Prosus, Naspers’s subsidiary which primarily focuses on the classifieds business has announced plans to exit the car classifieds business by selling the business and operations of OLX Autos.
The exit of OLX Autos will help the firm focus on its other core classifieds business of OLX Group which operates in 30 plus countries, serving 322 million people every month in autos, property, jobs, household goods, among others with over 20 well-loved local brands including Avito, OLX, OLX Autos, Otomoto, and Property24.
OLX Autos started in 2018 with a minority investment by OLX Group in Frontier Car Group (FCG). A further $500m investment into FCG in 2019 made OLX Group a majority shareholder. Starting in January 2020, OLX and FCG blended operations in selected markets, rebranding from local brands to “OLX Autos” in most countries. For the first time in these countries, FCG’s ‘real world’ inspection centres were paired with OLX’s online car trading platforms, addressing the customers’ need of helping overcome barriers of buying or selling a car online from a stranger.
In 2021, OLX Autos announced it had surpassed US$1B in total car transactions since its formation in January 2020, via its platforms from both its online platforms and inspection centers in 10 countries including Argentina, Chile, Colombia, Ecuador, India, Indonesia, Mexico, Pakistan, Peru, and the United States.
The business, now up for sale, saw over 500K cars listed on its OLX Autos classifieds platforms by consumers and dealers. It had over 450 inspection centres offering free car inspection with a convenient and trusted car selling service and immediate payment in 1 hour for car sellers.
Monthly the platform saw inspections of nearly 50,000 cars from a network of over 13,000 dealers. OLX Autos has bought, sold, and inspected 400K+ cars. In FY21 ~100K cars were sold but the firm has struggled due to some economic changes.
“Most recently, OLX Autos, the adjacent car transaction business, similar to listed peers, has been affected by ongoing macroeconomic and market challenges,” the firm announced in a statement. “Higher cost of capital, high inflation and reversal of pandemic trends have led to a significant and persistent slowdown in the second-hand car market,” the firm added.
“While OLX Autos has built leading positions across many of its key markets as a result of its strong technology platforms and local focus, pursuing a global growth strategy is no longer the right approach for our shareholders. Prosus will explore all options for the OLX Autos business, acknowledging that significant value exists within local markets,” announced Prosus.
Beyond OLX Autos, Prosus says other businesses in the OLX Group are profitable, cash flow positive, and fast-growing. The exit of OLX Autos will lead to a significant improvement in the profitability profile of the Classifieds segment as a whole.
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