Category Archives: Webmotors

Competing Against International Businesses On Our Turf


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Webmotors recent acquisition of BuscaCarros shows an interesting dynamic change to what carsales faces in Australia where in 19 years it has completed just the two acquisitions of automotive classifieds sites.

In 2005 carsales acquired/merged with Carpoint (and Boatpoint, Bikepoint, etc) and in 2007 Discount New Cars was acquired. In 2012 the ACCC (Australian Competition and Consumer Commission) blocked the carsales acquisition of Trading Post.
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Trading Post was an iconic brand from a print perspective but that did not move online so the interesting part of the failed Trading Post transaction is that Trading Post really offered no material gain for carsales.com.au (as opposed to carsales.com Ltd) because from an online automotive classifieds perspective, Trading Post was terminal; yet the basis for the ACCC blocking the transaction was centred around the impact it would have on competition in online automotive classifieds.
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The value for carsales was in a general classifieds platform where it was looking to compete against the emergence of Gumtree, owned by US online giant eBay.

The ironic part of this is that all the ACCC (along with all the submissions) succeeded in doing was stop carsales.com Limited, an Australian founded and run company (who pays its fair share of Australian tax), compete effectively against an international company such as Gumtree (who may or may not pay its fair share of Australian tax).
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I get the competition focus of the ACCC and agree with it in principle. The problem in this case was that the whole picture wasn’t considered and generally in Australia we like to cut down the “tall-poppys”; the issue with online is that Australia is not big enough to be viable market with 2-3 competitive players in each market vertical.

This opens the door for the international giants such as eBay, Amazon, Google, Facebook, etc to use their global reach to compete against Australian businesses with unfair advantages.

And make no mistake, the likes of Google, Facebook and Amazon are potential competitors for practically all online Australian businesses.


What Does Brazil Know That We Don’t?


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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.
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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.
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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.
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Webmotors.com.br, 2007, shortly before the Santander acquisition

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!


Webmotors Spreads It’s Wings


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carsales.com’s investment in Brazil, Webmotors, last week announced it was acquiring seven automotive websites – all of them market leaders in the South of Brazil – from RBS Group, a Brazilian media conglomerate, operating under the brand BuscaCarros.

This makes it the third acquisition of a regional online leader that Webmotors has made since carsales made its investment in July 2013 following Meucarango (North East Brazil) in 2013 and Compreauto (São José do Rio Preto, Sao Paulo and region) in 2014, both market leaders in their respective regions.

Brazil is very parochial to regional plays both from a dealer and consumer perspective so these acquisitions are important in establishing Webmotors as the clear number 1 automotive website group in Brazil.
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Changing the brand in the local region is not in the plan as each brand we have acquired has enormous equity that we do not want to lose. The key to success for Webmotors is using our world class platform to provide dealers and consumers a great experience and ensuring we benefit from the economies of scale that are available.
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BuscaCarros has online brands in the following locations: state of Santa Catarina (BluCarros), Porto Alegre (PoaCarros), Florianópolis (FloripaCarros), Joinville and region (JoinvilleCarros), Itajaí and region (ItajaíCarros), Alto Vale do Itajaí (RiodoSulCarros) and Criciuma and region (CriciúmaCarros).


6 Latin America Factors for carsales.com


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.
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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.
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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.
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Guadalajara, Mexico

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!


5 Service Differences Between Sao Paulo And Melbourne


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carsales.com‘s investment in Webmotors invariably means business visits to São Paulo. From a business perspective São Paulo is not cheap but vital to Brazil as the business hub.

One the first things we had to do with Webmotors was give the company its own identity outside of Banco Santander which included having its own office space. Location is always important in a big city to ensure you can attract the best talent and this was a big factor in being based in Vila Olimpia. What struck me about looking around Sao Paulo at suitable office space is the extra services that ultimately drive up the cost of setting up (and visiting) for business.

Here’s 5 examples that are a little different to what we’re used to in Australia:

1. Office Buildings – All office buildings I have visited have an electronic swipe system with security guards manning the entry/exit points. For visitors, you must present photo id (and in some cases a photo taken) before a temporary swipe card is issued for your visit so every building has staff ready to process you. The other noticeable difference is the presence of cleaners, etc throughout the day. These costs add up.

2. Hotels – There just seems to be people everywhere no matter what time it is. Security at the front door then more as you come in and that is before you even get to the reception area.

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Shell Service Station, Brazil

3. Service Stations – the good old days of the service station attendant is alive and well in Sao Paulo so you don’t have to leave your car to get your tank filled if you don’t want.

4. Valet Parking – Parking is tough in São Paulo so at most restaurants, bar precincts, shopping centers and hotels the best (or only) alternative is valet parking which just keeps adding to the expense.

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Shopping Vila Olimpia, São Paulo

5. Shopping Centres – Armed guards at the front doors and people directing traffic at the entrance just to name two.

These extra services are a result of the extra security measures required and the need to provide some form of employment to the broad class of people. They need to be employed. The result is that no matter what the cost is, all of these extra services add up and someone has to pay for them. I guess it’s the end user which makes Sao Paulo not the cheapest place to do business or live.


6 Considerations Before Hitting The Road in São Paulo


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carsales.com.au entered the Brazilian market in July 2013 with the 30% acquisition of leading automotive portal Webmotors with the head office in São Paulo, Brazil’s biggest city. Cars are obviously an important part of our business and you cannot help but see some big differences to being on the road in Australia.

Here’s 5 considerations for Australians before you hit the road in Sao Paulo:

1. Traffic is bad. They say morning meetings never start on time. Why? There is always someone (usually more than one) delayed by traffic. The amount of cars on the road is incredible and traffic jams are a given, São Paulo people just accept it. Every time I visit Sao Paulo the traffic never ceases to amaze me. Think of Punt Rd at peak hour on a regular basis.

2. Merging is a state of mind. You either merge seamlessly in Sao Paulo or you get no where as allowing people to merge is just part of being on the roads. It shouldn’t amaze but it does probably because we are so bad at it in Australia. No one gets upset at merging in Sao Paulo yet you try to “push in” on Punt Rd and it’s nearly on for “young and old”. I call merging a skill because it is one thing that I have found I have needed to teach my two boys who have been learner drivers in recent years. Most probably though it is a state of mind because if everybody knows that merging is an imperative to the flow of the roads then it should just happen.

3. Safety requirements. I’m not talking air bags here. Sao Paulo can be a dangerous place (even though I am yet to feel in any danger). For luxury cars bullet proof windows, even a bullet proof body is a must in Sao Paulo and must be considered as an aftermarket imperative or go cheaper. As is tinted windows, especially for solo female drivers. Having the windows down is a luxury especially in a lot of traffic where you can be susceptible to a bike pulling up beside the car to say hello. Stopping at traffic lights in the early hours with no one around is not advised either. One positive is road rage is limited compared to Australia – probably because a gun will most likely be pulled!

4. Small cars are nearly a must. It is no coincidence that most of the cars on the road in Sao Paulo are small cars as they are easier to maneuver in the traffic but the main reasons are price and parking. Generally smaller cars are cheaper by nature; cheaper to purchase and cheaper to run. Parking in Sao Paulo is a premium and very tight. The parking spaces are very small with cars packed together. I am a 4 wheel driver, I love having a big 7 seater up high on the road but I think even I would be converted to a smaller car if I lived in Sao Paulo.

5. Motor Bikes. There are more motor bikes in SE Asia but with the amount of traffic on the road in Sao Paulo, the way the motor bikes get around amazes (and scares me) every time. They constantly beep their horn to indicate they are coming and no gap is too small to weave their way through traffic, usually as fast as they can go. How I haven’t seen one come off I just don’t know.

6. Forget line of sight as a guide. You may able to see where you want to go but you cannot use that as guide to work out how far or how long it will take. Traffic is one consideration but the other is the maze of turns and lane crossings required (hence merging skills). This is especially so crossing the Marginal highway which has up to 8 lines both ways on either side of the “river” and run by where Webmotors and our partner Santander are located (in separate buildings) in Vila Olimpia.

It just seems to work, sort of. With all the traffic, motor bikes, constant merging, safety issues and the like, I am yet to see any accidents or road rage which is amazing given all the mitigating factors. In some ways driving in Australia is actually more dangerous.

São Paulo on its own represents a great opportunity of growth for Webmotors and carsales as cars will be around in this city for a good while yet.


6 Things We’ve Learnt About Our Business in Brazil


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carsales.com.au entered the Brazilian market a little over 2 1/2 years after it’s acquisition of 30% of Webmotors.com.au. It’s fair to say that in that time we have learnt a hell of a lot about ourselves and doing business in Brazil. As a strategic investor we have been very hands on with the Webmotors team as well as being active at a Board level.

So here’s 6 things that we’ve discovered about our business in Brazil:

1. It’s expensive. For a start it is a long way to Brazil and not conducive to a couple of days trip so it gets expensive to travel there regularly. Starting a business entity is difficult and expensive. A range of taxes including a ~40% tax on expenses paid in foreign currency is something to learn about quickly. Then there’s little things like office rents which get inflated with all the extra services required/expected in Brazil such as extra electronic security, security personnel, full time cleaners, etc.

2. Regions are important. This one has been an important learning in regards to our strategy. It is not uncommon for online brands to have varying degrees of popularity in different geographical areas but we were not used to coming up against so many smaller, regional online plays that had a great following from not only consumers but also from the dealers. This has led us to two acquisitions so far of these regional plays in Meucarango.com.br and Compreauto.com.br. This is a big difference to the Australian market.

3. Dealers are dealers. Car dealers in Brazil have pretty much the same challenges, objectives, profit margins, profit drivers, structure, etc as car dealers in Australia. There are always going to be little differences but overall the great initiatives and products carsales has brought to the Australian market are applicable to the Brazilian market. This is great to have confidence in the strategic direction we are bringing to Webmotors.

4. Consumers are consumers. Like dealers we have found that consumers have the same needs and wants in Brazil as Australia. Like carsales, consumers come to Webmotors to find, sell or learn about cars, nothing else. It was great to learn that many thousands of consumers want to contact dealers via email form, as well as by phone, and the ratios are very similar to what we have with carsales. Private sellers are willing to pay for a premium service that works even though there are general classifieds giants offering a “freemium” service. Again, this gives us further confidence in the carsales strategic direction in Brazil.

5. User Interface. One of the first things the Webmotors team was keen to do when we had the capability was to replicate the carsales website. We added the Ryvuss search engine, structured the user interface around carsales and our users of the web site immediately gave us feedback. Feedback is always good to receive even if it is not so good as it provides the chance to change for the better and this is what we did. The changes we had to make weren’t significant but they did provide an insight into what our users expect on Webmotors which is a little different to carsales.

6. Culture is good. It has been a great experience working with the Webmotors team of ~200 people. They are not afraid to put the hours in when it is required and the passion is the most obvious characteristic which is not unlike carsales. The people have been the best and easiest part of carsales strategic position in Webmotors. Language has not been a barrier as all of the senior people are fluent in English from usually US education. Brazilians and Australians are not unlike apart from some obvious differences, this has been the best part.

I’m sure all businesses and industries are different in attempting to do business in Brazil. These are just 6 things that have had an impact in our decision making and direction.