From MS. I don’t hold but if I had some dry powder would be buying a brilliant company at a historically low PE. Still not a complete bargain but to channel the great man Wazza: a great company at a reasonable price. The progress in the international segment gives me confidence

We expect the medium- and long-term strategic focus for Car Group to revolve around functional and geographic expansion.

We expect Car Group to capture a larger part of the car retailing value chain, especially in its original Australian online marketplace for automotive, www.carsales.com.au. Car Group has been a highly innovative company since its launch over two decades ago, launching countless improvements and features to www.carsales.com.au to increase the return on marketing spend for dealerships and private sellers, while simultaneously increasing its own take rate. However, www.carsales.com.au is currently still mostly a marketing channel, which leaves significant opportunity beyond marketing, especially in the buying and selling of cars through its Instant Offer and Carsales Select products. We believe these products address significant pain points for consumers, especially younger ones, and expect adoption of these products to drive take rate for the medium to long term.

Beyond Australian automotive, we expect Car Group to focus on consolidating its markets. Among Car Group’s overseas markets, we believe its South Korean subsidiary, Encar, has been most successful in entrenching itself as the dominant local online marketplace with its guarantee product, while its Brazilian subsidiary has been successfully leveraging its regional leadership positions into national dominance. We believe online marketplaces for vehicles (as opposed to property and employment) are inherently conducive to consolidation due to the indivisibility of their category. We therefore believe Car Group will be successful in these overseas expansion efforts.

Beyond automotive, we expect Car Group to continue refining its pricing strategy in its United States subsidiary for nonautomotive, Trader Interactive. Trader Interactive boasts impressive market-leading positions in recreational vehicles and powersports, and we believe these are significant enough to enable it to transition toward a more sophisticated pricing strategy, which will improve Car Group’s take rate.

Bulls Say/Bears Say

• Car Group's online marketplace for Australian automotive, www.carsales.com.au, has established itself as the undisputed leading online marketplace for automotive, supported by networks effects and cost advantages. 
• Car Group has launched new products in Australia to capture a larger part of the automotive retail value chain, which will increase its take rate over time. 
• Car Group has a history of successful overseas expansions and recent investments in lower-maturity online marketplaces in the United States and Brazil provide opportunity for growth. 
• Car Group's recent investments in overseas online marketplaces have been done at arguably expensive multiples. 
• Car Group invests in online marketplaces in developing markets, especially Latin America, where significant investment may be required to capture the market. 
• Self-driving cars may affect the share of the population owning private vehicles and therefore shrink the market in which Car Group operates. 

We assign Car Group a narrow economic moat based on network effects and cost advantages in its online marketplace businesses in Australia, South Korea, the United States, and Brazil.

Economic Moat

 Narrow

Roy Van Keulen,

Published on Feb 09, 2026

We believe Car Group’s economic moat is widest in its original Australian online marketplace for automotive, www.carsales.com.au.

Online marketplaces derive their network effects from a virtuous cycle of additional demand on the network attracting additional supply and vice versa, at little incremental expense to the marketplace operator. In the case of automotive marketplaces, the value of the network increases for dealerships and private sellers commensurate with the size of the audience, while for the audience the value of the network increases commensurate with the size of the pool of relevant listings. Establishing these network effects can be incredibly costly and time consuming as they require a critical scale on both the supply and demand side of the network. Only after a certain audience size and listings pool size has been achieved does one side of the network start attracting the other and vice versa.

Car Group’s Australian online marketplace for automotive, www.carsales.com.au, has managed to achieve critical scale on both sides of the two-sided marketplace and has become the dominant online automotive marketplace in Australia. We view www.carsguide.com.au and www.autotrader.com.au as Car Group’s closest competitors in Australia, at around 10% of total time spent compared with www.carsales.com.au and around a third the total number of listings. Additional competition comes from www.gumtree.com.au which focuses more on the last owner of a vehicle, while Carsales and its direct competitors focus more on a vehicle’s second and third owners.

Carsales’ success in Australia, was highly improbable, in our view. To win, scrappy startup Carsales.com had to fight off Australia’s largest corporations, which included the largest media companies in Australia—Fairfax Media, Publishing and Broadcasting Limited, and News Corp—who not only held tremendous financial resources but also held vast distribution capabilities through their various media assets.

We attribute Car Group’s eventual success to a couple of factors, starting with competitor switching costs. Car Group’s competitors were initially strongly disincentivized to move their lucrative existing classifieds businesses online. Not only would moving online require investment to build an online media asset, which they could easily afford, but more importantly, any success in doing so would cannibalize their existing classifieds businesses. Given that listing fees for listing online were much lower at the time compared with traditional classifieds (often free even), due to the relatively immaturity of the business model at the time, traditional media companies were reluctant to move online.

Car Group seized on the window of opportunity and started solving problems and taking advantage of the natural advantages of the internet with gusto. What started with manually uploading listings received by fax to a text-only online marketplace, eventually turned into self-serve listings for dealerships and a highly intuitive picture-based user interface for consumers, complete with filtering features that weren’t possible in traditional classifieds listings. By the time the traditional media companies caught on to the secular shift online, Car Group had not only spent more money developing its marketplace than its competitors, but crucially, it had spent more time, something which the traditional media companies could not buy. Car Group’s competitors were therefore continuously behind the learning curve as they started building their own marketplaces. Car Group, meanwhile, continued making www.carsales.com.au more performant, user-friendly, and feature-rich and used its first-mover advantage to continue pulling away from its competitors.

As Car Group reached critical scale on both the supply and demand side of the network, a tipping point was reached whereby competitors increasingly faced an uphill battle as they had to spend increasingly more to attract supply and demand. The reasons for this are manifold, including a degree of brand recognition and consumer force of habit. However, the key reason why costs to attract supply and demand started to diverge, we believe, is because www.carsales.com.au crossed an invisible threshold beyond which it was simply good enough to meet the needs of most dealerships and consumers. At that point, dealerships and consumers simply didn’t need to bother with listing and searching on other online marketplaces. We continue to see this today. Even though dealerships today have systems that enable them to broadcast listings to every marketplace simultaneously and pay on a per-lead basis, which would incentivize listing across every platform, www.carsales.com.au still enjoys by far the largest inventory. The reason is that many sellers, especially private ones, usually don’t bother listing on multiple websites, because they know www.carsales.com.au provides them with all the potential buyers they need. This is most clearly evidenced in www.gumtree.com.au, whose total number of listings has remained below www.carsales.com.au despite not charging for listings until early 2023. When it eventually did introduce a listing fee which was less than 10% of the fee to list on www.carsales.com.au, listings started declining rapidly. As a result of competitors having inferior inventory, consumers don’t bother scouring other online marketplaces, as evidenced by website traffic statistics. These behaviors also tend to become very sticky. When US-based Cox Automotive, which already owned www.carsguide.com.au, launched its highly performant, user-friendly, and feature-rich website, www.autotrader.com.au in Australia, it failed to attract sufficient supply and demand even after a multi-million dollar publicity campaign. Two years later, it sold the websites to eBay, which already owned www.gumtree.com.au. The three websites have since been on sold multiple times, at continuously lower valuations.

Car Group’s competitive advantage, we believe, is further supported by the market dynamics for the category in which it operates. CAR Group enjoys a market position much more dominant than its Australian peer online marketplaces for real estate and employment, wide-moat REA Group (ASX:REA) and narrow-moat Seek (ASX:SEK). We believe this can be explained by the relative indivisibility of the category in which it operates. Real estate, in our view, is inherently local and competitors can try to segment the market geographically, as narrow-moat Domain (ASX:DHG) has done successfully in various cities and suburbs in Australia. Employment, similarly, can be segmented in multiple ways, including by job function, economic sector, and experience level. However, vehicles are highly comparable to their adjacent listings and cannot easily be segmented into distinct markets. Vehicles, contrary to real estate, can also be moved to another geography, which prevents geographic segmentation and can be easily compared across body type, brand and age, which prevents functional segmentation. We believe for this reason that online marketplaces for vehicles naturally coalesce around a single marketplace.

In addition to network effects, we believe Car Group’s competitive advantage is further supported by cost advantages in development costs. The automotive market continues to be a highly dynamic space with new ownership models through ride hailing, car sharing and autonomous driving, dealer disintermediation business models by rapidly growing electric vehicle companies and a larger part of the transaction moving online. A competitor may introduce new products or features which prove appealing to buyers and sellers. However, we believe the adoption of such new products and features is inherently constrained by a degree of inertia due to the mature nature of the Australian market, as over 80% of consumers in Australia already shop online for a car and have developed online shopping habits. Any new feature needs to convert existing shoppers, rather than attract first-time online shoppers, something which faces far more friction. Meanwhile, Car Group can likely easily copy these features and deploy them to its own online marketplace before they start to significantly affect market share. Moreover, Car Group can do so while spreading out development costs over a business which is an order of magnitude larger than its nearest competitors in Australia.

Beyond Australia, we see similar network effects and cost advantages in Car Group’s automotive businesses in South Korea and Brazil, where Encar and Webmotors, respectively, also claim the number one online marketplace position. In South Korea, we see Car Group’s economic moat further supported by the Encar Guarantee offering, whereby Encar inspects and guarantees listed vehicles through a network of inspection sites. Given that South Korea’s relatively immature dealership market is perceived with a degree of distrust by consumers, we believe this provides an additional moat source for Encar based on brand. In Brazil, which is the least mature market of Car Group’s major businesses, consumers have not yet developed online shopping habits for cars, meaning the market is still characterized by a landgrab. We expect Webmotors will continue to leverage its dominant market share in Sao Paulo and Rio de Janeiro, which account for over a quarter of Brazil’s population and around 40% of Brazil’s gross domestic product, to consolidate the market nationally.

We also believe Car Group’s nonautomotive businesses in Australia and the United States, which provide marketplaces for nonautomotive personal vehicles, such as motorcycles, boats, and recreational vehicles, and professional vehicles, such as trucks and farm equipment, are protected by economic moats based on network effects and cost advantages. We believe these economic moats are widest in recreational vehicles and motorcycles, where Car Group’s businesses enjoy audience and inventory sizes at multiples of their nearest competitors. Similar to automotive, we believe these categories of vehicles each naturally move toward national consolidation due to listings within each category being highly comparable to adjacent listings and vehicles being easily transportable.

Our fair value estimate for Car Group is AUD 33 per share, implying a price/ earnings ratio of 40 and an enterprise value/ EBITDA multiple of 19 in fiscal 2026.