Carsales.com has built its success upon being a disruptor in the vehicle classifieds industry, but now as the market leader it must find ways to fend off those looking to take what it has taken from others.
Last week, the auto sales website had a big win against one of its smaller, and quite aggressive, rivals Carsguide. Carsales won, in Melbourne's Supreme Court, a claim of misleading and deceptive conduct over a series of advertisements by Carsguide, a News Corp joint venture. It was the first time Carsales had taken anyone to court.
"It's not our preference to have to talk things out in court but they didn't want to be reasonable. I think they'll regret that ... now having misleading and deceptive conduct on their record," Carsales chief executive Greg Roebuck told Fairfax Media, which competes with News Corp.
The ruling came during Carsales' annual "hackathon" where many of its employees join together to brainstorm ideas on how they would beat the business if they were a competitor.
The purpose? Disrupt yourself before anyone else can.
"In the competitive landscape, we're now the hunted rather than the hunter. Being a little bit paranoid is part of a start-up mentality, I still think that's alive and well in this business and it needs to be," Mr Roebuck said.
Carsales have brought several of its hackathon projects to life over the years, including live insurance quotes on private listings, live connections between buyers and sellers with no call costs and notifications for registration and insurance expiry for members.
"Our disruption could come in all sorts of ways – Google, Amazon, eBay, Facebook, Twitter, will all at some point provide abilities for people to sell things including cars," Mr Roebuck said.
Since listing in 2009, Carsales shares have jumped more than 200 per cent. While growth in the share price has moderated a bit, it is still up 4.1 per cent at $10.85 for 2015.
Citi forecasts Carsales will report net profits up 12 per cent to $106 million on sales, up a third to $314 million when it unveils its full-year results on Wednesday August 12.
The broker told clients in a note last week that a rebound in listings for Carsales "arguably refutes suggestions of competitive threats impacting the platform" but it also noted that "Gumtree appears to be gaining momentum, in both online engagement and listings".
To keep growth ticking over, Carsales has taken stakes in businesses in Brazil, South Korea and other parts of south-east Asia. It has also added bolt-on businesses such as a stake in Stratton Finance and RateSetter, as well as starting Tyresales.com.
Mr Roebuck said each partner was chosen in areas and businesses where Carsales could add value.
"We like markets with scale but we don't want to be in a market where we don't add a lot of value. Markets like the US and UK, they've got some good players there, there's no point being an interesting No. 2, you need to be a compelling No. 1," he said.
However, it's not always as simple as taking Carsales into a new market and just expanding.
"In many of the emerging markets people have never owned a car before. Buying a car second hand, people may think 'why would I buy a car from someone I don't even know'?," Mr Roebuck said.
"In Brazil, the issues around security are so much greater that you probably want a safe meeting place, rather than having a stranger turn up to your door. Facilitating a safe meeting place for private sellers is a far higher priority for us in a market like Brazil than it would be in a market like Korea."
There is a chance that in a country like Brazil, where the industry is still in its infancy, Carsales could be displaced but Hyperion Asset Management portfolio manager Joey Gray, who holds 9 per cent of the company, reckons the risk-return proposition looks pretty good.
"Carsales is a higher return on capital business model with strong first-mover advantages in the markets in which they compete," Mr Gray said.
"They've probably got some maturing businesses in their used-car classifieds – the growth there is slowing but they've identified that and they've been investing for a number of years in alternative growth options, again within their circle of competence."
