CAR Group (CAR) – Reviewing Cyclical Pressures

CAR Group provides online vehicle marketplaces in Australia, New Zealand, Brazil, South Korea, Malaysia, Indonesia, Thailand, Chile, China, and North America. The company operates through six segments: Australia – Online Advertising Services; Australia – Data, Research and Services; Investments; North America; Latin America; and Asia segments. The company was formerly known as carsales.com Ltd and changed its name to CAR Group in November 2023. CAR Group was incorporated in 1996 and is headquartered in Melbourne, Australia.‍

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CAR Group (CAR) has a strong track record of resilience through macroeconomic cycles, but current conditions suggest some modest near-term pressure. Reflecting this, Ord Minnett has trimmed its forecasts slightly, with our EPS estimate for FY26 and FY27 by around 1% for FY26–FY27. Our changes imply slightly softer growth than the broader market is anticipating. Our central assumption is that growth in the second half of FY26 moderates compared to the first half, before re-accelerating into FY27 and beyond.

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Domestically, CAR delivered solid revenue growth of 8% year-on-year (YoY) in the first half of FY26, but this is expected to ease to around 7% in the second half. The moderation reflects softer dealer lead volumes due to higher fuel prices and general macroeconomic headwinds, relative to the 4% growth recorded earlier in the year. That said, stronger dealer depth (pricing per customer) should partially offset this. Display advertising growth is also expected to slow from the 10% rate seen in the first half, consistent with softer advertising trends observed across industry data. Encouragingly, demand from Chinese original equipment manufacturers (OEMs) and electric vehicle (EV) advertisers remains supportive.

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Internationally, impacts are expected to be modest and varied across regions. In the US, Trader Interactive may see some pressure in its truck vertical due to higher fuel costs, although its larger recreational vehicle and powersports segments appear more stable. As a result, second-half revenue growth may track slightly below the 13% recorded in the first half, rather than accelerating as previously expected. In South Korea, inventory indicators remain positive, but export-related disruption linked to the Strait of Hormuz situation could weigh marginally on growth, leading to a slight deceleration from the 17% constant currency growth achieved in the first half. In Brazil, Webmotors’ growth remains robust (likely above 20%) despite some softening in finance volumes, which account for only around 15% of revenue.

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Overall, currency movements and these modest operational adjustments translate to only minor forecast changes. On a constant currency basis, CAR is still expected to deliver around 10–11% net profit growth in FY27, or approximately 9% after foreign exchange impacts. Importantly, these macroeconomic pressures are likely to be temporary, with scope for growth to strengthen again from FY27.

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