Karooooo, the owner vehicle-tracking platform Cartrack, yesterday said that despite the growth experienced in South Africa by Carzuka, an online car platform that connects buyers to sellers, it had decided to cease buying second-hand vehicles as dealerships had expressed that Carzuka's business competed with them.
In its second quarter and half year 2024 results, Karooooo said the decision follows considerable interaction with motor dealerships across South Africa over the past few months, in conjunction with Carzuka’s expansion, as some of the motor dealerships started perceiving Carzuka’s business interests to conflict with their business interests.
“We maintain that the Carzuka business model is robust, but we do not want to risk the long-standing strategic relationships that Cartrack has forged with motor dealerships across South Africa.
“There are many components within the Carzuka’s platform that have been built and developed and will continue to provide substantial value to the existing Cartrack fleet platform. In a seamless transition, we intend to integrate the majority of Carzuka’s dedicated staff into Cartrack,” the group said.
It said its management was positive about the potential of this business model and endeavour to pursue opportunities in different geographical markets should the right prospects arise.
Carzuka is a company that sells used cars through a website, and the group said in the latest interim revenue Carzuka grew revenue by 29% to R85m.
Carzuka’S operating loss amounted to R13m from a R6m operating loss in 2022 second quarter, mainly due to its investment in infrastructure and brand building.
The group reported that in the second quarter of 2024, Karooooo's total revenue grew 21% to R1 billion compared to the second quarter of 2023, which was R859m. Earnings per share grew 14% to R5.61 per share.
Subscription revenue grew 17% to R860m.
Karooooo CEO and founder Zak Calisto said: “Our proven, robust, and consistently profitable business model, underpinned by a strong balance sheet and healthy cash position, gives us multiple levers for expansion.
“We expect our investment in marketing and sales, and the realization of economies of scale across our business segments, to continue to generate robust results.”
He said the company remained confident that its track record of success, specifically our ability to generate healthy cash flows, was sustainable.
The group reported that the number of Cartrack subscribers rose by 15% to 1.83m in the first half compared to the same period last year, and net Cartrack subscriber additions increased by 56% to 115631.
Looking ahead, the group said its annual guidance remained unchanged for Cartrack at 1.9m to 2.1m subscribers and expected to generate R3.4bn to R3.6bn in subscription revenue.
“Our mission is to be a leading on-the-ground Operations Cloud service provider. We believe Karooooo is well-positioned for growth. We operate in a growing and largely underpenetrated market, with strong demand from customers across diverse industries,“ the group said.
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