Car Group says rushing new emission standards will hike prices and steer more people into used cars

CEO Cameron McIntyre says the government’s new emission standards are a step in the right direction but need to be ‘carefully implemented’ to avoid a fresh supply shock.

Carsales’s owner Car Group is harnessing artificial intelligence – including ChatGPT – to verify and write advertisements plus combat scammers, as it revs up its half-year dividend and forecasts and acceleration in profit.

But the Albanese government’s new vehicle emission standards threaten to put the handbrake on new car demand, if it rushed, creating a fresh supply shock across auto manufacturers, chief executive Cameron McIntyre.

Mr McIntyre said it was vital carmakers are given time to adjust to the new standards, to maintain supply and choice for Australians.

“It’s a step in the right direction. The question is around the timing, how fast it’s done. And you have to remember in Australia that we’re a right-hand drive market, and we’re a very small market as well,” he said.

“So you make these changes, if you make them quickly, it does put pressure on car companies to provide more fuel efficient cars in your right hand drive versions.

“The risk is that consumers end up having less choice and costs go up in the short term. That would not necessarily be a great outcome, and it would push people into used cars over new cars, because those standards don’t apply to us cars. So I think for me, I’d like to see if applied in a way in which we met all those objectives. They just need to think about it quite carefully in terms of how it’s implemented.

Car Group boss Cameron McIntyre.

Mr McIntyre said the company – which has a market value of $12.83bn – had become one of the world’s biggest online auto marketplaces. It raised $1.2bn last year to fully acquire US commercial trucks and RVs listing business Trader Interactive. It also lifted its stake in Brazilian auto classifieds site, Webmotors, from 40 to 70 per cent.

But the deals dragged half year profit down 72 per cent to $117m. This was mainly due to a revaluation of Webmotors boosting the previous corresponding period’s profit by $300m. “You don’t get to do that every year,” chief executive Cameron McIntyre said.

On an adjusted basis, profit firmed 34 per cent to $121.8m – slightly ahead of analyst consensus estimates. Revenue, meanwhile, surged 60 per cent to $331.8m.

Mr McIntyre described the result as “excellent” as he unveiled a 21 per cent lift in the group’s interim dividend to 34.5c a share, which will be paid on April 15.

He said artificial intelligence will play an increasing role in the group’s operations, particularly in streamlining the advertisement approval process. This includes using ChatGPT to write content and build data specification tools.

“We use it for three different reasons – to enrich consumer experience; to enhance trust and safety; and we use it as an engineering optimisation and process improvement tool to help our engineers code faster and better as well,” Mr McIntyre said.

“ChatGPT can also be used for comment generation. So you just tell us one or two things about the car, and we use AI to generate commentary.”

Crucially, the technology helps ensure a person is attempting to sell the correct make and model of car, while also filtering out scams.

“You load a photo of your car, and we’ll use AI to determine the make, model, badge et cetera, et cetera of that vehicle. So it helps us with matching what consumers think their cars are and what the car actually is,” Mr McIntyre said.

“It’s quite a large percentage – around 10 per cent of people misidentified the car that they’re selling.”

The Albanese government is betting that the more companies use AI to streamline their operations and lift productivity, the bigger the benefit to the national economy. It is expecting the much-hyped technology to deliver gains of up to $600bn a year by the end of the decade.

In the immediate term, Mr McIntyre said AI will make Car Group more efficient, supporting earnings.

He expected “good revenue growth” this financial year, as well as an expansion in the company’s profit margin.

“The excellent momentum we have built heading into the second half provides confidence in our ability to deliver another year of great results for our shareholders.

“The Australian automotive market continues to be resilient despite cost of living and higher interest rate pressures, with traffic and inquiry volumes to carsales.com.au in December all tracking above the same time last year.”

Car Group shares jumped 1.7 per cent at $34.03 on Monday, against a 0.4 per cent fall across the broader share market.

Barrenjoey analyst Eric Choi said the guidance remained unchanged, while the company likely underestimated foreign exchange tailwinds.

“FY24 group guidance has not been upgraded, despite 1H tracking ahead – but this is because guidance has always excluded FX,” Mr Choi said.