According to the Financial Review, Cameron McIntyre, Carsales’ new chief executive, never intended to maneuver the Australian online classifieds giant on a different course to that of company founder Greg Roebuck.
However, McIntyre’s first result as CEO does indicate that he is keen to steer Carsales just a bit faster and following his own proverbial map whilst doing it.
During a recent Carsales slide show, for the first time, an interesting slide quantified the size of the revenue opportunity that it could capture in the international markets is has been quietly building up.
In Australia, an economy with a GDP of $1.6 trillion, Carsales’ revenue is $267.2 million. Using that GDP to revenue ratio as a broad guide, Carsales says its South Korean business – which currently generates $45 million in sales – could potentially grow that seven times, to approximately $313 million.
Likewise, revenue in Brazil could grow from $44.6 million in 2016-17 to almost $400 million, and in Mexico, revenue could grow 375 times from $600,000 to as much as $232 million. Argentina, where Carsales is a relatively new player, the company sees scope to lift revenue by 51 times, from $2.4 million to $121 million.
McIntyre, who like Roebuck, focuses on steady and consistent growth, wasn’t trying to overplay the opportunity – that wouldn’t seem to be his style – but he was eager to demonstrate how these businesses would grow to be a more important part of Carsales’ future.
“No matter how you look at it, there is substantial long-term opportunity for us to grow in those markets,” recently McIntyre told investors.
Encouraging revenue in regions such as Korea and Brazil is time consuming – especially due to the fluctuations that developing economies can have. Carsales has struggled in Brazilian, since it ventured into the market back in 2013, although the company indicated that there are signs the local economy is picking up.
But as the very strong and still growing margins in the Australian business demonstrates, when you get it right there are big earnings on offer for the leaders in any particular market.
In Australia, Carsales lifted revenue from private sellers by 27 per cent over 2017, by selling more and more premium listing products – a sign of Carsales’ market dominance and its pricing power.
If Carsales can bring the intellectual property it has developed in Australia to dominate its international territories – and then ride the economic bumps each market will inevitably throw up – then it can create a new platform for growth.
The above article has been sourced from the Financial Review. To read the article in its original form, click here.