Carsales profit in reverse, but buyers are coming back

A post-lockdown surge in car buying is driving Carsales into 2021.

Carsales CEO Cameron McIntyre said conditions during COVID-19 were worse than during the GFC, when the company was much smaller.

A crash in the number of cars being bought during the COVID-19 pandemic caused carsales.com’s profit to slip by 9 per cent to $120m for the year.

Private sales recorded a 5 per cent fall in revenue as people held onto their cars longer, especially in the second half when revenue fell 17 per cent.

Still, there were some positives in the last two months, with a surge of new buyers causing inventory across the site to slip — driven by an increase in used car buyers and people buying additional cars.

Carsales CEO Cameron McIntyre said conditions during COVID-19 were worse than during the GFC, when the company was much smaller.

“In the GFC, new car sales volumes came off and used car sales volumes increased, and the reason why was in that scenario what you saw was a stockmarket collapse and people taking margin calls on their equity position and having to close those positions out and they’d sell their car and take their equity, but they still needed a car,” he said.

Mr McIntyre said sales dramatically dropped after the Grand Prix was cancelled in March, with Carsales putting in place relief measures across the business by March 23. “What we decided to do was make a big call and went free for all of our dealer customers for the month of April because we were concerned about jobs and the viability for our customers through this,” he said.

Mr McIntyre said the post-lockdown market was seeing a surge of car buying with many customers flush with cash after overseas holidays were axed.

“From what we can see a move back to car ownership is happening as people are looking to avoid public transport, they can’t fly interstate, so they’re buying a decent car,” he said.

The dividend remains unchanged at 25c per share.