carsales.com has investments in online automotive businesses in the two largest economies in Latin America – Webmotors.com.br and Soloautos.mx. They both represent good value for future long term growth for carsales.com yet they are very diverse in a number of ways.
I’m not trying to find a winner here…….it is just interesting to look at the dynamics of each business in comparison to the other in terms of country, city of origin, language, carsales involvement, partners and the positions they occupy in their respective markets.
1. Brazil vs Mexico – The key difference is the maturity of online automotive classifieds where Brazil is some way ahead of Mexico. Webmotors in Brazil, is now a relatively clear number 1 in the online automotive space with more traffic and over twice the number of vehicles online than it’s next auto vertical competitor. There is no real clear leader in Mexico with our business Soloautos on the road to staking a claim.
2. Sao Paulo vs Guadalaraja – Both businesses have strong positions in the cities they are based in and this goes someway to explaining why one is number 1 on a country basis and the other isn’t (just yet). Webmotors is based in Sao Paulo, Brazil’s biggest city with 11m people in the city region and over 21m people in the metropolitan region. Soloautos is based in Guaralajara which is Mexico’s second largest metropolitan area with ~4m people. It’s interesting how regionalised the online market can be in Latin America compared to Australia.
Sao Paulo, Brazil
3. Spanish vs Portuguese – I don’t speak either language (unfortunately); the real difference for carsales is that only Brazil speak Portuguese whereas all other countries in Latin America speak Spanish. This isn’t an issue technology wise as we are working with consumable API’s to give us economies of scale and we can get synergies at the product end where what we do in Mexico can be used in any other country in Latin America (i.e. Chile where we have just entered).
4. Control vs Minority – We have a 65% controlling stake in Soloautos and a 30% minority stake in Webmotors. This hasn’t altered the way we have worked with either business as a strategic partner. We don’t mind being a minority stakeholder as a starting point and as we put more IP in to drive the growth we’d like to see that change.
5. Large partner vs Individual partner – This is really the difference in governance. Our partner in Webmotors is Banco Santander who by virtue of being a bank, can bring some governance an online company wouldn’t normally see at Webmotors size. We have an individual partner in Soloautos which is quite the opposite. It is fair to say there are pros and cons both ways.
6. Market Leader vs Number 2/3 – We are a clear leader in Australia and South Korea whilst Webmotors has been able to gain a nice lead over the competition since we’ve been involved. It is a whole new game doing the chasing with Soloautos and it is a task that our team is really enjoying. The basics remain the same for both though so I will say we don’t mind where we are to start with as long as we know where we need to be.
One thing is for certain, we are loving working with the people from Webmotors and Soloautos!