Highlights

• CAR Group reaffirmed its FY27 outlook, guiding to Revenue growth of 11% to 14% in constant currency.

• FY26 revenue rose 6% to A$1,253 million, and proforma revenue rose 10% after excluding the exited Australian tyres business.

• Latin America was the fastest-growing region, with revenue up 19% in constant currency to A$251 million.

• The central debate is whether AI will strengthen or erode online classifieds, and the company says its own AI tools are lifting leads and conversion.

What is weighing on CAR Group shares when the company keeps reporting double-digit growth?

CAR Group (ASX:CAR), best known as the owner of carsales.com.au, reaffirmed its FY27 outlook at its Annual General Meeting on 30 October 2026.

What CAR Group does

CAR Group runs online vehicle marketplaces in several countries. In Australia it operates carsales; in South Korea, Encar; in the United States, Trader Interactive, which covers recreational vehicles, powersports and other categories, plus marine through Boatmart; in Chile, chileautos; and in Brazil it is the Majority Shareholder of webmotors.

It is increasingly adding transaction-linked services, including instant offers to private sellers in Australia and inspection, delivery and dealer-direct services in Korea.

FY26 results

For the year to 30 June 2026, released on 10 August 2026, reported revenue rose 6% to A$1,253 million. On a proforma basis, which excludes the Australian tyres Business the company has exited, revenue rose 10%, or 12% in constant currency. Adjusted EBITDA rose 9% to A$700 million and adjusted net profit after tax rose 8% to A$407 million.

Reported net profit rose 14% to A$314 million, and reported Earnings Per Share rose to 82.9 cents from 72.6 cents. Full-year dividends increased 8% to 86.0 cents per share, with a 43.5 cent final Dividend franked at 30%. The company reported 100% conversion of reported EBITDA into operating cash flow, a group EBITDA Margin of 56% and net Debt of 1.7 times EBITDA.

How the regions performed

Australia remains the largest and most profitable segment. Revenue rose 7% to A$519 million and adjusted EBITDA rose 8%, with a margin of about 66%. Dealer revenue grew 8%, helped by leads, pricing and uptake of premium products, while private revenue rose 4%, partly through Instant Offer. Electric and hybrid inventory on carsales rose 32% to 23,743 vehicles, a sign of how the mix of cars being advertised is shifting.

North America generated A$327 million of revenue, up 12% in constant currency, with adjusted EBITDA also up 12% in constant currency. Management noted RV Demand remained soft, although traffic was improving, and is investing in marine.

Latin America was the fastest-growing region: revenue rose 19% in constant currency to A$251 million and adjusted EBITDA rose 23%. Lower margins of about 38% reflect a business still scaling. Brazil's total new and used car sales rose 11% to 16.5 million units, and interest rates there began falling in the second half. Asia, which is Encar, grew revenue 15% in constant currency to A$145 million, with guaranteed inspections covering 57% of listings and home delivery transactions up 65%.

What management expects for FY27

The company's FY27 outlook, in constant currency compared with FY26, is for revenue growth of 11% to 14%, adjusted EBITDA growth of 10% to 13% and adjusted NPAT growth of 9% to 12%. It expects net finance costs of A$66 million to A$72 million, Depreciation and Amortisation growth of about 16% to 19% and an effective tax rate of 20% to 21%. The outlook excludes acquisitions.

By region, it expects high single-digit revenue growth in Australia and double-digit revenue growth in North America, Latin America and Asia. In North America and Asia, revenue is expected to grow faster than EBITDA because of Investment in marine and in Dealer Direct and home services.

At the AGM, Mr Elliott said that "nearly 4 months into the new financial year, we're very pleased with how the company continues to perform", which he said gave the company confidence in reiterating the August outlook. No year-to-date figures were given.

The AI question

The central debate is whether AI agents and search tools will disintermediate classifieds sites by helping buyers find cars elsewhere, or whether marketplaces with deep proprietary data will use AI to become more useful. CAR Group is clearly arguing the latter.

At the AGM it described building its own AI agent into its sites and apps, connecting to external platforms such as ChatGPT while setting terms for what third-party agents can access, and using AI for listings, pricing suggestions, buyer follow-up and finance approvals. Its FY26 presentation cited a 26% lift in session-to-lead conversion from carsales AI search. A global AI hub in Brazil builds products once for use across markets.

These are company-reported metrics, and it is too early to judge whether AI will change the long-term Economics of vehicle classifieds.

Risks and what to watch

Beyond AI disruption, the risks include softer vehicle markets, particularly North American RVs, currency movements, which the company expects to reduce FY27 growth by about two percentage points mainly in the first half, and execution risk across a portfolio spanning five countries.

Higher investment in marine, dealer tools and AI may weigh on margins in North America and Asia in the near term. Investors will likely watch the February 2027 half-year result for evidence that revenue growth is tracking within guidance, how Dealer Direct and marine are developing, and whether AI features translate into measurable gains in leads and pricing.

The bottom line

CAR Group's operating results have been consistent, and management has stood by its FY27 outlook. Whether the market rewards that will depend largely on how convincingly the company shows that AI strengthens rather than weakens its marketplaces.