years of weak new car sales and the export of young used cars. Delivery workshops for new cars also picked up. This is the counterintuitive part of the story: the worse the new-car cycle has been, the more valuable Bilia's installed base becomes. Peers in the auto-supply chain are still fighting the other side of that trade — Autoliv's call leaned on global light vehicle production and market headwinds — while Bilia's aftermarket exposure quietly insulates it.New cars: a peak, not a recovery
The headline number looks like a recovery. New car order intake, adjusted for brand changes, was up 27% year over year, and Avander flagged the backlog: “We have increased our underlying backlog for new cars by approximately 6,100 units compared to last year, and today we have 18,600.” — Per Avander, CEO · 2026-10-23 Eighteen thousand six hundred units is, by management's own admission, historically high. But listen to how the CEO frames the timing: “We see that in Sweden and Norway, but what I tried to tell that there will be a peak now in Q4 this year because the change of VAT in the end of this year.” — Per Avander, CEO · 2026-10-23 That is a pull-forward, not a demand recovery. Norway already ran this experiment — a strong finish to Q4 last year on tax changes, then a weak January and February, and the company expects a similar soft patch in Q1 2027. Sweden's market is genuinely improving quarter after quarter, but the shape of the next two quarters is being set by a tax calendar, not by consumer confidence. There is also a delivery wrinkle. CFO Kristina Franzén conceded a slight delay on some Volvo EV models, pushing the usual three-to-six-month order-to-delivery window a little longer. New product is doing its job — the Volvo EX60 and BMW iX3 were called out as well received, and stabilised prices for electric used cars have revived customer confidence — but a backlog that is high and slow to convert is a working-capital question, not just a demand trophy.The used-car drag and the quiet circular-economy option
The weak link was used cars: SEK 55 million versus SEK 68 million, with Norway hit by a glut and aggressive new-car price competition. Management attributes soft Swedish used demand to competitive private leasing offers — the brands' own attractive discounts are cannibalising the second-hand trade. That is a structural squeeze worth watching: the same campaigns that fill the order book depress used-car gross margin. Where it gets interesting is the smallest segment on the call. The dismantling business appeared near the top of the keyword ranking this quarter — genuinely new territory for a company whose vocabulary has been new cars, used cars and workshops. Avander: “There is a lot of regulation in the market for the moment. We guess it will be better and better in our dismantling business, both in Sweden and Norway.” — Per Avander, CEO · 2026-10-23 Franzén added the strategic reason insurers are pushing it: “It's not big from a turnover point of view, but it's essential from a strategic direction and also contributing well to profitability within the service business.” — Kristina Franzén, CFO · 2026-10-23 Bilia also runs Volvo's classic spare parts franchise for older cars, selling largely to external workshops and increasingly into its own body and paint shops. It is a circular-economy, insurance-cost-driven business that is “not so dependent on changes in the economic environment” — exactly the kind of uncorrelated profit pool a cyclical dealer should want.A balance sheet built for the next deal
Cash flow from operations was SEK 479 million, broadly flat year over year once you strip out last year's SEK 303 million property-sale payment. Net debt excluding IFRS 16 sits just under SEK 2.2 billion, with net debt/EBITDA improving to 1.2x from 1.3x at both mid-year and year-end 2025 — comfortably inside the sub-2.0x leverage ratio target. Committed facilities rose to SEK 3.1 billion after a new SEK 800 million line, giving financial flexibility alongside SEK 6 per share of dividends paid in four instalments. So what will they buy? Avander's answer was unusually specific: more Volkswagen business in Sweden, where Bilia holds only 4%–5% of sales against a 10%–15% ambition for a new brand; the truck business, at 7%–8%; and more dismantling capacity. He was also honest about the market for deals: sellers still remember past multiples, so it is not easy to acquire company for the moment now. The tension worth holding onto is the tone. Management called it a good set of figures with strong cash flow and an even more solid financial position — then closed the outlook with a warning:Both can be true. Bilia is outperforming a pressured industry precisely because two-thirds of its profit no longer depends on that industry's volume cycle. The Q4 order peak is a tax artefact; the service margin, the ageing car parc and the dismantling niche are the durable signal. The efficiency program from last year is still running, and a Capital Markets Day in May 2027 will be the venue where this quieter, more annuity-like Bilia gets properly priced.The markets are still very difficult and we continue to see an industry very much under pressure. We remain humble in our outlook but are encouraged by our ability to continue outperforming the market through disciplined execution.