Is WeBuyCars the next Discovery?

When the founders of WeBuyCars recently sold a sizeable block of shares, speculation quickly followed. Had they lost confidence in the company? Were they exiting the business?

WeBuyCars listed on the JSE in April 2024 at just under R20 a share; since then, the share price has roughly doubled to about R42, at one point coming close to tripling in value.

That performance created an opportunity for founding brothers Faan and Dirk van der Walt to realise a portion of their holdings.

This month, they sold 18.7-million shares for R866m. “It is a big quantum, but it is the smallest percentage that I’ve ever disposed of in WeBuyCars,” says CEO Faan van der Walt.

The brothers’ shareholding has been diluted in stages. Private equity investors initially acquired 25%, followed by a further 15%. Another 15% went to Transaction Capital, which eventually held close to 75% before unbundling and separately listing WeBuyCars.

The brothers founded WeBuyCars in 2001 with an idea that was strikingly simple at the time: create a fast, hassle-free way for people to sell their cars for cash, avoiding classifieds, private buyers and dealership trade-ins. It began as a small, hands-on operation where the brothers personally inspected cars and bought vehicles directly from sellers. Stock was parked wherever space was available, initially at offices and borrowed lots. Cars were then resold through auctions and dealer networks.

Today the group has 20 vehicle “supermarkets”, including The Dome in Joburg. Built as an events space, this is now the largest used vehicle showroom in Africa, capable of holding 2,200 cars at a time.

It’s a R25bn-R30bn revenue business, generating just under R1bn in annual earnings. Last year, the group bought 180,576 vehicles and sold 179,006, reflecting its high-throughput, inventory-turn model. In South Africa about 150,000 used vehicles change ownership each month, and WeBuyCars accounts for 15,000-17,000 of them.

Faan, the younger brother, trained and worked as a teacher and Dirk studied marketing. Both spent years fixing vehicles on the side. At one point, Faan and his wife went to the UK to work. They lived off one salary, saving the rest to buy a house and a car, then put aside capital for the newly formed business.

Despite the recent disposal, the founders remain deeply invested and retain close to 6% of the company, a stake worth nearly R1bn. Since the listing, Faan has established a family office to manage investments outside the automotive business, spreading risk across geographies and sectors. “It’s a balancing act of investments. If the share price hadn’t performed as well as it did, we wouldn’t have been selling,” he says.

This diversification increasingly intersects with property, particularly through long-standing relationships with the Atterbury Group. The developer has delivered several purpose-built vehicle supermarkets for WeBuyCars, including a Cape Town showroom costing about R150m.

That relationship deepened this month when AttBid — an investment vehicle majority-owned by the brothers — moved to acquire stakes linked to RMH Property, which holds interests including Atterbury. Once finalised, the transaction will give them an indirect holding of 36.5% in RMH.

Though news of the RMH transaction and the brothers’ WeBuyCars share sale surfaced simultaneously, Faan stresses the two were unrelated. Funding for the property deal had been committed months earlier. “It’s a coincidence, this timing,” he says.

We used to tell people it’s not our cup of tea, and it was a lost opportunity

—  Faan van der Walt

While their personal portfolios are broadening, operational focus remains firmly on expanding WeBuyCars’ domestic footprint. Faan is cautious about international expansion. “It would probably distract us and make us lose focus — and we don’t want that.”

The company now commands 10%-12% of the used vehicle market, up from 3.8% in 2017, and aims to reach monthly sales of 23,000 units by 2028, with an expected market share of 15%-18%. A decade ago, the business sold 3,500 vehicles in an entire year — it now does that in about eight days.

The market is fragmented with no single dominant rival. Major competitors include traditional dealers, private sellers and other buying services such as Weelee and Cubbi, auction houses and other used car aggregators.

In a recent infrastructure investment, the group added 3,000 bays nationally, including 1,200 at its new Montana facility in Tshwane, where more than 1,000 cars were sold in January, only its second full month of trading. Another large supermarket opened in Lansdowne in Cape Town in January.

WeBuyCars’ national footprint would be difficult to replicate, because the business model requires large, strategically located and cost-efficient retail and logistics spaces.

Unlike sales of new vehicles, which fluctuate sharply with economic cycles, the used car market tends to be more stable.

“I do think new vehicle sales are slightly inflated. The quantum is probably difficult to estimate, but there is probably some overreporting happening there,” says Faan. It is believed that some manufacturers and dealerships, under pressure to meet targets, sometimes register vehicles in their own names, classifying them as sales before later selling them as demo models. “It counts as a new vehicle sale, but it hasn’t reached a consumer,” he says.

It’s not an easy time for the motor industry, especially with no recent cuts in interest rates.

Lower-priced vehicles typically move fastest. Repeat customers are a meaningful contributor to volumes: about 12% of purchases by WeBuyCars are vehicles it has previously sold. Dealer relationships are also significant, with more than 400 buying stock each month, accounting for nearly a quarter of sales.

Technology has become a key differentiator. Several years ago, WeBuyCars considered acquiring vehicle inspection firm Dekra but opted to build its own system after internal developers concluded they could deliver better solutions more cost-effectively.

This led to the creation of Inspectify, the company’s proprietary inspection and reporting platform. The system focuses on translating technical assessments into plain language, particularly for first-time buyers transitioning from public transport to car ownership.

As to whether there could be a conflict of interest in having those who inspect cars also make offers for them, the view from WeBuyCars is that accuracy is paramount, more important than independence. “Even if our biggest competitor prepared the report and it is accurate, we would be satisfied, as it serves the customers’ interests.”

WeBuyCars’ proprietary technology enables the group to assess vehicles quickly, and once an offer is accepted, proof of payment is said to typically reflect within seconds. Paperwork has been digitised. For the financing journey, WeBuyCars aims to make the application process fast, convenient and straightforward by automating many of the steps.

The company is also extending its reach into related segments. It recently bought a 49% stake in GoBid, which handles “end-of-life” vehicles — cars that are damaged, mechanically compromised or destined for salvage. Previously, WeBuyCars turned such vehicles away. “We used to tell people it’s not our cup of tea, and it was a lost opportunity,” he says.

While the broader market has remained largely flat, WeBuyCars expects to continue to expand strongly. “There are more vehicles coming into the system, including Chinese brands that will eventually feed into the used market,” Faan notes. “We keep a close eye on that.” He believes WeBuyCars, with its scale, data capability and logistics network, will have a competitive edge in this environment.

The founders’ recent share sale is not a signal of retreat but a reflection of how far the business has evolved. It underscores the strength of the platform the Van der Walts have built — and why market chatter increasingly positions WeBuyCars as a potential “next Discovery”.