Carsales.com blames tighter credit conditions and a new ban on flex commissions for an anticipated $48 million impairment against its stake in Stratton Finance.
The auto classified advertiser, which owns 50.1 per cent of the finance business, also said profits from Stratton are set to halve.
Carsales said it had already flagged the potential hit in its annual report and on Tuesday confirmed its first-half results due in February will include a non-cash impairment charge against the value of its stake in Stratton.
"Management identified that certain external factors had the potential to adversely impact the valuation of the Stratton Finance CGU, including ASIC legislative changes on car financing which came into effect in November 2018 and the continued tight credit market conditions," the company said.
ASIC's ban on flex commissions in the car finance market began on November 1.
The commissions were paid by lenders to car dealers and finance brokers to encourage them to arrange car loans at the highest possible interest rate, resulting in higher commissions.
Carsales also anticipates its share of FY19 net profit from Stratton will be about $1 million, half of last year's $2 million profit, despite stating that total finance contract volumes higher for the five months to November 2018 compared to the prior corresponding period.
Shares in the online car advertiser surged to a record high of $16.25 in August after it posted a leap in full-year profit as its overseas expansion strategy delivered an earnings boost.
But they have been slipping since and at 1103 AEDT on Tuesday were down another 1.45 per cent to $11.58.
Carsales bought into Stratton Finance in 2014.
