SK C&C, who has been investing in the online used car market for two years since its acquisition of Encar, secured its foothold for growth of its on-line operations and entrance to the global market by forming a joint venture corporation with a global leader in the business. SK C&C (www.skcc.com) announced on June 11 that it had inked a deal to establish a joint venture corporation with Austria’s leading online auto advertising group carsales.com.
SK C&C split Encar’s online operation division and founded SK Encarsales.com and will sell 49.9 percent of its shares at 117.5 billion KRW. The both parties plan to grow the company into a leader in the global online used car market based on their experience and knowledge, using innovative business models, auto trading products, and dealer support solutions.
SK Encarsales.com will be officially launched in early April after undergoing necessary procedures, including board approval, capital payment, and partitioning. SK Encarsales.com will likely to focus largely on on-line used car advertising, vehicle history and pricing information services, dealer support solution services, including sales and stock management, and auto trade consulting services. SK Encarsales.com will leverage carsales’ global business expertise and Encar’s differentiated certification business model to expand into the global market, including China and Japan.
Austria’s leading on-line auto trader carsales.com, which was founded in 1999, has demonstrated a two digit growth every year based on its highly profitable business model. carsales.com is one solid blue-chip company posting AUD 215.1 million in revenue and AUD 117.6 million in operating profit, with AUD 2.0 billion in market cap. in 2013.
carsales.com is acquiring shares to expand its reach in the country it is investing, as well as the neighboring countries. carsales.com currently owns 30 percent of Brazil’s No. 1 online auto trader Webmotors SA and 19.9 percent of Malaysia’s iCAR ASIA, a leading online auto trader in Southeast Asia, with its business influence spanning over not only Malaysia, but also Indonesia, and Thailand.
SK C&C believes that this joint venture will contribute to creating a more transparent used car market and improving buyer and seller experience by reinforcing the existing services, such as vehicle diagnostics and certification services, vehicle history services, and small and medium sized dealer supports. SK C&C will continue to play its pivotal role in the industry, and plans to promote and support other players in Korea to venture overseas.
Senior Vice President Park Sung-chul, head of SK C&C Encar Business Division, said, “We will improve transparency of on-line used car market by grafting carsales.com’s advanced online trade services onto Endcar’s certification system, and we will do our utmost to protect the interests of consumers and users by stamping out false advertising and securing pricing transparency.”
carsales.com Ltd CEO and Managing Director Greg Roebuck said, “Korea’s SK C&C Encar is the perfect partner for carsales.com, sharing many similarities and business values, including the primary focus, great brand awareness, high profitability, and global expansion.” He also added, “We will use our synergetic effects to further our global advancement.”
SK C&C acquired Encar at the end of 2011 and revamped its business and profit model by grafting its own information and communications technologies onto the newly acquired company. Since then, SK C&C’s revenues increased to 670 billion KRW, up from 470 billion KRW in just two short years. During the same period, now Encar Business Division of SK C&C grew by whopping 40 percent with 17.9 billion KRW in revenue, up from 12.8 billion KRW, securing its No. 1 spot as an on-line used car trader.
SK Encarsales.com will be a subsidiary of majority shareholder SK C&C and take the form of a joint venture corporation, with its management control and the power to appoint chief executive officer vested in SK C&C. The on-line used car sales operations will be taken over by Encarsales.com, whereas, the off-line operations, such as off-line sales, certification services, and overseas sales will be conducted by the existing Encar Business Division of SK C&C.
“carsales.com showed strong commitment toward global expansion and they highly appreciated Encar’s on-line business capabilities and the potential value of the Korean market, and that made this joint venture deal possible,” said one of the staffers of SK C&C.