Company Interview / Growth drivers & resilient

Cameron McIntyre, CEO of Car Group (ASX:CAR) , outlines that the company's robust performance in FY24 has set the pace for expected growth in FY25. Cameron takes pride in their competitive standing and their consistent operational deliverables, leading the business optimistically into the new fiscal year. Despite global uncertainties, Car Group remains fearless, focusing on growing their businesses in individual countries and not concerning themselves too much with daily foreign exchange movements.

Pointing out the factors driving consumer resilience, Cameron cites migration into Australia as a prime factor. The influx of new residents has created a surge in car demand. Similarly, lifestyle changes and cost of living have seen consumers trading their luxury vehicles for cheaper cars, a situation advantageous for Car Group. He affirms that the resilience of consumers, mirrored in their platform's web traffic and transaction volume, justifies their outlook for growth.

The CEO further reveals that their growth strategies vary from country to country. In the US, they are investing in new product and building their team, with a notable entry into the marine market. In Brazil, the large consumer credit demand and their strong partnership with Santander present great opportunities. Even in South Korea, they are digitising the buy and sell experience for consumers. In Australia, they are making transactions easier between private sellers. The constant innovation is what keeps them at forefront of their industry according to Cameron.

Full unedited transcript:

0:00

It's a car group, as detailed. The company's guided to good growth in adjusted revenue and earnings for FY 25. So to find out what that really means, car Group CEO Cameron McIntyre joins me now. Cameron, nice to see you again. Thanks for joining us. Thanks for having me. And I know that you're fresh off of the analyst call. So yeah, flesh out what good growth means to you.

0:25

Yeah I mean, look, as a as a business we've had a a good year in FY 24. We've, uh, we've delivered on all of our operational priorities. Our I guess our competitive position has improved. Our financial numbers were all where we wanted them to be. And, uh, you know, we started the year into FY 25 the same way. So, you know, the business is is performing the way we'd like it to. And I guess that's reflected in that outlook statement of of good growth.

0:59

Previous guest was commenting that he keeps a pretty close eye on web traffic. And all indications are that you're really converting. Could you flesh that out for us a bit? Yeah. So what we're seeing, I guess, is a few things. First, from our side of things, you know, we continue to invest in our platform. You know, we we make changes to encourage consumers to the to the site, make it easier for them to work with us to find the cars that they're looking for. Um, and so we're always optimizing our own individual performance. Um, I guess where the consumer is at the moment, uh, the consumer is resilient. Um, you know, there is good interest in, in buying of used cars in particular at the moment. Uh, and so I guess that's reflected in traffic. It's also reflected in the volume of transactions that we're seeing through the platform. Um, so yeah, I understand what he's saying and, uh, completely concur. The consumer is is quite resilient out there.

1:59

And that's reflected in those numbers. Well, why is the consumer so resilient in your view.

2:05

Yeah. Look, I think uh, for several reasons. Um, so the first reason would be, I mean, migration to Australia over the last sort of 12 to 18 months, there's half a million new new people in the country that that obviously helps demand for cars. Uh, when, when Covid occurred, you know, back in 2020, we had a lot of people entering the car market probably a little bit before they would have otherwise entered the car market. And so you've seen those people get to a point now where they're looking to to trade those vehicles as well. Um, you've also got people that have got changes in lifestyle, changes in job, uh, and that and that goes to quite often a change in vehicle, um, as well. So there's, there's many, many reasons why. The other one too is around cost of living. So at the moment you may have people that might be, you know, in vehicles, uh, where they would like to take some equity out

3:05

of those cars and, and maybe put that into their home loan. They know they need to buy it or they need to own a car. So maybe what you might see is someone trading out of an $80,000 car and, you know, buying another car, but it's a $40,000 car. And so that turnover is good for our business. And that's probably one of the things we have noticed, is there probably is a little bit more interest these days at the moment in, in slightly cheaper cars. Interesting. Thanks. Because you've got an insight into the consumer that you know is really real time. What about some of the challenging trading conditions in the overseas operations? Has the same resilience been seen there and why? Yeah, no, I mean the I mean Brazil, uh, is a is a very high growth market for us. Um, you know, interest rates are coming down there, very strong demand for consumer credit, very strong demand for, for for cars. And that's reflected in the the Brazilian numbers that you might have seen through the results in the US. You

4:05

know, high interest rates in the US, the markets that we're in in the US, you know, there's I divide them into two. One is, you know, commercial with trucks and another one is discretionary with RVs and powersports equipment, like, you know, personal watercraft, etc., etc.. On the on the the discretionary side of things, what you tend to see is when interest rates are higher, the cost to, you know, to finance a an RV is a little bit higher. You'll see demand come off a little bit, um, which is what we see there. But, you know, we've been able to maintain very good growth through, you know, building a new product and evolving the market for, for ourselves here. But, you know, obviously looking out for interest rate reductions in the US over the course of the next several months, which should bring consumers back into those lifestyle type assets that we're in

4:58

when it comes to currency and, you know, the exchange rate, how how do you anticipate that will pan out through FY 25 for the company?

5:09

Yeah. Look, I mean, trying to predict currency movements is exceptionally difficult. And and we don't, uh, make a job of it ourselves to be, to be honest. I mean, yeah, the the Aussie dollar, uh, will move around quite a bit. Uh, it's difficult to hedge it against the Brazilian riyal, Uh, against the US dollar. Clearly much, much easier. I, you know, I think, um, from, from our perspective, we just stay focused on, on, on growing our businesses in our individual countries. Will will hedge, uh, where we have known commitments that we understand. But, uh, but outside of that, um, we, we try not to spend too much time thinking about, uh, FX movements day to day. And so when you think about the real drivers of top line growth in the year to come, Cameron, you know, what levers can you pull yourself to to meet and actually exceed your numbers, potentially. Yeah, I mean, it's country to country. It's a little bit

6:09

different. Uh, you know, in the, in the US, like we're talking about the US a moment ago. There's. Yeah. Our media business there is is young and growing. There's there's new product that we're deploying into that market. We're building a team. We're getting to, uh, closer to much closer to to manufacturers there. And there's significant opportunity with that where we've entered a new market there in marine. So we have a site called Boat Mart that we've just launched inside the last sort of six months or so. You know, the marine industry in the United States is huge. and we understand it. Um, we understand it in the United States and here in Australia. So there's those sorts of opportunities in Brazil. Finance. We have a partner there. Santander, the biggest consumer bank in in Brazil. There's plenty of finance opportunities for us. Our partnership with them is very strong. Um, again, media is an opportunity there. Um, in Korea. You know, we're we're really trying to digitize the

7:09

buy sell experience for consumers. We we try and enhance the offering for our dealer customers there with a product called guarantee. And then in Australia, you know, we're doing some some pretty cool things now. Um, we're trying to make it easier for consumers in the private or private space. We've just launched what we call CTC payments. Um, just to remove the friction point when a private seller and buyer come together to buy and sell a vehicle. There's lots of innovation like that going on at the moment around the business that are going to hold us in really good stead as we move into 2025 and beyond. There's a lot you've got to be across different economies, you know, different, um, assets, different marketplaces, different technologies. How do you keep yourself across it all really at the fore and continuing to push, you know, on all sorts of fronts?

8:04

Yeah. Look, I mean, it starts with our people. Our people are our greatest asset. We've got an incredible team of of individuals across the organization that that understand these digital marketplaces that we're in intimately, and they understand where growth needs to come from. So, um, you know, as an organization, we have a strong sense of what our strategy is. We have a strong sense of our mission and our purpose. And, you know, individual countries get behind that. And they, you know, they have their own path to execution. We share intellectual property. We share technology where that counts. Um, and and that is the, the secret sauce, really. I mean, selling a car is the same process as selling an RV or a truck, by and large. Uh, and, you know, the digital marketplace assets that we have, you know, facilitate that. And so when it comes to people, um, you know, how how difficult, how easy is it to secure people that

9:03

are able to, to continue to innovate, particularly technologically? And where do most of those people exist? Yeah. Look, I mean, it's it's easy to find people. It's hard to find a great people. It's hard to find people that that innovate. And I think, you know, from, from our perspective, uh, it starts with, you know, a lot of the people that we have in our business, uh, have been a part of, uh, the business or a part of, you know, uh, other businesses that are associated with ours for a long time. So there's a lot of intellectual property inherent in our in our organization. But, you know, a lot of it is about just finding people with the right attitude, finding people that are, you know, prepared to grow, do things differently. You know, we try to run the business, uh, with the same sort of entrepreneurial spirit that the organization started with. And so, you know, we encourage people to come in to try things, to learn, evolve. If things don't

10:03

work, we pivot, we change, uh, and we continue to evolve that way. So yeah, I mean, that side of things. Um, yeah, it's harder to define those sorts of people, but they do exist and they exist everywhere. And, uh, you know, we have great people around the world now, over 2000 people. Um, and they are all, uh, contributors to, to what you're seeing in terms of the way the business is growing today.