During the $12.6 billion CAR Group’s earnings call, unexpected insights into the Australian used car market emerged, causing ripples in the industry. CAR Group, formerly Carsales.com, reported favourable results, showcasing growth in revenue, EBITDA, and earnings per share. However, CEO Cameron McIntyre’s revelation about a shift in momentum from private sales to dealer sales captured analysts’ attention.
McIntyre disclosed that Australian car dealers had regained ground in the used car market, traditionally dominated by private sales. While this change was not expected to impact CAR’s earnings significantly, it became a valuable nugget of information for investors. Shares in Eagers Automotive, Australia’s largest listed car dealer, saw a 3% increase following the revelation.
The CEO explained that easing new car supply issues led more buyers to trade in their used cars rather than selling privately, resulting in increased stock for dealers. Although CAR still benefits from online advertisements, distinguishing between dealer and private sales is crucial for understanding market dynamics.
This shift favours dealers, as more immediate access to new cars encourages buyers to trade in their used vehicles quickly, playing into dealers’ hands. McIntyre referred to this as a small “mix change” for CAR Group, but it has implications for the industry, challenging the long-standing trend towards private sales.
While dealer revenue grew by 12% in the last six months, private sales revenue increased by 11%, showcasing CAR’s ability to adapt to changing market dynamics. The company’s global expansion, with operations in the United States and Latin America, has contributed to its robust revenue and earnings growth.
CAR’s unique approach, involving strategic joint ventures, co-ownership, and timely acquisitions, has set it apart in the industry. With only 42% of its revenue coming from Australia, down from 72% four years ago, CAR has become a significant player in the MSCI Australia Index, attracting global institutional investors. McIntyre acknowledged the impact of passive funds and increased US-based investors on CAR’s register, contributing to its share price performance while emphasizing the company’s focus on operational results in its core divisions.