1 00:00:04,200 --> 00:00:07,020 Sean Aylmer: Welcome to the Fear and Greed Daily Interview. I'm Sean Aylmer. 2 00:00:07,230 --> 00:00:10,110 Sean Aylmer: The car market, particularly the used car market in Australia, 3 00:00:10,110 --> 00:00:12,750 Sean Aylmer: has been pretty remarkable over the past couple of years. 4 00:00:12,960 --> 00:00:16,410 Sean Aylmer: Supply chain challenges with new cars saw demand for used 5 00:00:16,410 --> 00:00:20,430 Sean Aylmer: vehicles soar and took prices to levels we really haven't 6 00:00:20,430 --> 00:00:23,489 Sean Aylmer: seen before. As markets start to normalize, I wanted to 7 00:00:23,489 --> 00:00:26,220 Sean Aylmer: talk to Cameron McIntyre, the Chief Executive Officer of carsales.com, 8 00:00:27,510 --> 00:00:30,420 Sean Aylmer: Australia's leading car website. This is a big company. It's 9 00:00:30,420 --> 00:00:33,449 Sean Aylmer: got a market cap of around $ 7. 7 billion with 10 00:00:33,450 --> 00:00:36,600 Sean Aylmer: a very large international presence, which is getting even bigger. 11 00:00:36,870 --> 00:00:38,940 Sean Aylmer: Cameron McIntyre, welcome back to Fear and Greed. 12 00:00:39,150 --> 00:00:40,350 Cameron McIntyre: Thanks, Sean. Great to be here. 13 00:00:40,710 --> 00:00:46,200 Sean Aylmer: Very different environment today in March, 2023, to when we 14 00:00:46,200 --> 00:00:47,490 Sean Aylmer: last spoke late 2020. 15 00:00:48,659 --> 00:00:50,730 Cameron McIntyre: It's different, but it's also, I guess, a little bit 16 00:00:50,909 --> 00:00:54,990 Cameron McIntyre: the same. The things that have probably changed a little 17 00:00:54,990 --> 00:00:58,710 Cameron McIntyre: bit over that period of time would be clearly, prices 18 00:00:58,710 --> 00:01:01,140 Cameron McIntyre: have gone up, as you talked about your introduction and 19 00:01:01,800 --> 00:01:05,699 Cameron McIntyre: between March, 2020, and today, used car prices are up 20 00:01:06,030 --> 00:01:10,140 Cameron McIntyre: between 40 and 45% in Australia and in pretty much most of 21 00:01:10,140 --> 00:01:13,050 Cameron McIntyre: the markets we're in around the world. Similarly, in that 22 00:01:13,050 --> 00:01:18,270 Cameron McIntyre: timeframe, we've seen consumers avoid public transport and move into 23 00:01:18,270 --> 00:01:21,060 Cameron McIntyre: car ownership just because of the pandemic. We've seen supply 24 00:01:21,060 --> 00:01:25,500 Cameron McIntyre: chain issues with new cars and getting supply to market 25 00:01:25,620 --> 00:01:27,270 Cameron McIntyre: and so there's been a whole bunch of things that 26 00:01:27,270 --> 00:01:31,319 Cameron McIntyre: have changed and consumers have become more comfortable in transacting 27 00:01:31,319 --> 00:01:34,830 Cameron McIntyre: in all things online as well. And so we've seen 28 00:01:34,890 --> 00:01:36,660 Cameron McIntyre: a lot changed, so it's been a busy time. 29 00:01:37,140 --> 00:01:40,319 Sean Aylmer: Okay. Is demand normalising? Are we getting back to the 30 00:01:40,319 --> 00:01:46,050 Sean Aylmer: point where the new car market, deliveries are coming on time. 31 00:01:46,470 --> 00:01:49,140 Sean Aylmer: Presumably that takes pressure off the used car prices, but 32 00:01:49,140 --> 00:01:50,460 Sean Aylmer: where are we up to in that cycle? 33 00:01:51,450 --> 00:01:54,900 Cameron McIntyre: With new cars, it depends on the make and model 34 00:01:54,900 --> 00:01:59,130 Cameron McIntyre: that you're talking about. So there's still quite decent wait 35 00:01:59,130 --> 00:02:02,460 Cameron McIntyre: times for particular cars and other cars are much easier 36 00:02:02,460 --> 00:02:05,190 Cameron McIntyre: to get a handle on or ahold of these days 37 00:02:05,190 --> 00:02:10,290 Cameron McIntyre: at the moment. But supply, more generally speaking, is probably 38 00:02:10,680 --> 00:02:15,300 Cameron McIntyre: getting closer to more normal levels overall. But it can 39 00:02:15,300 --> 00:02:17,730 Cameron McIntyre: still be a little bit hit- and- miss, depending on 40 00:02:17,730 --> 00:02:20,370 Cameron McIntyre: what it is that you're looking for. And new car 41 00:02:20,370 --> 00:02:25,050 Cameron McIntyre: sales are improving as well, and I think VFACTS had 42 00:02:25,050 --> 00:02:29,250 Cameron McIntyre: new car sales at about 6.5% or so up on the 43 00:02:29,250 --> 00:02:32,250 Cameron McIntyre: same time last year to date. So things are getting 44 00:02:32,310 --> 00:02:35,220 Cameron McIntyre: back to normal in the new car space, but it's 45 00:02:35,220 --> 00:02:36,570 Cameron McIntyre: a little bit make and model specific. 46 00:02:37,080 --> 00:02:40,980 Sean Aylmer: Okay. So I wanted to talk about Carsales, the company 47 00:02:40,980 --> 00:02:45,450 Sean Aylmer: itself. You've actually had a good 2023 year to date 48 00:02:45,450 --> 00:02:48,419 Sean Aylmer: in share price terms or you had a great start and been 49 00:02:48,419 --> 00:02:52,380 Sean Aylmer: fairly flat since then. I want to get into the 50 00:02:52,470 --> 00:02:54,780 Sean Aylmer: international market and what you're doing in Brazil, but what's 51 00:02:54,780 --> 00:02:56,040 Sean Aylmer: happening locally first? 52 00:02:56,910 --> 00:03:01,170 Cameron McIntyre: Yeah, so the local market for us is still buoyant. 53 00:03:01,200 --> 00:03:06,960 Cameron McIntyre: We're still seeing good demand for used cars. Inventory is 54 00:03:06,960 --> 00:03:09,930 Cameron McIntyre: returning to normal. So if any of your listeners are 55 00:03:10,680 --> 00:03:14,100 Cameron McIntyre: looking on car sales, we have about 202,000 cars on Carsales 56 00:03:14,760 --> 00:03:16,830 Cameron McIntyre: at the moment. You go back to when we talked 57 00:03:16,830 --> 00:03:20,280 Cameron McIntyre: in 2020, inventory was in a different spot then, and I 58 00:03:20,280 --> 00:03:23,340 Cameron McIntyre: think we got down to about 126,000 cars was the 59 00:03:23,340 --> 00:03:26,550 Cameron McIntyre: low point. So inventory's returning to normal levels and pre- 60 00:03:26,550 --> 00:03:32,700 Cameron McIntyre: pandemic 2019- ish, we were probably 230, 000 cars. So what 61 00:03:32,700 --> 00:03:35,790 Cameron McIntyre: we're seeing is the time it's taking to sell a 62 00:03:35,790 --> 00:03:39,270 Cameron McIntyre: car is getting closer to where it used to be pre- 63 00:03:39,270 --> 00:03:42,690 Cameron McIntyre: pandemic, but it's still faster at the moment and consumer 64 00:03:42,690 --> 00:03:47,310 Cameron McIntyre: demand is still good. And prices, as I mentioned before, 65 00:03:47,400 --> 00:03:51,870 Cameron McIntyre: are still up 40 to 45% and we're not seeing that change. 66 00:03:52,080 --> 00:03:55,051 Cameron McIntyre: That's still holding at those levels at the moment. 67 00:03:55,051 --> 00:03:57,600 Sean Aylmer: Are you worried about interest rates? 68 00:03:58,200 --> 00:04:02,250 Cameron McIntyre: Not at these levels, no. I think our business is 69 00:04:02,250 --> 00:04:06,810 Cameron McIntyre: all about buying and selling cars. So if there's turnover 70 00:04:06,810 --> 00:04:09,870 Cameron McIntyre: of cars, that's a good thing for us. So, couple 71 00:04:09,870 --> 00:04:13,950 Cameron McIntyre: of scenarios would be high interest rates, people need more 72 00:04:13,950 --> 00:04:16,799 Cameron McIntyre: money to pay down their mortgage, so they might sell 73 00:04:16,800 --> 00:04:20,159 Cameron McIntyre: a $ 40,000 car, but they still need to commute from 74 00:04:20,160 --> 00:04:22,440 Cameron McIntyre: point A to point B, and so they might buy 75 00:04:22,440 --> 00:04:26,279 Cameron McIntyre: a $ 20,000 car and take $20, 000 of equity. People still 76 00:04:26,279 --> 00:04:31,080 Cameron McIntyre: have changes in family circumstances that require them to buy 77 00:04:31,110 --> 00:04:33,839 Cameron McIntyre: and sell a car. They change jobs, et cetera. So 78 00:04:33,900 --> 00:04:38,790 Cameron McIntyre: interest rates might indicate how much money people spend on 79 00:04:38,790 --> 00:04:41,550 Cameron McIntyre: a car, but they will still buy and sell cars. 80 00:04:41,610 --> 00:04:45,270 Cameron McIntyre: And in all those circumstances, that's a good outcome for 81 00:04:45,270 --> 00:04:45,780 Cameron McIntyre: our business. 82 00:04:46,290 --> 00:04:48,210 Sean Aylmer: Stay with me, Cameron. We'll be back in a minute. 83 00:04:54,540 --> 00:04:58,589 Sean Aylmer: My guest this morning is carsales. com CEO, Cameron McIntyre. 84 00:04:59,730 --> 00:05:00,989 Sean Aylmer: What I want to spend a bit of time on 85 00:05:00,990 --> 00:05:04,380 Sean Aylmer: is your overseas push. So whereabouts are you, and then, 86 00:05:04,380 --> 00:05:07,350 Sean Aylmer: I just want to go into Brazil particularly, but just 87 00:05:07,529 --> 00:05:09,120 Sean Aylmer: tell us where realestate. com is? 88 00:05:09,510 --> 00:05:13,680 Cameron McIntyre: So our markets are South Korea, so we have a big 89 00:05:13,770 --> 00:05:17,670 Cameron McIntyre: business in South Korea called Encar, which is the Carsales equivalent 90 00:05:17,670 --> 00:05:20,880 Cameron McIntyre: in South Korea. We have a business in Chile, which 91 00:05:20,880 --> 00:05:23,640 Cameron McIntyre: is again, the car sales equivalent in Chile, called Chileautos. 92 00:05:23,700 --> 00:05:28,860 Cameron McIntyre: Again, in Mexico, Soloautos. We bought a very large business 93 00:05:28,860 --> 00:05:32,580 Cameron McIntyre: in the United States inside the last 18 months, and 94 00:05:32,580 --> 00:05:36,990 Cameron McIntyre: that's called Trader Interactive, and now we own 70% of 95 00:05:37,410 --> 00:05:40,920 Cameron McIntyre: the number one auto marketplace in Brazil called WebMotors. 96 00:05:41,279 --> 00:05:44,400 Sean Aylmer: How do you choose where to go? How do you 97 00:05:44,400 --> 00:05:47,820 Sean Aylmer: choose to go to South Korea or Brazil or the U. S.? 98 00:05:48,180 --> 00:05:50,940 Sean Aylmer: And this is a leading question because the criticism of 99 00:05:50,940 --> 00:05:53,880 Sean Aylmer: the extra 40% of WebMotors that you've picked up is 100 00:05:53,880 --> 00:05:56,669 Sean Aylmer: that you maybe spent too much on it. Now, you 101 00:05:56,670 --> 00:05:59,970 Sean Aylmer: were always going to get to's and fro's on that. I'm just interested 102 00:05:59,970 --> 00:06:02,010 Sean Aylmer: in the process of working out where to go. 103 00:06:02,730 --> 00:06:07,170 Cameron McIntyre: Yeah, so the process, there's a lot to it, but 104 00:06:07,170 --> 00:06:09,990 Cameron McIntyre: I'll give you the basic things that we look for. 105 00:06:10,770 --> 00:06:14,339 Cameron McIntyre: So we are looking for markets where we can acquire 106 00:06:14,339 --> 00:06:17,940 Cameron McIntyre: a position in a number one player or a close 107 00:06:17,940 --> 00:06:20,969 Cameron McIntyre: number two player because in digital marketplaces, it tends to 108 00:06:20,970 --> 00:06:24,300 Cameron McIntyre: be a winner take all. We tend to approach these 109 00:06:24,480 --> 00:06:28,049 Cameron McIntyre: investments by taking a minority position first. So we look 110 00:06:28,050 --> 00:06:33,300 Cameron McIntyre: for partners in those markets where we have alignment around 111 00:06:33,839 --> 00:06:36,810 Cameron McIntyre: the potential business that we're looking to buy and the long- 112 00:06:36,839 --> 00:06:41,430 Cameron McIntyre: term vision for that business. We're looking for markets where 113 00:06:41,910 --> 00:06:48,510 Cameron McIntyre: there's relatively less digital sophistication, so markets growing in terms 114 00:06:48,510 --> 00:06:53,730 Cameron McIntyre: of digital environment and customer sophistication around digital marketing. There's 115 00:06:53,730 --> 00:06:57,270 Cameron McIntyre: lots of runway around that for the development of our 116 00:06:57,270 --> 00:07:02,160 Cameron McIntyre: intellectual property and technology into those markets. We are looking for management 117 00:07:02,160 --> 00:07:06,630 Cameron McIntyre: teams that we have alignment with around values and behaviors. 118 00:07:06,900 --> 00:07:11,070 Cameron McIntyre: We are looking for businesses where we're not just bringing 119 00:07:11,070 --> 00:07:14,100 Cameron McIntyre: our cash to the table. We're bringing product and tech 120 00:07:14,100 --> 00:07:17,190 Cameron McIntyre: to the table, and we can deliver outcomes to our 121 00:07:17,190 --> 00:07:24,000 Cameron McIntyre: shareholders relatively quickly. But also, there's a good long- term runway. 122 00:07:27,540 --> 00:07:31,230 Sean Aylmer: Okay, you now earn... I'm probably going to get this wrong, Cameron McIntyre from carsales.com, is 123 00:07:31,230 --> 00:07:33,690 Sean Aylmer: it 53% of revenue or earnings from offshore? 124 00:07:33,930 --> 00:07:38,160 Cameron McIntyre: Yeah, so the majority of our revenue comes from offshore now. 125 00:07:38,610 --> 00:07:42,630 Sean Aylmer: Why do you think you've been successful among the local... 126 00:07:43,260 --> 00:07:46,080 Sean Aylmer: I suppose real estate's a very different sector, but a 127 00:07:46,080 --> 00:07:49,350 Sean Aylmer: lot of the technology stocks, very few have done that 128 00:07:49,350 --> 00:07:51,780 Sean Aylmer: well overseas, but you guys seem to have been able 129 00:07:51,780 --> 00:07:54,810 Sean Aylmer: to establish this diverse revenue base. 130 00:07:55,230 --> 00:07:57,900 Cameron McIntyre: Yeah, and I can't talk for anyone else, but I 131 00:07:57,900 --> 00:08:03,180 Cameron McIntyre: think in our circumstance, it's been about taking those minority 132 00:08:03,180 --> 00:08:07,680 Cameron McIntyre: positions, learning the market, learning about where we can create 133 00:08:07,680 --> 00:08:12,060 Cameron McIntyre: value for the business and for our shareholders. It's been 134 00:08:12,060 --> 00:08:16,590 Cameron McIntyre: about developing trust with the management team on the ground 135 00:08:16,620 --> 00:08:22,020 Cameron McIntyre: and collaborating with them and building a strong long- term 136 00:08:22,080 --> 00:08:26,760 Cameron McIntyre: relationship. And it's about treating every market as being unique, 137 00:08:26,850 --> 00:08:29,820 Cameron McIntyre: I guess. So we don't go into any market and 138 00:08:29,820 --> 00:08:33,390 Cameron McIntyre: assume that we can just deploy our intellectual property and 139 00:08:33,390 --> 00:08:38,160 Cameron McIntyre: technology or our platforms, et cetera. We treat every market 140 00:08:38,220 --> 00:08:42,059 Cameron McIntyre: as different. And in doing that, I guess we don't 141 00:08:42,059 --> 00:08:45,179 Cameron McIntyre: potentially fall across some of the traps that maybe others have 142 00:08:45,630 --> 00:08:47,310 Cameron McIntyre: fallen into in the past. 143 00:08:47,670 --> 00:08:50,130 Sean Aylmer: Okay. I can't let you go without asking about the EV 144 00:08:50,340 --> 00:08:54,240 Sean Aylmer: market, the electric vehicle market. What's happening in that market 145 00:08:54,240 --> 00:08:57,240 Sean Aylmer: here and is it the same? I'd imagine Korea is 146 00:08:57,240 --> 00:08:59,459 Sean Aylmer: very different to Brazil is very different to the U. 147 00:08:59,460 --> 00:09:00,930 Sean Aylmer: S. is very different to Australia. 148 00:09:02,070 --> 00:09:05,670 Cameron McIntyre: Yes. No, they're all different and they're all different in 149 00:09:05,670 --> 00:09:10,890 Cameron McIntyre: a number of different ways. EV sales here are growing. 150 00:09:10,950 --> 00:09:15,840 Cameron McIntyre: The EV market here is growing. The friction points here have 151 00:09:15,840 --> 00:09:22,470 Cameron McIntyre: been one, price. EVs have been expensive. Two, variety, makes 152 00:09:22,470 --> 00:09:26,040 Cameron McIntyre: and models, choice for the consumer. The choice is improving 153 00:09:26,040 --> 00:09:30,360 Cameron McIntyre: today, but you go back 12, 18, 24 months, less choice. Now 154 00:09:30,360 --> 00:09:34,380 Cameron McIntyre: there's more. So it's evolving. Things like range anxiety have 155 00:09:34,380 --> 00:09:38,309 Cameron McIntyre: been an issue for some consumers and just getting past 156 00:09:38,309 --> 00:09:41,910 Cameron McIntyre: that. A lot of consumers these days live in apartments 157 00:09:41,910 --> 00:09:45,480 Cameron McIntyre: and so charging can be a challenge. " Where do I 158 00:09:45,480 --> 00:09:48,240 Cameron McIntyre: charge my EV when I get one?" and thinking about 159 00:09:48,240 --> 00:09:51,960 Cameron McIntyre: that. So all those things have been front of mind 160 00:09:51,960 --> 00:09:56,280 Cameron McIntyre: for consumers and different markets around the world think of 161 00:09:56,280 --> 00:10:00,720 Cameron McIntyre: that differently. But here, for Australian consumers, they've been the 162 00:10:00,720 --> 00:10:03,270 Cameron McIntyre: key issues and I guess we are getting through a 163 00:10:03,270 --> 00:10:06,000 Cameron McIntyre: lot of that. Batteries on cars are getting a bit 164 00:10:06,000 --> 00:10:10,020 Cameron McIntyre: better, ranges are getting longer. There's more charging ports for 165 00:10:10,020 --> 00:10:13,679 Cameron McIntyre: consumers to choose from as that network expands. Prices are 166 00:10:13,679 --> 00:10:17,010 Cameron McIntyre: coming down, as you might have observed with one particular 167 00:10:17,010 --> 00:10:21,990 Cameron McIntyre: manufacturer recently. So I think the space is opening up 168 00:10:22,080 --> 00:10:24,000 Cameron McIntyre: more for the consumer, but it's going to take some 169 00:10:24,000 --> 00:10:27,540 Cameron McIntyre: time. When you think about we've got nearly 20 million 170 00:10:27,540 --> 00:10:31,229 Cameron McIntyre: cars in the Australian car park and the average age 171 00:10:31,230 --> 00:10:33,480 Cameron McIntyre: of a car on the road in Australia is 10 172 00:10:33,480 --> 00:10:36,900 Cameron McIntyre: years. So it's going to take some time for our 173 00:10:36,900 --> 00:10:39,750 Cameron McIntyre: fleet to change over, but it is evolving. 174 00:10:40,350 --> 00:10:42,180 Sean Aylmer: Cameron, thank you for talking to Fear and Greed. 175 00:10:42,720 --> 00:10:44,310 Cameron McIntyre: Great to catch up, Sean. Thank you so much. 176 00:10:44,610 --> 00:10:48,569 Sean Aylmer: That was Cameron McIntyre, Chief Executive Officer of carsales.com. This 177 00:10:48,570 --> 00:10:50,670 Sean Aylmer: is the Fear and Greed Daily Interview. Join us every 178 00:10:50,670 --> 00:10:53,040 Sean Aylmer: morning for the full episode of Fear and Greed, Australia's 179 00:10:53,040 --> 00:10:56,550 Sean Aylmer: most popular business podcast. I'm Sean Aylmer. Enjoy your day.