Karooooo, the owner vehicle-tracking platform founded by multi-millionaire entrepreneur Zak Calisto, said yesterday that it will no longer purchase second-hand vehicles. This decision comes despite Carzuka’s growth in South Africa. Carzuka, an online platform linking buyers to sellers, faced concerns from dealerships that viewed its business as competition.
In its Q2 and first half 2024 results, Karooooo noted the decision followed significant discussions with South African motor dealerships over the past several months. Some dealers began to see Carzuka’s operations as conflicting with their own.
“We maintain that the Carzuka business model is robust, but we do not want to risk the long-standing strategic relationships that Cartrack has forged with motor dealerships across South Africa,” Calisto said in a press statement.
Karooooo plans to sell Carzuka and integrate most of Carzuka’s staff into Cartrack. “There are many components within the Carzuka’s platform that have been built and developed and will continue to provide substantial value to the existing Cartrack fleet platform. In a seamless transition, we intend to integrate the majority of Carzuka’s dedicated staff into Cartrack,” the group said.
Carzuka, an online used-car seller, saw a 29% increase in its interim revenue, reaching R85 million ($4.5 million). However, its operating loss grew to R13 million ($680,000) in Q2 2024, up from R6 million ($320,000) in Q2 2022, largely due to investments in infrastructure and branding.
In Q2 2024, Karooooo reported a 21-percent increase in total revenue, reaching R1 billion ($52.6 million), up from R859 million ($45.2 million) in the same period in 2023. Earnings per share rose 14 percent to R5.61 ($0.30).
Subscription revenue climbed 17 percent to R860m ($45.2 million).
Calisto, Karooooo’s CEO and founder, remarked, “Our solid business model, combined with a strong balance sheet and cash position, positions us well for growth. Our investment in marketing and sales, along with economies of scale, should continue to yield strong results.”
Calisto expressed confidence in the company’s consistent success, emphasizing its capacity to maintain healthy cash flows.
In the first half of 2024, Cartrack’s subscriber count grew 15 percent to 1.83 million, a 56-percent increase in net subscriber additions, totaling 115,631.
For the year, the company’s forecast for Cartrack remains between 1.9 million and 2.1 million subscribers, anticipating R3.4 billion ($178.8 million) to R3.6 billion ($189.4 million) in subscription revenue.
