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Prosus, the consumer internet arm of Naspers, said on Thursday its looking to exit its vehicle-trading business OLX Autos, citing high costs and a slow-down in the second-hand car market.
The core classified business of OLX continues to deliver a strong performance, with improving profitability, Prosus said in a statement, but recently OLX Autos, along with its peers, had been affected by ongoing "macroeconomic and market challenges."
"Higher cost of capital, high inflation and a reversal of pandemic trends have led to a significant and persistent slowdown in the second-hand car market," the company said.
"Prosus will explore all options for the OLX Autos business, acknowledging that significant value exists within local markets." SA's biggest online vehicle trader AutoTrader, is not part of OLX Autos, and will remain part of the group's core classifieds business.
Covid-19 supply-chain issues and a semi-conductor had boosted the prices of second-hand cars, although this crunch has since eased, with SA's largest vehicle dealer, Motus, saying recently that vehicle supply generally has reached about 85% or 90% of normality, depending on make.
READ | Cheaper rides the new norm as SA consumers take strain, says major dealer Motus
In the group's year to end March 2022, OLX Auto's had reported revenues of $1.6 billion (R29.1 billion), up 158% year on year as the company actively built scale, with this accounting for just over half of the revenue of the company's classified business.
OLX Autos had transacted 175 000 cars in Prosus's 2022 year, compared with 98 000 cars in the prior year. The second half was a strong finish to a year of record growth, where monthly volumes exceeded 22 000 cars, which was twice pre-Covid-19 levels.
In the first half of the group's 2023 year, OLX Autos had grown revenue 60% $1 billion, with the company saying demand and prices for used cars remained high amid supply shortages for new cars across various markets. Trading losses increased to $206 million, however, driven by strategic investment to build retail infrastructure.
*News24 is part of Media24, a subsidiary of Naspers.
