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Sunday / 14 July 2024
HomeFeaturesHow much money WeBuyCars makes when it sells a car

How much money WeBuyCars makes when it sells a car

Used-car giant WeBuyCars (WBC) makes an operating profit of around R7,000 on every vehicle it sells.

WBC was listed on the Johannesburg Stock Exchange (JSE) in April 2024 and subsequently published its first financial statement as a singular entity on 3 May 2024, giving us a lot more insights into its operations than before when it was still under the Transaction Capital umbrella.

The company’s interim results detail that it recorded a total revenue of R11.4 billion between September 2023 and March 2024, with the aggregate operating profit from its core business, which is selling vehicles, coming in at a substantial R564,752,000.

The report further revealed that WBC moved a total of 80,538 cars during this time.

Dividing these numbers, it shows that WBC scored an average operating profit of R7,012.24 on every car it sold during the six months under review.

Getting a car showroom ready

Using the data available we can also calculate more or less what WBC spends on average to get a car “showroom-ready”.

This includes all the costs incurred between when the vehicle is handed over to the buyer until it is parked on the showroom floor – such as its purchase price, the cost of getting it back to the warehouse, performing roadworthy inspections, repairing what is broken, washing it, and taking photos.

WBC’s cost of inventories sold on 31 March 2024 stood at R9,640,846,000 which is what it took out to get the aforementioned 80,538 vehicles ready for their new owners.

Therefore, we can calculate that the retailer spent, on average, R119,705 per car over the six months on getting it showroom-ready.

Meanwhile, it made a total revenue of R11,400,000,000 by selling all these cars, indicating that the average selling price of a vehicle was in the region of R141,548.

This points out that WBC earns R21,438 gross profit per car, but only R7,012 in operating profit, meaning the R14,831 balance goes to operational expenditures such as salaries and water and electricity for its buildings.

The used-car retailer may have shaved a decent amount off the top of the vehicles it sold and seen its total revenue jump by 15.9%, however, it recorded an overall loss of R69.5 million for the six-month period.

This was largely due to R426.46 million worth of call options that were cancelled when WBC was disbanded from its parent company and listed on the JSE as an individual entity.

Before listing on the JSE, these call options gave WBC the right to repurchase 25.1% shareholding in the company from minority shareholders between September 2024 and 2026.

“Upon the successful listing and the adoption of the new Memorandum of Incorporation, the current shareholders’ agreement was cancelled which led to the cancellation of the call options,” said WBC.

“The call option derivative asset was consequently derecognised on 25 March 2024.”

As such, WBC in reality made a net loss of R863 for every car it sold between September 2023 and March 2024.

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