WeBuyCars as a Sourcing Platform

WeBuyCars is a vehicle buying and selling company. They are the automotive equivalent of Cash Convertors. They buy vehicles from people who want instant money (at a discount – sometimes a large one – to what they would have gotten on the open market) and resell it. Like Cash Convertors and Cash Crusaders there is an opportunity to buy at WeBuyCars and resell somewhere else. There is also an opportunity to buy vehicles there to start a business with which we will also look at. That is part of what to me is the best opportunity that WeBuyCars presents, which is not the buying and selling of “cheapies” – which can be a lot of drama – but rather the more unique vehicles that end up on their floor: unique business vehicles and trailers, motorhomes, limos, buses and some very interesting conversions.

But caveat emptor (buyer beware) – WeBuyCars has a very poor reputation, I reputation I spoke of back in 2021:

• This business model like the Cash Convertors guys attract people who want to sell their vehicles fast so they often get less, but on the flip side, a lot of cars that end up here are f-u-c-k-e-d.
• Most of the bargains at BuySellCars have Dekra reports with issues as long as one’s arm.
• The owner has likely cut their losses and just sold it to make it someone else problem.

The biggest Takeaway:

But I also spoke of the opportunity nonetheless:

One could also argue that WeBuyCars has such a poor reputation that one could buy a car from WeBuyCars park it across the road with a “For Sale” sign on and people would rather buy that car from you than buy from WeBuyCars. Which is a business opportunity in itself.

Rationale for WeBuyCars as a sourcing platform

How can you make money off buying and selling cars from a website that – unlike dealer-only trade-in auctions – is heavily advertised and available to anyone? One of Angie Motshekga’s students might ask.

If you don’t understand trading, supply and demand or connecting buyers and sellers then it might be a valid question. We can proffer various reasons such as people not knowing of, thinking of or not checking WeBuyCars but most importantly as there are only one of a kind deals on the platform and if you can snap it up you can easily flip it again. In simple speak it is a centralised place with a lot of cars, can you buy a car there and sell it somewhere else for more money?

If you are a trader monitoring WeBuyCars every day, you will be able to snap up vehicles if you see it’s a good deal. Now you are not necessarily going to sell that car immediately but you will hold it till the right buyer comes along. Remember what we learnt from trading commodities: commodity supply and demand are not always in sync, that is why we have a concept in commodity trading called “transformation in time” and we have warehouses to store until the time is right. Sometimes there are good deals at WeBuyCars that have been reduced and auction clearance multiple times but still no takers. The demand just wasn’t there at that time (and location); most certainly if you had to buy and hold it will sell.

WeBuyCars on the other hand don’t care about those things because those things cost them money: then have 1. Deployed capital to buy the cars 2. The car is taking up floor space and it needs to be sold soon. Every day that that car is standing that capital is tied up, that floor space is taken they need to pay rent, salaries and other operating expenses.

For example I was watching a Clio Sport with sunroof. Didn’t sell in the Cape reduced, reduced, reduced. Eventually I saw it on auction at another branch in a different province where it sold. I’ve seen Mini Cooper’s with acceptable issues be reduced to R25k and still not sell one week. The next week there are Mini’s in worse condition sell for more than double. If you can buy cars early in the month and keep it till later then it may sell when people have money or if you can take a car from one place where it is not popular and take it to a place where it is you can make money.

That being said, WeBuyCars like Cash Crusaers and Cash Convertors can hardly be descrbed as cheap but there are ways to make a profit if you know what you looking for and what its worth – or if you have buyers for that type of car.

Getting Started

Before you start trading anything you need to know the market, it’s not like you dealing in surplus and salvage food where you can say “economy fucked, unemployment #1 in world, 1/2 of country on SASSA, most unequal in world and thus people poor and hungry and there is a need for cheap food”. You need to research and immerse yourself. You need to know something about cars and you need to know something about the market for cars. It is not about what you like its about what the market wants. Part of success in any business

Understand the market
In the secondhand trade in general there is a sweet spot where a few different “forces” converge and that is know where what will sell. No person out there can search the entire market.

Understanding the cars

When I am researching and immersing in a business I am interesting in I like to look at the entire supply chain including the supplier of a supplier. As part of my research and immerse phase i like to look at all angles including the supply, no different from a buy shop.

Where do the cars come from

• Poor people desperate for money
• People with assets desperate for money to “plug holes”
• People selling excess vehicles without drama
• Asset disposal
• Deceased estates

Without the long winded auction process that guarantees neither a sale nor getting the price you require (and include auctioneer fees).

That being said, WeBuyCars do pay significantly less than what you will get selling privately providing you have the patience. For example when one of my neighbours passed away the landlord was tasked with selling the vehicle (he’s family was from another province). WeBuyCars came out with their tablets and made an assessment and offer but it was sold privately as I assume their offer was too low as the vehicle was sold to other people.

Just like with the buy shops we need to understand the thought process of how some of the cars ended up there and ended up for that price. When I look at these companies I always wonder if they are using “big data” or machine learning algorithms to guide them instead of a simple formula discussed below because sometimes I cannot make sense of the pricing. Like the guys at the buying counter of Cash Convertors they don’t know all angles of the market they think they know, maybe they have buying data, book value data, resell value data all that means little in the real world.

What source are WeBuyCars buyers using to price the cars. These “buyers” are not geniuses like the buy shops its mainly mediocre people who’s main advantage is that they are standing in front of desperate people that they can lowball. Sure they can use a formula like (book value – 50%) based on certain parameters they can change the percentage if its fantastic maybe its book value – 40% if its a big rough then book value – 60%. I say this because because usually as a trader WeBuyCars needs around three markdowns for it to be a good deal for me to be able to sell for a profit. I have also seen Nonsensical buying in policies like a Honda del Sol for R100k, Golf VR6 and Toyota Cressida for crazy money. So clearly they not using Kelley Blue Book because who would pay crazy money for those cars outside of the Cape Flats or Durban’s ghettos? Same for the Toyota Venture and Stallion – cars that are virtually extinct outside of the Transkei. WeBuyCars sell these vehicles at the same pricepoint as modern vehicles with lots of bells and whistles or at the very least a much more comfortable drive. Who is paying these crazy money for these cars and where is WeBuyCars getting the data from? They must have really fine-grained data to be able to say mandrax selling gangsters in Mitchells Plain will buy this VR6 for crazy money or people in the Eastern Cape use the Toyota Venture to transport dagga from Ingonyama Trust land in KZN to Mthatha for further processing. Because I can’t understand who is paying crazy money for those vehicles.

The Honda del Sol looks like a Lesotho car that foreigners use to deliver Takealot parcels. I knew it won’t sell at that price.

WeBuyCars believed that the CR-X del Sol is worth R100 000 but the market disagreed.