WeBuyCars looks to double market share

Used-car network cofounder Faan van der Walt wasn’t sure he wanted a website as his brother suggested in 2011 as he was happy with advertising on billboards and in newspapers.

But the site that Dirk van Der Walt insisted on was what turned the then 10-year-old used-vehicle seller into a national business as the brothers had customers nationwide who wanted to sell their cars.

“All of a sudden we found ourselves on planes buying cars across the country. And that’s when we knew we had to scale this business.”

Today the car seller’s website attracts 2-million visitors who spend about 13 minutes on it a month, its chief information officer, Wynand Beukes, told investors.

WeBuyCars will unbundle and list separately from holding company Transaction Capital, and on Friday senior executives gave a presentation to the market. The firm is drumming up support for its separate listing. Estimates put its market capitalisation at R6bn-R7.5bn.

Executives said they think the business can double its 10%12% market share of the usedcar market by 2028. After the presentation, Transaction Capital’s share price rose 6.21% and closed at R9.40.

The envisaged unbundling will be implemented on a distribution ratio of not less than 0.30241 WeBuyCars shares for every one Transaction Capital Share held.

Van der Walt said: “WeBuyCars has no comparable listed equivalent in the SA market. No competitors buy and sell preowned vehicles at WeBuyCars’ scale.”

The firm sold a record 14,000 cars in January, above its usual 12,000-13,000. In SA, three times more used cars are sold than new cars (50,000). The firm says it has taken the place of ordinary car owners who used to sell directly through adverts to other consumers. Now sellers sell directly to WeBuyCars as the service is available and the pricing and payment is quick.

The Van der Walt brothers started the used-car business in 2001 and initially grew organically, without massive debt, instead reinvesting profits into the business.

Faan van der Walt says that the firm plans to do “more of the same” by focusing on what works, buying cars at the right price. “We’ve learnt that if you don’t buy right, you’ll be in trouble. Buy right, then you won’t have a problem selling a car.”

There are no plans to expand outside SA and Namibia, and it will not owe lenders but will work with the main banks and financiers. They say that what makes WeBuyCars unique is their national footprint, their software that helps them price right, the consumer data they own, their low debt position and various affordable showrooms.

Van Der Walt’s says that what makes them competitive is the low-cost of dealer sites where they store and sell cars with the property costs equating to about a R1,000 a car. Many other dealers spend R5,000 a car on rent and rates, he said.

The firm has 74 small pods where interested sellers can take their cars for assessment if they don’t want buyers visiting where they live or work. These pods are often in supermarket parking lots and are brightly visible, an idea copied from a British firm.

Beukes said that owning its own software, avoiding foreign enterprise software development and dollar-based fees helped the firm keep IT costs down and stay “agile” and in control of its business processes. Since 2018, WeBuyCars has been generating and controlling its own data to help it run the business.

Beukes said: “Today we’re a data-driven business.” The firm is also automating what it can,

If many potential customers checked a car in a bay and none test-drove it, its software might flag this. The car may smell of cigarette smoke, said Beukes. If many consumers have test driven a car and it isn’t selling, software will show the price may need adjusting.

Van Der Walt says be believes WeBuyCars can grow and double market share as its data shows that an SA car will change owners at least five times in its lifespan. “We have the ability to price and serve customers at each and every interaction. That’s why we are successful. We compete as hard for the oneyear-old as we compete for the 20 year-old [car],” he said.