The online retailer sold more than half a million cars in 2021.
(Photo: Reuters)
Frankfurt The online used car dealer Auto1 cannot keep up the rapid growth rate in the current year. The Berlin-based company announced on Wednesday that an increase in sales of at least 19 percent and a maximum of 42 percent is expected for 2022.
“We are confronted with sharply rising used car prices, and the war in Ukraine is causing people to worry more, which is also having an impact on demand, at least in Eastern Europe,” said company boss Christian Bertermann of the Reuters news agency.
In the past year, revenues had climbed by 69 percent to 4.8 billion euros and were thus above the forecast raised in November. In the fourth quarter it was even enough for a plus of 99 percent.
The outlook was not well received on the stock market. After initial gains, the paper turned negative and lost almost 16 percent by the afternoon. “The decline in our share price does not reflect the development of the company,” said Bertermann, whose company was only recently relegated to the small-cap index SDax. The company – known in Germany for the platform “wirkaufendeinauto.de” – has only been on the stock exchange since February 2021, the issue price was 38 euros.
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A dealer said in view of the high fuel prices: “The overall situation is also shaking the business model a bit.”
Transition to electric mobility is a challenge
Auto1 struggles with two developments. For one thing, the current geopolitical crisis is driving inflation higher. This is shrinking the budgets of private households, which will probably be more reluctant to make large purchases in the coming months. The fact that the prices for used cars have risen sharply should also slow down demand.
Added to this is the trend towards electromobility. Fuel prices are higher than ever before and will probably not drop significantly again anytime soon. “With the increase in gasoline prices, the search for electric cars has skyrocketed,” said the Auto1 boss. “But the e-car segment has been growing very strongly for some time.” In other words: the range of used vehicles here is manageable.
In principle, the Auto1 management assumes that it will be able to benefit from electromobility. The company takes over the used ones and checks them before reselling them. This effort is reduced with the electric car. “A battery and an electric motor are much easier to test than a combustion engine,” Bertermann told the Handelsblatt when it went public at the beginning of last year.
However, the transition between the two worlds is problematic. Auto1 initially takes the car on its own balance sheet. If a vehicle does not find a buyer for a longer period of time, there is a risk of loss of value and depreciation. This is exactly what can happen with combustion engines.
In addition, investors are currently avoiding companies that are making losses. This can be seen with Delivery Hero, for example. The Dax value has lost around 70 percent since the end of last year.
Sales to private customers increase significantly
Auto1 even increased its adjusted operating loss (Ebitda) last year to 107.1 million euros. In 2020 the minus was still 15.2 million. This is mainly due to the investments in the still very young business with end customers. It is intended to supplement the previous core business with dealers. The new division, which runs under the Autohero brand, grew strongly last year. “The majority of customers who bought a car online also want to buy their next car online again. The future in our market is online business,” said Bertermann.
In total, the company wants to sell between 650,000 and 770,000 vehicles this year. Last year there were 596,731 cars, 31 percent more than in the previous year. Gross profit increased by 51 percent to 431 million euros in 2021 and is expected to reach 470 to 580 million euros this year.
The bottom line is that the company will continue to make losses due to high investments, including in glass delivery trucks, staff and marketing expenses. The adjusted Ebitda margin is expected to be between minus 2.0 and minus 3.0 percent in 2022. How low the margin was in 2021 should only become clear when the annual report is published on April 8th.
With agency material
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