Carsales chief executive Greg Roebuck has warned that the government's plans to relax restrictions on the import of new and near-new foreign cars is not a positive move for consumers and may leave them without local support should something go wrong with a vehicle purchased from overseas.
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His comments came as Carsales reported a record half-year profit of $51.34 million, up 10 per cent compared with the previous corresponding period, while revenue rose 11 per cent to $167.3 million in the same period.
The government today gave the green light to a policy that will allow consumers to import cars or motorbikes from overseas from 2018, as long as the car is under 12 months old, has under 500 kilometres on its odometer. The policy also states that the vehicle must come from a country of 'comparable standards' – Japan and the United Kingdom are the only countries that currently qualify.
"I just think it's not a positive thing for consumers in all cases because there will be people that buy a car and have no local support and be pretty unhappy with that result," Mr Roebuck told Fairfax Media.
Mr Roebuck said that there were a number of issues, including warranty and insurance that could have a negative impact on consumers.
"I think the local guys do a great job of the complete service of selling a car, owning a car, servicing a car, providing warranty on a car that may not look the same in a parallel import scenario," he said.
It is not the way Mr Roebuck would like to see the market go, but he said any impacts would likely be more positive than negative for Carsales due to an increase in listings.
Aiming for international business
In its results, Carsales' core online advertising business boosted revenue 9 per cent to $115.8 million. Revenue in the international businesses rose 24 per cent to $1.7 million while revenue in its finance business climbed 17 per cent to $33.4 million.
In the half, Carsales acquired 65 per cent of Mexico-based business SoloAutos.
Mr Roebuck said he was aiming for the international business to, in the long-term, contribute more to earnings than the domestic business.
"I like what Seek have done. I think they continue to give us an objective to chase, which is contributing more revenue out of international than domestically," he said.
"We'd like to get to that stage, that's a little way off and there's a lot of work to do. But, we'd like to be able grow our revenue and profits without just having to drive yield in the Australian market."
Carsales is also keeping its ear to the ground on possible acquisitions, but they are more likely to come in the form of peripheral businesses such as its recently purchased mobile vehicle inspection business Redbook Inspect.
"You'll see more acquisitions contributing to that growth in revenue over time. I'd be surprised if we ever got to a point where there wasn't an appetite for that," Mr Roebuck said.
"But, some markets look great from the outside and look at the growth that they can deliver, but sometimes there's too much risk in some opportunities versus the return."
Joel Gray, portfolio manager at Hyperion Asset Management, which owns 7.9 per cent of Carsales, was happy with the half-year result and expected the car classifieds business to keep growing at a similar rate and believed that Carsales could grow its international business to a point where it made up 50 per cent of revenue.
"Seek is more advanced in that strategy because Seek invested for many years before them. It's a very similar playbook, where they buy minority interests in business within their circle of competence and gradually over time adapt business models to what they've learnt in Australia, or vice versa, to help these overseas businesses, but only when they don't rush it."
