Based on an interview with Paul Barlow, Managing Director International

Carsales’ unique lead generation-based business model has enabled its leadership of online vehicle sales since its establishment in 1997. A sharply honed understanding of its global competitive advantage has driven its international expansion into four Latin American markets and South Korea over the past decade.


Paul Barlow, Carsales Managing Director International, explains that Carsales positions itself as experts in online sales rather than as advertisers. “If you look around the world at all of our peers, the most common business model is a subscription-based model, where car dealers are the number one clients of online automotive verticals and they usually pay a monthly fee to advertise. Carsales differs from that. We have a pay per lead model.” The more leads Carsales provides, the more it helps dealers sell cars. Barlow adds: “We are very aligned with educating dealers on the best way to handle these leads. We help them convert from a lead to a sale.”

In internationalising its business, Carsales has sought to acquire leading online car sales businesses that can benefit from its expertise. Barlow explains that in new markets they “look for a business that is a number one or a number two that can challenge to be number one.

We find a business where our technology or our IP can accelerate the growth of that business. And then we look at whether we work with a partner.”

In its Mexico, Argentina and Chile acquisitions, Carsales took controlling stakes. But in its first deal with Webmotors in Brazil and its most recent and largest deal with SK Encar in South Korea, it began with establishing strategic partnerships by purchasing minority stakes. Both deals involved long negotiations.

Carsales emerged from four years of negotiations with Webmotors’ owners Banco Santander as more than just a strategic partner in Brazil’s largest online vehicle sales business. It had also gained a sharply defined understanding of its global competitive advantage. Carsales took this experience into its largest deal yet. The purchase of a minority stake in Encar, South Korea’s largest online used car sales platform, from SK Group, one of South Korea’s giant ‘chaebol’ conglomerates, also took four years. In 2018 Carsales took its stake to 100 per cent.

Barlow explains: “In South Korea what we brought to Encar was a different way of thinking. We come from a dealer servicing background. Most of our peers from around the world come from advertising or in the SK Group example, big conglomerates, one of the chaebols. Encar was an offline and an online business.

They saw that we are online specialists.”

Barlow goes on to explain the particular value its back-end expertise offered to Encar. “In the back end we’re integrating the dealer into all different systems, whether it’s inventory management, pricing, or CRM etc. Then it’s about partnering with the dealers and monetising from there.”


For global businesses seeking to expand into South Korea, the chaebols’ dominance of the economy can make it difficult to read opportunities. This is particularly the case in online sales, as South Korea is one of a handful of countries where local search engines are much more popular than Google. Through its acquisition of Encar, Carsales now dominates online used car sales in South Korea, a market segment that used to be the domain of one of the largest chaebols. Carsales understood that while the South Korean government supports the dominance of chaebols in the economy, it will occasionally intervene in the interests of consumer protection. When legislation obliged SK Group to divest from Encar, Carsales’ understanding of the market and its unique offering positioned it to make a decisive offer.