The online project, in which dealers invested with the prime motive of bringing competition to the then totally-dominant online classified player, Carsales, first wound up in bed with News Corp when a large number of dealers and dealer groups operating under the business name of OneWayTraffic paid $15 million to acquire a half share of what was then News Corp’s online motoring site.

News Corp tipped in $15 million in advertising and promotional exposure for the CarsGuide website.

But it was not a happy marriage with News thinking the dealers should have advertised exclusively with CarsGuide and the dealers not sure that the contra advertising was doing the trick on driving traffic.

By 2016, News had lost its enthusiasm for online cars and the dealers were casting around for a new partner which turned out to be Cox Automotive.

News and OneWayTraffic agreed to go their own way and the dealers stumped up another $20 million to buy out News Corp’s share of CarsGuide.

By then the dealers, in their pursuit of applying the blowtorch of competition to Carsales, had spent, allowing for a few calls along the way, around $39 million. 

The dealers rolled their interests over into a new entity, DealerMotive, which was a consortium of 60 dealer groups representing around 600 dealerships selling across every new car brand in the country.

DealerMotive rolled CarsGuide into the newly-formed Cox Automotive Australia with the dealers holding 30 per cent of the new company (valuing the entire business at around $133 million).

Meanwhile, the sale to eBay raises the issue of what happens to the dealer shareholders in Cox Automotive Australia?

Once the ACCC process is complete and assuming it gets approved then that will be the time for the shareholder to decide what to do with the eBay cash sitting within Cox of which the dealers own 30 per cent.

That could follow a discussion as to whether the 30 per cent dealer holding in CAA is the right structure now that the reason the dealers were in the company in the first place has now been sold off.

Insiders are saying that there are three options available or a combination of the three:

• Retain the cash within CAA and use the funds to build CAA’s remaining businesses or make further acquisitions in the wholesale and dealers services space 
• Pay a one-off special dividend to all shareholders of which the DealerMotive dealers would receive 30 per cent
• Give shareholders (dealers) the opportunity to sell their shares in CAA with the valuation reflecting the added value created within the company by the websites brought to Cox by the dealers.  

The dealers, through their 30 per cent DealerMotive shareholding, will have a say in any one of the options.

One insider told GoAutoNews Premium that dealers who invested in the merger into Cox should be happy that the asset in which they originally invested is worth more than when they started.

The asset is clearly more valuable assuming the price paid reflected the growth and value added over the past few years within Cox.

He added that dealers who are shareholders have not only increased the value of their investment they have also achieved their stated aims of bringing the fight to Carsales to ensure fair play in the online classified market.

Meanwhile, insiders are saying that CarsGuide (and Autotrader which was launched in 2018) now seem to have found a natural owner in EBay.  

Insiders are saying that eBay is the right purchaser of the Cox websites as the combined sites have the best potential to add value to the online classified offerings available to car dealers and, in concert, are the most likely to increase the competitive pressure on Carsales in terms of advertising costs and operational rules.

By John Mellor