South African investors were left rattled this week as shares of WeBuyCars Holdings Ltd tumbled nearly 14% on the Johannesburg Stock Exchange (JSE) following a weaker-than-expected trading update for the financial year ended 30 September 2025.
The decline wiped millions off the company’s market value, raising questions about consumer sentiment, credit access, and the overall health of South Africa’s used car market.
Profit Growth Slows Amid Softer Second Half
In its latest update, WeBuyCars forecasted core headline earnings growth of 12%–17%, translating to between R917 million and R958 million for the year.
On the surface, that appears positive—but investors were quick to notice warning signs beneath the headline numbers.
Core headline earnings per share (HEPS) are only expected to rise by 0.8%–6%, reaching 219.2 to 230.1 cents, largely due to share dilution from over 83 million shares issued earlier in the year.
The result: while profits grew, returns per share lagged far behind market expectations.
The company also acknowledged that its second-half performance weakened, even as the first half of the year delivered solid results.
This softening momentum fueled investor concerns that the post-COVID boom in used vehicle sales may be tapering off.
Consumer Credit Pressure and Slowing Approvals
WeBuyCars pointed to a significant decline in vehicle finance approval rates—dropping to around 40% in recent months—as tighter lending criteria and higher interest rates took a toll on consumer affordability.
The used car segment, which often relies on financing to complete purchases, is particularly sensitive to such changes.
Fewer approved loans translate directly to fewer completed sales, placing pressure on both margins and turnover.
According to industry analysts, this trend reflects broader economic headwinds: rising living costs, weak wage growth, and declining consumer confidence have squeezed disposable income and credit availability across South Africa.
Competition and Market Shifts Intensify
The used car market is also facing new competition from affordable new vehicle brands—particularly Chinese automakers—that are aggressively pricing entry-level models.
For consumers, the choice between a slightly used car and a competitively priced new model is becoming less clear-cut.
This “substitution effect” is beginning to reshape the used vehicle landscape, with dealers like WeBuyCars having to adjust pricing, inventory, and marketing strategies to remain competitive.
Valuation Concerns Amplify the Sell-Off
Even before this week’s plunge, analysts warned that WeBuyCars’ valuation had outpaced its earnings growth trajectory, leaving little room for disappointment.
When the trading update hinted at slowing momentum, the market reacted swiftly.
The stock’s sharp correction reflects both an expectation reset and a flight to safety among investors wary of South Africa’s fragile economic conditions.
Industry-Wide Implications
WeBuyCars is widely viewed as a bellwether for South Africa’s used car market. Its recent update signals that the broader automotive retail ecosystem may be entering a phase of consolidation after several years of rapid post-pandemic expansion.
If credit conditions remain tight, smaller dealers could face cash flow challenges, while larger players may respond through cost-cutting or expansion into adjacent services such as trade-in financing and digital retail.
Looking Ahead
WeBuyCars is set to release its full annual results on 17 November 2025, which investors and analysts will scrutinize for more detail on margin trends, inventory levels, and strategic responses to softer demand.
Key areas to watch include:
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The impact of credit tightening on volumes sold.
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Whether management can sustain earnings growth despite lower margins.
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Progress on digital and auction platform innovations.
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Strategic positioning against emerging new-car competitors.
Bottom Line
The 14% share slump may be a short-term overreaction, but it underscores growing caution in South Africa’s automotive sector.
For now, WeBuyCars faces a delicate balancing act—maintaining growth while navigating consumer strain, tighter credit, and rising competition.
As one analyst told CCE News, “WeBuyCars remains a strong operator, but the easy growth phase in the used car market may be behind us.”
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