R274-million used-car website officially dead in South Africa

Carzuka, a used-car classifieds platform that raked in an impressive R274.8 million in sales in the 2023/24 financial year, has officially been closed down.

Following the initial announcement in October 2023 that the website was heading to greener pastures, Carzuka owner Karooooo announced in its latest earnings report this October that the final on-hand vehicle was sold off in the second quarter of the 2024/25 financial year.

Carzuka has now been fully integrated to support the operations of Cartrack, a major vehicle telematics firm also under the Karooooo umbrella.

We touched base with the parent company to inquire why it decided to close up shop on its classifieds site.

Conflicts of interest

Karooooo explained that the primary motivation for shutting down Carzuka was to preserve Cartrack’s strategic relationships with motor dealerships.

“Certain motor dealerships believed that Carzuka was competing with them, as a result, they chose to stop supporting Cartrack,” said the organisation.

“To protect the valuable, long-standing relationships we’ve built with motor dealerships across South Africa, we decided to stop purchasing second-hand vehicles in South Africa.”

The company previously told Business Day that dealerships usually refer their clients to Cartrack for vehicle tracking services due to a good working relationship built up over a matter of years.

However, with Carzuka quickly gaining traction in the used-vehicle sector, owners were increasingly opting to sell their cars directly to Carzuka instead of transacting with independent dealerships, or purchasing vehicles via dealerships advertising on Carzuka.

“We paused business growth to engage in lengthy discussions with motor dealerships, aiming to clarify that Carzuka operates in a different tier of the ‘second-hand’ vehicle market compared to their newer, higher-value pre-owned vehicles,” said the company.

“Their fears persisted given our track record of being able to scale businesses. Ultimately, we decided it was best not to jeopardize our long-standing relationships with these motor dealerships.”

Karooooo revealed that Carzuka averaged around 250 vehicle sales per month before shutting down.

The company put some of its eggs back in one basket as it integrated key components of the Carzuka management software into the Cartrack operational business as well as shifted over the approximately 150 Carzuka employees onto the Cartrack payroll to help it keep growing its market dominance.

A conflict of interest with dealerships may have been the main cause of Carzuka’s demise, but it also ran into financial challenges as the business gained market share.

As showroom successes grew, Carzuka’s balance sheets went deeper into the red as a result of higher operational costs, with the entity reporting a R53 million operating loss in the 2023/24 financial year – its most successful on record in terms of car sales.

In comparison, it reported a R38 million deficit for the 2022/23 financial year, and a R13 million shortfall the year before that.

The company chalked this up to the difficulty of successfully running and scaling a business, regardless of the field in which it competes.

“We don’t believe there were any specific challenges [in running Carzuka] beyond the normal operations involved in running a business,” Karooooo told TopAuto.