Some start-up companies are convinced the time has come for putting the entire automobile purchase process online.
Phoenix-based Carvana will locate a vehicle, handle the paperwork online and provide free vehicle delivery to buyers within 100 miles (160 km) of 14 major U.S. cities. (For a fee, the company will deliver elsewhere.)
Using what it calls a “peer-to-peer” marketplace, Silicon Valley-based Beepi helps clients buy and sell pre-owned vehicles in 14 states and the District of Columbia. For buyers, the company offers a full refund after 10 days and guarantees it will sell a car in 30 days or less. Beepi says it takes a markup on the transaction between sellers and buyers.
Having raised $4 million from individual and small group investors, Roadster.com, based in Palo Alto, CA, handles the new-car buying process for clients, from research, selection, trade-in and delivery.
“You’re not skipping buying a car from a dealership, you’re skipping the dealership experience. You do everything from home and your car comes to you,” says Chief Operating Officer Rudi Thun.
The company says it has agreements with some 200 dealerships in California that sell 35 brands, but works with any dealership if necessary.
Some dealers are prickly when it comes to working with brokers. “Not every dealer wants to work with a broker, but there are many that do,” Thun says. “Pretty much every dealer that we work with wants more deals from us, not less.”
He adds: “We’re not providing leads, we’re providing orders. When we come to a dealership we have the customer all squared away with a credit app, a proof of insurance, and a very fair market price. This is a very attractive channel for volume dealerships that are looking to make their monthly target. It’s a win-win.”
Roadster has sold 900 cars in the 12 months since it went online. It charges dealerships up to 1.25% of the price of the car being sold. “We’re looking at a volume play here, not trying to squeeze out as much money as possible,” Thun says.
Buyers include Millennials who “expect this experience, and when they go to buy their first car they’re surprised that this isn’t the norm,” he says. Conversely, “older people don’t expect this.”
Roadster considers itself a technology company first and eventually wants to license that technology to dealers.
“We’re starting to work with dealers to enable them to use this platform for their own websites,” Thun says. “That’s another way for us to have good relationships with dealers. Let’s merchandise how good these cars are and do it on a modern platform that’s fast and mobile friendly.”