By adaptive - August 17th, 2015
A UK start-up hopes to drive away with a growing share of used car sales. Ella Williamson has a closer look at the upstart’s plans and challenges on the road ahead…
CarSpring, a newly launched UK peer-to-peer marketplace, aims to make the used car buying and selling process an entirely more streamlined and hassle-free one. And CarSpring’s timing couldn’t be more auspicious for the launch: a recent study released by the University of Buckingham Business School revealed that 4 out of 5 car owners would go for pre-owned rather than brand new when purchasing their next car.
Founded in February this year, CarSpring co-founders Peter Baumgart and Maximilian Vollenbroich set about launching a platform to match-make those selling and buying a used car. Backed by Berlin-based start-up investors Rocket Internet, CarSpring will value, inspect, market, collect and sell a pre-owned car giving the seller a guarantee that if a buyer is not found in 30 days, then CarSpring will buy the car instead.
A potential car buyer is offered a platform to browse used cars available within their budget, opt to buy on finance, have their purchased car delivered to them and enjoy a 14-day trial period within which they can return the vehicle to CarSpring if unsuitable.
In amongst the busy automotive trading space that is dealerships, classifieds and auction sites, CarSpring needs to stand out from the crowd. The new business plans to do this in a number of ways, explains co-founder Vollenbroich: “CarSpring is completely free of charge, guarantees that it will take the car you want to sell off you after 30 days at the agreed rate, requires both buyers and sellers to have only one point of contact and you don’t have to go anywhere – it’s a one stop shop”.
By sidestepping dealership overheads and offering two thorough vehicle inspections and a return policy, CarSpring is hoping to attract customers that are intimidated by the used car buying process. “Everyone deserves to have a car that fits their needs so those people who don’t particularly love cars, don’t care too much about the brand and who simply want to get from A to B – like my mother – can be satisfied by CarSpring,” Vollenbroich adds.
Financially Rocket holds equity in CarSpring and also acts as a service provider of sorts. “It’s like a big start-up consultancy – they can source expertise that we need as a business” Vollenbroich reveals, adding, “Plus they work with so many start-ups so each venture pushes them up the learning curve”. Not keen on foreign advertising as a revenue stream, CarSpring’s remuneration is focused on fixed car-mark ups on the price offered to the seller – around 5-10% - and commission from additional services. These services will include yearly MOTs, annual services, insurance, upgrading of in-car technology and finance provision.
Incorporating finance may be a prudent move for CarSpring, as it’s a predicted game changer for the used car industry over the next few years. Andrew Ballard, strategy director at Experian Automotive says, “Finance deals have become a popular option with people who view a manageable monthly budget as more important than buying a car outright. We’ve noticed more people are checking their credit history and thinking about affordability and budget, that translates into what car they can afford. It’s a trend we expect to see grow in the coming years”.
With relatively seamless platforms like CarSpring appearing on the market to buy and sell cars, it begs the question about how long before this process becomes mobile first. Ballard points out, “Mobile is already a significant part of the car buying journey. One of our customers has told us that two-thirds of its traffic comes through a smartphone or tablet. We have been working to help motor traders differentiate between casual browsers and people carrying out active research with purchase intentions”.
Buying cars on mobile is a definite trend to watch out for according to Rocket’s Wahlandt, “The way we buy things in general is changing throughout all aspects of life. Buying cars on your smartphone could be quite a common scenario within the next few years”.
Vollenbroich says mobile plays a significant part of the selection process for CarSpring,, “Mobile is great for the social element – showcasing cars to friends and working out if the car a potential buyer is looking at fits with their social environment. Mobile is a very powerful tool”.
CarSpring recently announced 3 million euro in funding that will allow the company to expand in Europe, starting in Germany. And When it comes to competition in the automotive space, CarSpring is less preoccupied with what exists now and is more alert to new companies pushing into the same space if its model succeeds. Will CarSpring be a huge success? With a website rebrand, geographical expansion and marketing push– the new firm won’t need to wait long to find out.
For all the latest mobile trends, check out The Open Mobile Summit 2015 on November, 9-10, San Francisco