Australia’s CAR Group Exits Tyres Business to Sharpen Digital Focus

ASX-listed CAR Group (AU:CAR) announced its exit from the Tyres business to enhance its focus on its core digital operations. The company highlighted the ongoing challenges in the competitive tyre retail and wholesale industry, noting that this decision comes after struggles to achieve sustainable profitability. Investors responded positively to the announcement, with shares rising nearly 3% today.

CAR Group is a digital marketplace for buying and selling vehicles with global operations.

CAR Group Divests Tyres Unit

The transaction includes the sale of both the wholesale division, tyreconnect, and the e-commerce platform, tyresales.com.au to a third party. The transaction is expected to be completed by the end of February. Meanwhile, the tyresales.com.au platform will shut down effective 14 January 2025.

The company further stated that the exit would result in minor costs, such as redundancies and asset write-downs. However, these would be considered non-recurring and would be excluded from adjusted financial reports.

CAR Group Reaffirms FY25 Outlook

Along with the announcement, CAR Group reaffirmed its FY25 guidance on a pro forma basis, excluding the tyres business. The company expects growth in revenue, EBITDA (earnings before interest, tax, depreciation, and amortization), and NPAT (net profit after tax). Moreover, the company anticipates stable EBITDA margins compared to FY24. In FY24, CAR Group reported pro forma revenue of $1,099 million, with EBITDA of $581 million and NPAT of $344 million.

The company will release its first-half results for FY25 on February 10, 2025.

Is CAR Group a Good Buy?

According to TipRanks’ rating consensus, CAR stock has received a Moderate Buy rating based on three Buy and one Sell recommendations from analysts. The CAR Group share price target is AU$40.56, which is 5.3% above the current price level.

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