By Tess Bennett
Car Group says it has established a global artificial intelligence hub in Brazil to help the automotive classifieds business take advantage of the technology, after reporting a bumper profit for the first half of the financial year.
The company announced the news after reporting a solid result with net profit up 16 per cent to $143 million for the six months ended December 31.
Shares in the company jumped 8 per cent on Monday, recovering from last week’s tech sell-off, which wiped billions of dollars from the market caps of technology companies in the past month.
Car Group chief executive William Elliott said the Sao Paulo hub, known as CG/lab, would develop so-called agentic tools that would change how people bought and sold cars online. The agents, or AI-powered robots, will be able to negotiate deals with sellers and handle the registration of the vehicles.
The company’s first step towards developing these bots is voice-controlled vehicle search, launched in Carsales’ iOS app.
“AI is accelerating the ability for consumers to find the right car in a way like they would speak to someone, rather than having to go through a structured search,” Elliott said.
Car Group, formerly Carsales, owns automotive classifieds websites around the world, including Bikesales, Boatsales and Trucksales in Australia, Trader Interactive in the US, Webmotors in Latin America, and Encar in Asia.
Car Group’s push into AI comes after investors deserted technology stocks in the past few weeks over fears that such tools could replicate many of the services offered by software giants and consumer-facing tech businesses.
Shares in Car Group had fallen 20 per cent since the beginning of the year, closing at $24.48 on Friday before their rebound on Monday.
“Clearly, I think investors are grappling with the impact that AI can have on businesses and industries like ours,” Elliott said. “We’re confident that we’ve got an incredibly strong economic moat.”
RBC Capital Markets analyst Wei-Weng Chen said the results were “largely uneventful” while Citi’s Siraj Ahmed said Car Group had made progress on AI and was arguably better-positioned than real estate giant REA Group.
Elliott, Car Group’s former chief financial officer who took over as chief executive in August when Cameron McIntyre moved to REA, said a growing proportion of its $120 million in annual investment in software development was going to AI.
“In a challenging tech environment, the market is rewarding tech companies like Car, which can demonstrate they have proprietary data and can demonstrate AI can be implemented within existing budgets,” said Barrenjoey analyst Eric Choi.
The company reported revenue of $626 million, excluding the Australian tyres business it exited last year, ahead of the market’s expectation of $619.4 million. Earnings of $324 million were in line with forecasts.
Car Group declared a fully franked dividend of 42.5¢ a share, up 10 per cent, and reaffirmed its profit guidance for the full year. It expects revenues to grow between 12 per cent and 14 per cent, and adjusted profit after tax is expected to increase 9 per cent to 13 per cent.
Wilson Asset Management’s Shaun Weick said there were “no real negatives” in the half-year results, which landed after the tech sell-off eased in the United States at the weekend.
“Car is such a dominant platform that it is one of the companies where the disruption risk around AI feels overstated,” Weick said. “We think AI is an enabler, and it is embedded in a number of their products and platforms.”
He highlighted improvements in Car Group’s North American business, Trader Interactive, which grew revenue by 13 per cent in the first half.
“It was positive to see within North America, the Trader Interactive results are excellent. They’re seeing good demand in their premium dealer products and the media business. The key incremental, medium-to-longer term opportunity for Car Group is within North America.”
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