WeBuyCars CEO Faan van der Walt on strong results amid tough economic times
Despite high interest rates and sluggish new vehicle sales, WeBuyCars has managed to deliver impressive growth and expand its footprint in South Africa's competitive automotive market. Bronwyn Nielsen speaks to CEO Faan van der Walt.
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WeBuyCars CEO Faan van der Walt sat down with BizNews to discuss the company's stellar performance for the financial year ending September 2024, a period marked by a challenging economic climate and heightened pressures on consumer confidence. Amidst high interest rates and declining new car sales, the used car retailer reported strong results, powered by strategic growth and an unwavering focus on innovation.
Resilience Amid Economic Headwinds
Reflecting on the year, Van der Walt acknowledged the hurdles faced by South African consumers. "It has been a whirlwind since our listing in April," he said. "The motor industry faced a tough trading environment with new vehicle sales slumping and interest rates staying high for most of the year. Consumer confidence was not where we'd like it to be."
Despite these challenges, WeBuyCars delivered a robust financial performance, a testament to the resilience of its business model. "We are proud of our results," he shared. "This was a collective effort by our fantastic team. It's a good growth story, underpinned by disciplined operations and customer-centricity."
The company's success included the opening of one new supermarket during the year, with several others in the pipeline. Van der Walt highlighted WeBuyCars' ability to navigate a tough economic landscape by leveraging its cash-generative business model. "We are fortunate to be in a position where we can fund growth responsibly, keeping debt levels lower than a year ago."
Expanding Market Presence
WeBuyCars currently holds an 18% share of South Africa's used vehicle market, trading approximately 25,000 units monthly. Van der Walt is confident about expanding this figure, with a target to grow market share to over 25% in the next five years.
"Our goal is to continue scaling up, and we're focused on opening more supermarkets across the country," he said. The funding for this aggressive rollout will rely on existing cash flows and responsible debt management. "We want to retain as much capital as possible within the business to fuel sustainable growth."
Adaptability: A Key to Success
Van der Walt pointed out that WeBuyCars' diverse inventory positions it well for an evolving market. Unlike competitors who primarily focus on newer vehicles, WeBuyCars trades across the spectrum. "There are 11 million cars on South African roads, with an average age of over nine years. We have the capability to determine fair value for vehicles of any age and provide a seamless selling experience," he explained.
This approach has allowed the company to remain resilient even as new vehicle sales struggle. "While high-end segments are under pressure, our broad service offering allows us to cater to a larger market."
The Rise of Affordable Brands
A notable trend in the automotive market is the rise of more affordable brands, particularly from Chinese manufacturers. Van der Walt likened this to the entry of Korean brands like Kia and Hyundai decades ago. "Chinese brands have significantly improved their quality and are capturing market share by offering value at a fraction of the price of traditional German competitors."
This shift, he believes, will reshape the market and provide consumers with better options in the long run.
Technology at the Core
While WeBuyCars is a vehicle retailer at its core, Van der Walt emphasized its reliance on technology. "We're not just embracing technology; it's at the heart of everything we do," he said, citing innovations like their proprietary chatbot, Orange, which answers customer queries online.
Last month alone, the company rolled out over 2,800 tech updates, showcasing its commitment to improving operations and customer experience. "This is a continuous machine of learning and experimentation," Van der Walt noted.
Looking Ahead
Van der Walt remains optimistic about the future despite the economic challenges. "We are staying focused, not getting distracted, and continuously improving processes to meet customer needs," he said. "Looking after the goose that lays the golden egg is our priority."
As WeBuyCars continues its journey, it's clear that its blend of innovative practices, a broad market approach, and disciplined financial management are propelling it to new heights. The coming years promise further expansion and a sustained effort to solidify its position as South Africa's leading used vehicle retailer.
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