carsales acquisition of Stratton Finance last year caught a few people by surprise as they thought it was outside of our core offering. What makes it more interesting is that in Brazil, the three leading automotive vertical websites are owned by banks. More on that shortly.
An automotive portal’s core value proposition is as a channel between buyer and seller. For dealers and private sellers it is a buying channel where buyers can come to the one place, find the car of their dreams (or needs) and deliver leads to the seller, thus providing them with the opportunity to sell their car.
As around 50% of used car sales are financed, it makes sense that at the time of enquiring about a car on carsales, the buyer can/will/does also enquire on the best finance to purchase the car.
Stratton had been a carsales display advertising client for over 10 years as they looked to capture these finance enquiries so it made sense for carsales and Stratton to get closer and maximise the finance lead generation opportunities.
Just to be clear here, the Stratton Finance brand and integration is ONLY placed against private seller cars on carsales, NEVER on dealer’s cars. In fact, carsales has NEVER placed a finance advertisement on a dealer car as dealer’s offer their own finance to their buyers and we do not want to diminish this opportunity for them.
The finance model and automotive portals is nothing new in Australia. In 2000 ANZ Bank’s Esanda Auto Finance started an automotive portal called eauto.com.au in an attempt to be a finance lead channel. In the same year, St George Bank formed a strategic partnership with Autobytel.com to launch Autobytel.com.au in Australia and try to replicate what was a successful model in the US. By 2002 both were gone with millions of dollars lost.
carsales had also tried its hand of monetising finance leads long before the Stratton investment with the creation of a business unit called Click For Finance 7-8 years ago. This effort didn’t last long either.
Back to Brazil.
We have looked at automotive portals around the world and I am yet to find any that are owned by banks, except in Brazil, where the three leading players are owned by banks:
1. Webmotors has Banco Santander as the controlling shareholder (with 70% and carsales 30%) after it acquired ABN Amro Bank in 2007 (ABN Amro had acquired Webmotors in 2002);
2. iCarros is owned by Itau Bank; and
3. Meucarronova is owned by BV Financeira
Do they know something others around the world don’t? No, I think that since Webmotors came to Santander through a bank acquisition and they kept hold of it, the other two banks took opportunities to follow suit.
As a side here, the founder of Webmotors also founded iCarros after he sold Webmotors to ABN Amro Bank so he followed a successful path for him in selling iCarros to Itau. “Only in Brazil” as my friend Fernanda says to me, seemingly all the time.
I also think the concept of automotive portals being a legitimate finance lead channel is acknowledged everywhere but as Esanda and St George found out, it takes a little more than simply setting up a website. Even in Brazil where the three banks acquired the automotive portals and have owned them for a number of years, they are still yet to maximise the opportunity for finance origination (as opposed to finance leads).
This is where carsales is adding enormous strategic value to Santander as a strategic investor in Webmotors having the experience of trying a finance model internally years ago and now successfully integrating with Stratton.
It is only the start of the journey and should be a great ride!