A business can be distilled to three parts: source, add value, sell. The “add value” can be as simple as getting a product in front of the right customer or a customer that is looking for that particular product at that particular time. This opens the door to marketplace arbitrage, where you can buy at one place and sell on the other. In some instances the arbitrage will be based on what we call in trading “transformations in space” transporting it to a local or regional place where the supply and demand is more favourable. In some businesses the sourcing place can become a competitive advantage which many hold close to their chest.

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:

People complaining about cars breaking down after driving home from WEBUYCARS do you think that: A company that buys a car after it has been assessed for a few minutes, made a low-ball offer that was accepted, is it rational to think that you are going to get high-quality cheap cars from such an institution? No, everybody is ripping off everybody, WEBUYCARS walk away thinking they got a good deal, the seller of the car with a myriad of issues are relieved to be rid of it and happy someone actually paid them for it. And here comes the consumer thinking because WEBUYCARS have nice branding and clean building and presentable salespeople they getting good quality cars. It is just not possible, a single car has about 30 000 parts, yes, much less critical parts, but it’s not like you buying and selling a commodity. This business wasn’t meant for scale and certainly not in a country like SA.

But I also spoke of the opportunity nonetheless:

Now even though this streamlined efficient model doesn’t scale well with regards to the condition of cars. This model works because we have a lot of stupid people that want to own a certain car no matter what it will cost them down the line and this is why we often see people selling cars still in the name of the previous owner, they never had enough money to even get the car to roadworthy standard the entire time they owned it.

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.

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


You will get all types of cars beautifully looked after high mileage cars with full service history and you will get rough late model cars with low mileage and not full service history – despite some still within motorplan range and full of little knocks and dings clearly of someone that wasn’t looking proper after the car.

I have already said how a lot of crap cars get to WeBuyCars but there are also very nice cars there. And I don’t know if they are maybe buying from dealers as well or selling consignment on behalf of dealers are there are some very new cars there. But there are also very nice cars from people who have fallen on hard times and needed quick money. For example I know of a guy who sold his nice car there as he needed money urgently, he was in a despute with the City of Cape Town over contracts and he was not making any money. So he disposed of his expensive car at a massive loss in order to keep the wolves from the door. The problem is that dealers don’t want to buy expensive cars outright as it ties up a lot of money, they want the cars on consignment so if you need quick cash WeBuyCars – part of Transaction Capital has the resources to do so at a large discount of course.

Business Model

There are three main business models that you can use from vehicles bought on WeBuyCars. Buy and sell (usually cars), buy and rent out (usually in the recreation category e.g. caravans) and the hyper-niche buy and start a business with.

In practice we will look at:

  • Buying and selling of “cheapies”
  • Buying and renting out motorbikes, caravans and trailers
  • Buying vehicles to start a business with

Sourcing

Using the platform

Go to webuycars.co.za/buy-a-car, there are a few sorting and filtering options. The most important to me, starting on the left of my computer monitor is filter by province, where I see the Western Cape currently has 2068 vehicles. The next option is branches which in the Western Cape is Brackenfell, Epping, George, Richmond. I live in Cape Town’s northern suburbs so the Brackenfell branch is 14.5km away, the Epping branch is 12km away, Richmond branch is 8km away and George branch is 421km away . Now I only buy cars that I can see, I’m not working between provinces now. Nor am I driving over 400km to George but I keep that in my search just to see what is happening in the Garden Route.

Then at the top you have All, Auctions, Special Offers (read: markdowns standing too long on the floor) and Stock Alerts, that I usually leave on all. Why? because after location the main thing is price. Onto the right on a computer screen you will have a Sort option then Price and then select Lowest to highest. This and location is my main parameter.

There is another tab for Vehicle, Bakkie, Motorbike, Leisure, Commercial this we can call the five main categories. But this is also useless to me and not a thing I really care about. I will go into why later.

once you have filtered by province or branch, and sorting by price. You will now see the cheapest stuff at the top. If you not sorting by vehicle types the first few will usually be wheelchairs, trailers and scooters then you go onto the cars. Now if you are dealing in “cheapies”, let’s say R30k and below then you simply scan the cars, use the pagination to the next page if you don’t see anything close the window and come back later or tomorrow. That is literally my strategy, I just scan up to a certain pricepoint in my province across all, auctions and special offers.

Choosing a niche

Now we are getting to the more exiting part. You see often the niche as you choose as a trader is not found in any of the main categories. You will also find the more niche the more potential profits. Sure you can make R5000 per car selling cheapies, but you can make double that with less effort selling more niche vehicles.

You can start with sub-categories if you speciailse in a certain type of vehicle you can use the Body Type filter:

Hatchback, Sports Utility Vehicle (SUV), Sedan, Single Cab, Double Cab, Coupe, Multi Purpose Vehicle, Station Wagon, Cabriolet, Road, Crossover (SUV), Dual Purpose, Panel Van, Recreational Vehicle, 4 Wheel, Bus, Hard Top, Scooter.

I for one don’t use that filters as the type shows up in a search even when its not in the title. For example I often search “convertible” and “cabriolet” and I get cars tagged with that body type. On the other hand if you specialise in certain models you will search for that model like “X5” instead of searching SUV.

Source of delivery bikes & Trailers

Trailers:
Luggage trailers
Bike trailers (single and multi)
Display / Advertising Trailers
Mobile kitchen trailers
Fuel tank trailers
Multi-purpose trailers
Box trailers

Niche
There are a few things that don’t fit in there:

Motorhome (these sell fast on WeBuyCars)
Wheelchairs
Trailer Kitchens
Advertising trailers
Golf carts

Boats

Fuel Tanks

These are items that people may not necessarily look for in a platform like WeBuyCars.

Hyper niche

Then you have some one of a kind vehicles like I have seen:

2011 Lexus LX 570 Safari

2009 Hyundai H100 conversion

Bedford Bus

Reading a Dekra report
First and foremost a a good Dekra report does not mean that a car does not have issues only that it is not a common issue that was not picked up. A Dekra report is a mechanical assessment report and there are absolutely issues that it cannot pick up.

It is also important to read the Dekra report carefully, a long list of “issues” is not necessarily a red flag. Some of the issues are cosmetic or roadworthy relevant rather than the expensive to fix mechanical issues. WeBuyCars does not even do the minimum like adding missing wheel nuts which makes the roadworthy issue column longer. For example you may see:
Handle broken
Seats broken
Steering wheel loose
Wheelnuts missing

On the other hand engine, gearbox leaks are problematic and it is important to know when too much issues is an issue (lots and lots of cars on the road have oil leaks).

Photos of “issues”
A standard Dekra reports will have photos of the engine bay and chassis which will look like this:
ENGINE1
ENGINE2
CHASSIS

On some reports you will see

ENGINE1
ENGINE2
CHASSIS
Engine
Engine
Engine
Engine

Generally more photos on the Dekra report more problematic the car as they disclose all the issues. Those Engine, Engine, Engine, Engine pics are usually indicative of an issue found relevant to photograph – this is probably where you will find some of the most expensive issues to fix as some engines are so expensive to replace it is not even worth it. Those are usually issues you need to have a second very close look at. Sometimes you see some oil sweating on the engine sometimes you literally see drops of oil on the floor.