WeBuyCars unaffected by Transaction Capital CEO change

WeBuyCars CEO and co-founder Faan van der Walt said the company is largely unaffected by the changes in the management of its owner, Transaction Capital.

Transaction Capital recently released a trading statement for its financial year ending 30 September 2023, which revealed a struggling business.

The company said its SA Taxi business restructuring has continued to put pressure on its profits, and WeBuyCars will see a significant decrease in earnings.

Transaction Capital expects its core, headline, and basic earnings per share to be even lower than the dismal expectations shared in March.

This means its net profits would, at best, be 152% lower than the 2022 financial year. Investors can expect at least a R648 million net loss from the company.

It also noted that WeBuyCars’ profits will be 20% down from 2022, and Nutun’s profits will grow at a lower rate than previously expected.

SA Taxi, WeBuyCars, and Nutun jointly contributed more than 99% of Transaction Capital’s net profits in 2022.

In the trading statement, Transaction Capital also announced that its CEO, David Hurwitz, would be stepping down and replaced by Jonathan Jawno, the company’s co-founder and executive director.

Transaction Capital CEO David Hurwitz
Transaction Capital CEO David Hurwitz

Van der Walt told 702 that these changes are good, but Transaction Capital does not interfere with WeBuyCars’ business.

“When they initially invested in the business, that was exactly the reason for investing in WeBuyCars, because it’s a successful, well-run, growth business.”

“And that’s always been the focus, so they have not been highly involved in the business.”

However, he said Transaction Capital has added a lot of value to the company when WeBuyCars has asked for it, and the company consists of highly knowledgeable people.

Van der Walt said WeBuyCars remains a strong, successful business because “we’re blessed with extremely good leadership in our business and a strong leadership team, who’s been with the company for a very long time”.

“And we still enjoy what we do,” he said.

The used car sale business is also robust, as the company has seen its average number of vehicles sold per month remaining at approximately 12,000.

WeBuyCars’ Faan van der Walt

However, Van der Walt said the business “is not as easy as a year or two years ago”.

One of the company’s many challenges includes high inflation, which impacts its products’ affordability and demand.

“Affordability is a big challenge for the consumer. Combine that with fuel price increases and load-shedding, and the confidence is quite low,” he said.

“That did have an influence on the vehicle prices and the affordability of clients.”

These factors have led to a decline in the demand for higher-end vehicles and a slowdown in the pace at which they sell.

“So we’ve adjusted accordingly and focused more on the lower end of the market lately.”

Van der Walt said WeBuyCars saw huge inflation in used vehicle prices in its previous financial year, “which was good because today you buy a vehicle, tomorrow, it’s worth more, hence more profit”.

“But on the downward trend of that cycle, you have the opposite. You’ve got a margin squeeze.” However, he said the deflation has now normalized.

Van der Walt said there is a gap between what used vehicles are being advertised for and what they cost, and, in fact, “new vehicles have seen quite a few increases lately”.

He believes this could see the prices of used vehicles increasing again.

WeBuyCars is prepared for this shift as the company has recently expanded its capacity, grown its inventory space by 25% and is dealing in more cars.

“So we’ve grown our market share by nearly 15%, which is important for us,” he said.

“We always have these ebbs and flows of the market, but we’ve got a long-term view of serving clients and growing market share.”