CAR Group Ltd (ASX: CAR) has come a long way from the Australian classifieds business many investors still associate with carsales.com.au.
Today, the S&P/ASX 200 Index (ASX: XJO) share owns leading automotive marketplaces across several major international markets.
I think that global expansion could give the company plenty more room to grow over the next decade.
Image source: Getty Images
The model has travelled well
What first catches my attention is that CAR Group has managed to take what worked in Australia and build a much larger international business around it.
The company now operates major marketplaces in Australia, South Korea, Brazil, and North America. Importantly, management says its brands hold the number-one audience position in each market where they operate.
That scale can create a powerful cycle.
Car buyers gravitate towards marketplaces with plenty of vehicles to choose from. Dealers want to advertise where the buyers are. More dealers then bring more inventory, giving consumers another reason to return.
CAR Group now attracts an average monthly audience of around 52 million people across its marketplaces. I think that figure is worth highlighting because it shows how far the opportunity has expanded beyond Australia.
There is also still room to build more services around these audiences, rather than relying solely on charging for vehicle advertisements.
It can become more valuable to dealers
I think the next stage of this ASX 200 share's story could increasingly be about helping dealers run their businesses.
The company already sits between dealers and millions of potential buyers, giving it access to information about vehicle demand, pricing, enquiries, and how quickly particular cars sell.
It is now using that data to develop tools that can help dealers decide which vehicles to acquire, how to price them, and which enquiries deserve the most attention.
That moves CAR Group further into the daily operations of its customers.
For me, this could strengthen the relationship considerably. A dealer using the platform to advertise vehicles is valuable. A dealer relying on CAR Group to source inventory, set prices, manage leads, and improve turnover could be worth much more over time.
AI could strengthen an advantage it already has
Artificial intelligence (AI) provides another opportunity, although I think CAR Group's approach is more interesting than simply adding an AI feature to its website.
The company has decades of proprietary information covering listings, prices, enquiries, consumer behaviour, and vehicle transactions across its markets. Management is using this data to power its own AI platform.
The early applications are practical.
Its conversational search tool is helping people find vehicles using natural language, while AI is also being used to improve dealer listings, respond to enquiries, and provide pricing intelligence. CAR Group says users of its AI-led search are four times more likely to submit a lead.
I think this is where the company's scale becomes particularly valuable. The technology itself will continue evolving, but CAR Group owns data and customer relationships that have taken years to build.
That could allow AI to make an already strong marketplace more effective rather than forcing the company to create an entirely new business.
Foolish takeaway
CAR Group is the sort of ASX 200 share I find increasingly attractive the further ahead I look.
It has already shown that its marketplace model can succeed internationally, and the opportunity is now expanding into dealer technology, transactions, data, and AI.
If CAR Group keeps becoming more important to both buyers and sellers, I think today's business could look surprisingly small compared with what it becomes by 2036.
That is a growth story I would be happy to buy and give plenty of time.
