Carsales.com stands down staff as transactions dip
23 April 2020, Written by Business News Australia
Carsales.com (ASX: CAR) has temporarily stood down around 250 employees in Australia as social distancing measures take their toll on sales volumes across the country.
Most of these stand downs have been on a partial basis for external customer-facing roles where activity has been impacted due to coronavirus-related restrictions from the government.
Private seller and dealer used car lead volumes were "growing solidly" in the lead-up to 10 March, but from that date until 21 April lead volumes were down 25 per cent on average.
The sales trajectory has improved since the Easter weekend, but the previous drop-off has led to a 9.5 per cent increase in inventory on carsales.com.au to 230,000.
The rise in inventory is also due to the company waiving its fixed and variable advertising charges for dealers in April, along with offering a 50 per cent discount for May.
"This support package will contribute significantly to reducing dealers' short term operating costs and demonstrates carsales' strong commitment to supporting the Australian industry it serves through these difficult times," the company said.
"Traffic on carsales.com.au has remained resilient over the past month, which is a reflection of the underlying demand that exists for buying, selling and researching cars even in this challenging environment."
The total amount of stock has also been lifted by some car manufacturers opting to relax third-party advertising restrictions for new cars.
In a bid to reduce costs further, board and executive remuneration has also been cut by 20 per cent from 1 April to 30 June, while the amount of outdoor brand marketing has also been reduced.
Management believes the company is well placed in the current operating environment, with a net debt position of $355 million and a strong liquidity position of $190 million in available cash.
"Our overriding priority continues to be the safety and wellbeing of our employees and customers around the world in these challenging times," says CEO Cameron McIntyre.
"We remain focused on managing short term performance while positioning the business to come out of the current environment in good shape.
"Our market leading position, strong customer proposition and diversification across geography and product supports our resilience and positions carsales well into the future."
Overseas, Carsales.com's Korean business is tracking well with economic activity "significantly less impacted than many other first world countries".
In Brazil, where the country's president Jair Bolsonaro continues to downplay the virus while at loggerheads with state governors over their social distancing measures, Carsales.com's Webmotors has seen its lead volumes fall by 30 per cent.
Updated at 11:04am AEST on 23 April 2020.
Author: Business News Australia