Merger: Cox Automotive will merge with Australian automotive classified website CarsGuide.

COX Automotive, the world’s biggest automotive services company and operator of autotrader.com, the market-leading auto classified website in America, has signed a series of merger agreements that will see it take control of CarsGuide in partnership with many Australian car dealers.

CarsGuide, launched in 2011, was a joint-venture between News Corp Australia and 38 of the country’s top car dealer groups formed to provide increasing competition against Carsales which had come to dominate the online classifieds business of car retailers.

Roughly 70 per cent of the used-car leads to Australian car dealers come from Carsales,which dealers say gives the company excessive market power over them. More recently dealers have been complaining that Carsales, which began two decades ago with many dealer shareholders, has started competing with them – especially in the area of car finance.

Greg Duncan

GoAuto understands that, under a number of agreements announced this week, News Corp Australia’s share of CarsGuide, which was originally 50 per cent but is now 55 per cent, will be bought out by CarsGuide’s dealer shareholders.

News Corp Australia will then exit the auto classified company. A newly-formed company, Cox Automotive Australia, will then merge with CarsGuide.

Under the merger terms, the dealers who own shares in CarsGuide will become shareholders in Cox Automotive Australia.

CarsGuide will become a division of Cox Automotive Australia. The arrangement, which is subject to approval of regulators, is expected to be finalised by the end of this year.

The move means that CarsGuide, plus the recently-acquired dealer web services company Dealer Solutions and the Manheim auto auctions business will all operate under Cox Automotive Australia but will retain their own identities and focus in the market.

The move provides the very substantial dealer group shareholders a financial stake in support services ranging from online classifieds, web design and web management, online leads integration and management as well as classified advertising photography.

Through the Manheim auction network, dealers will become part owners of public, car company and fleet-leasing vehicle disposal, vehicle logistics operations and even an online vehicle purchasing system for private sellers through sellmycar.com.au.

CarsGuide chief executive Lauren Williams said the deal would allow CarsGuide to deliver a “much needed alternative” in the online auto classified advertising space.

Lauren Williams

CarsGuide chairman and a director of AHG, Greg Duncan, who is a former owner of the Trivett luxury car group, said:

“Cox has the scale and breadth to be a game-changer, not only for CarsGuide but for the Australian automotive industry as a whole,” he said.

“Cox’s business is all about supporting and partnering with dealers, not competing with them.”

Cox’s Autotrader/Kelley Blue Book websites in the US attracts more than 30 million unique visitors a month and as such attracts more traffic than any other auto classifieds site in the world.

In addition to Autotrader and Manheim, Cox Automotive in the US owns the Kelley Blue Book pricing service and last year purchased Dealertrack, for about $5 billion ($A6.5b) in cash.

With more than 24,000 dealers and more than 90 financing sources currently connected, DealerTrack is North America’s premier independent web-based platform that automates and accelerates the entire automotive financing process.

Cox Automotive has 40,000 dealer clients worldwide and employs 30,000 people from 200 locations.

The parent of Cox Automotive is Cox Enterprises which also owns a major US communications company as well as Cox Media Group which owns newspapers, radio and TV stations. Cox Enterprises has a turnover of about $24 billion.

Footnote: In early 2015, Cox Automotive acquired an interest in John Mellor’s GoAutoMedia.

By John Mellor