The brothers said the disposal was part of personal investment diversification and estate‑planning strategies. The move comes after a period of extraordinary share‑price growth for the company, which has expanded rapidly since its founding in 2001 into a nationwide network of around 18 vehicle supermarkets and more than 100 buying pods, trading over 15 000 cars per month.
Speaking to Channel Africa on Wednesday, Rand Swiss portfolio manager Viv Govender noted that the founders sold at a time when the stock had enjoyed a dramatic rise.
“In April 2024, the share price was around $1.24. Today it’s about $2.61, and at its peak it was close to $3.73,” Govender said. “When you’ve seen that kind of movement, and you hold a large portion of shares, it’s often prudent to sell some for diversification.”
However, he cautioned that insider sales can unsettle investors, particularly when negative market news is circulating. “We’ve had reports of pressure from Chinese automotive producers,” he said. “You never want to see insiders selling just before potential bad news.”
Govender added that although the founders no longer hold a controlling stake, their shareholding remains “disproportionately large” and still influences the company.
The market did not take the sale lightly. In the seven trading days following the announcement, WeBuyCars’ share price fell 16.75%. Over the past month, it is down 10%, and from its mid‑January high, it has fallen by around 20%.
“Shareholders are not looking at this favourably,” Govender said. “When insiders sell, they typically know more than public investors, so it’s rarely a good sign.”
Year‑on‑year, the share price remains slightly higher, “less than 1% up,” according to Govender, but it has retreated significantly from last year’s peak levels.
Govender said WeBuyCars is also facing structural pressure from the surge in new, aggressively priced vehicles from Chinese manufacturers such as Omoda, Chery, JAC and Haval.
“These brands have exploded in SA,” he said. “They’re offering new cars with more features at prices that sometimes match or undercut used cars from traditional brands.”
This dynamic weakens demand for second‑hand vehicles, squeezing margins for companies like WeBuyCars.
Asked whether the company’s recent challenges could signal a wider trend for the second‑hand automotive sector, Govender said the landscape is evolving.
“SA has historically had a very strong used‑car market because our economy is weak and people can’t afford new cars,” he said. “But if the economy picks up, cheaper new vehicles, especially from China, could draw buyers away from used models.”
He added that the arrival of electric vehicles (EVs) could further disrupt the second‑hand market, as battery degradation makes EV resale values behave very differently from traditional internal combustion engines.
Govender emphasised that while SA’s second‑hand market remains large, several forces could reshape it:
- Cheap Chinese imports reducing demand for used cars
- EV uptake creating uncertainty around long‑term resale value
- Macroeconomic factors influencing consumer purchasing power
- Insider share disposals affecting investor confidence
For WeBuyCars, he said, the challenge will be managing these shifts while maintaining investor trust.
“When insiders reduce exposure, the question investors ask is simple: what do they know that we don’t?” Govender said. “That’s what’s weighing on the share price now.”
–ChannelAfrica–
