WeBuyCars shows astounding growth — and it is not complaining about the chip shortage
WeBuyCars recorded tremendous growth between October 2021 and March 2022, with revenue, sales, and headline earnings surging compared to the same period the year before.
Transaction Capital detailed the used car dealer’s impressive half-year performance in its interim results. Transaction Capital owns 74.2% of WeBuyCars.
The results showed WeBuyCars posted revenue of R8 billion for the six months under review, increasing 71% from HY2021, while headline earnings surged 58% to R406 million.
The financial growth comes on the back of a substantial rise in vehicle sales.
The company sold 58,520 cars during the period, 41% more than the same period the year before.
These averaged at about 9,750 vehicles per month and peaked at more than 11,000 in March 2022.
That is around a fifth of all the cars sold in South Africa in the same month, according to data from Naamsa.
That means WeBuyCars reached a medium-term target of 10,000 sales per month earlier than expected, with its new target now 15,000 per month.
The average selling price of vehicles had also increased, generating better sales margins.
More people are selling their cars to the dealer, with roughly 10,000 vehicles bought per month compared to 7,235 in HY2021.
The graph below shows how WeBuyCars’s vehicle sales and purchases changed from pre-pandemic to March 2022.
Transaction Capital has benefitted immensely from this growth, with R251 million of WeBuyCars’s headline earnings attributed to the company as part of its shareholding.
That reflected a jump of 122% from the R113 million that the used car dealer contributed in HY2021.
It is now generating more earnings for the parent company than its other big subsidiaries — SA Taxi and Transaction Capital Risk Services.
WeBuyCars attributed the impressive growth to several market factors.
Firstly, it said there was a growing consumer shift from buying new to used cars due to affordability constraints.
At the same time, the industry is struggling to cope with very low availability of new vehicles due to global electronic chip shortages.
That means more consumers are turning to used vehicles. The prices of these cars have also increased due to the greater demand.
In addition, WeBuyCars has been aggressively expanding its footprint with several new branches carrying thousands more parking bays across the country.
Aside from the massive Dome opening in December 2021 with space for 1,125 cars, it opened a 220-bay branch in Polokwane in February 2022, followed by a Nelspruit branch with 370 bays in April 2022.
Two of its existing branches were also enhanced during the six months under review, providing additional space for 260 bays.
Overall, the company now has 7,835 parking bays in eleven vehicle supermarkets, compared to 4,738 at the end of March 2021. It plans to add 600 bays in South Africa by December 2022.
The dealer also recently started its organic expansion into Morocco and is considering an international rollout in other selected markets.
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