CAR Group Limited: A Digital Marketplace Powerhouse in a Growing Used Car Economy

In a world where the automotive landscape is being reshaped by technology, sustainability, and shifting consumer preferences, CAR Group Limited (ASX:CAR) stands at the intersection of innovation and opportunity. With a global footprint spanning Australia, Brazil, South Korea, and the U.S., the company’s digital vehicle marketplaces are positioned to capitalize on a booming used car economy. But is its current valuation justified? Let’s dissect the numbers.

The Financial Foundation: Growth Anchored in Diversification

CAR Group’s FY2024 results reflect a company thriving through strategic diversification. Revenue surged to $1.1 billion, a 17% increase year-over-year, driven by contributions from all key regions. Adjusted EBITDA rose 17% to $581 million, with a robust margin of 53%, underscoring operational efficiency. The adjusted net profit after tax jumped 24% to $344 million, while the final dividend of 38.5 cents per share marked a 20% increase over FY2023. These metrics highlight a business firing on all cylinders.

The regional breakdown reveals CAR’s global muscle:
- Australia: Maintained market leadership with double-digit revenue growth across dealer, private, and media segments.
- Brazil (webmotors): Achieved market share gains through partnerships like its Santander finance integration, driving private seller participation.
- South Korea (Encar): Expanded its Guarantee Inspection product to 8 new sites, boosting trust and transaction volumes.
- North America (Trader Interactive): Leveraged premium subscriptions and AI-driven tools to enhance dealer and buyer engagement.

Market Tailwinds: Used Cars and EVs Fuel Growth

The automotive industry’s shift toward used vehicles and electric vehicles (EVs) is a $25 billion global opportunity by 2030. CAR Group is uniquely positioned to capture this.

1. Used Car Demand Surge:
2. The global used car market grew 6% YoY in Q1 2025, with SUVs and family vehicles dominating (up 2.2% in Australia).
3. Used EV inventory rose 27% YoY, with non-Tesla models outperforming due to affordability and newer tech.

5. Digital Platform Dominance:

6. CAR’s platforms generated 18 billion page views and 48 million monthly users in FY2024, reinforcing its role as a trusted digital hub.
7. Features like AI-powered valuations, vehicle history reports, and integrated financing tools reduce buyer friction, boosting conversion rates.

Valuation Metrics: Is CAR Undervalued or Overvalued?

To assess fair value, we compare CAR’s multiples to its peers and growth trajectory:
- P/E Ratio: CAR’s trailing P/E is 12.5x, below the sector average of 15–18x, suggesting potential upside.
- EV/EBITDA: At 9.2x, it’s well below Tesla’s 15x+, reflecting its focus on profitability over aggressive expansion.
- Dividend Yield: 4.2%, higher than most tech-driven auto platforms, offering stability.

Risks and Challenges

• Macroeconomic Volatility: Rising interest rates could curb discretionary spending on vehicles.
• Regulatory Headwinds: EV adoption depends on infrastructure investments (e.g., charging networks) and policy support.
• Tech Competition: Incumbents like Google (partnering with Ford) and Apple (investing in Kia) could disrupt digital marketplaces.

Conclusion: A Buy with a Strategic Lens

CAR Group’s $1 billion revenue milestone, robust margins, and exposure to high-growth segments like EVs and SUVs make it a compelling investment. With a 9.2x EV/EBITDA multiple and 4.2% dividend yield, the stock appears attractively priced relative to its peers.

The company’s $581 million EBITDA in FY2024, supported by cross-region synergies and tech-driven efficiency, suggests a fair value of $7.50–$8.50 per share. This aligns with its current price of $6.80, offering 10–25% upside.

Investors should watch for used EV inventory growth, regional expansion in Asia-Pacific, and margins in emerging markets. If CAR continues to outperform in these areas, its valuation could rise further—a bet on a digital powerhouse steering the next era of automotive retail.

In a market where transparency and trust are currency, CAR Group’s blend of scale, innovation, and profitability positions it as a long-term winner.