Just 5% of all vehicles in the UK are sold online, even though pre-COVID, 43% of auto shoppers wanted to do their entire transaction online without ever visiting an auto dealer.
Buying and selling used cars is deeply annoying as it generally entails excessive market research, a myriad of nontransparent negotiations, and lowball offers.
But Tom Leathes, CEO of the London-based Motorway says sellers on his platform earn up to £1,000 more for their car than they could via other sales tools.
“We transform the process of selling a car by moving it entirely online,” he said in an interview with the BBC.
Building a used car sales engine
Motorway has seen huge success over the last two years through a unique approach to used car sales: online auctions. In this case, success is two-fold. Not only do consumers have a more streamlined, digital-first approach to listing and selling their car, but they actually typically end up getting more for their vehicle compared to traditional means.
Motorway works like this: a customer uploads details of their used car via a Motorway app. Then, the app uses AI and enhanced computer vision to virtually assess the state of the car. Once the car has been assessed and verified, it is listed in a daily auction to more than 3,000 used car dealers, all of which individually bid on it. The highest offer wins the car, and then it is collected for free by the dealer within 24 hours.
In total, a car can go from listed in auction to off a driveway in under a day, and it’s all completely free for the seller. Over 90% of cars are sold within 24 hours of being listed on Motorway.
“By cutting out the dealer and moving the whole process online, we get a much better deal for both sides, without the hassle and with a much better experience,” says Leathes.
Motorway’s seamless auction-based platform also makes the experience for the seller much smoother. It removes every instance of high-pressure in-person situations, where a seller may not fully understand the value of their car before trading it in.
There’s also a benefit for the dealers themselves. Motorway’s platform improves the overall infrastructure around used car markets, connecting dealers to the absolute best stock of used cars to then offer to their own customer bases.
“There’s no one in the middle, and that ensures the dealers always get the best price,” explained Leathes.
Motorway’s impressive growth
The model is obviously working, as Motorway recently secured a massive £48 million funding round. As the pandemic drove every type of commerce online, Motorway has seen an exponential rise in the need for its services. The company saw sales top £50 million in May 2021 alone, and is currently hitting around £2.5 million of transactions per day and 4,000 car sales each month.
There is also a lot of room for Motorway to grow. In the U.K., the used car market sits at around £60 billion per year. Since the start of 2021, Motorway reported that average transaction prices for cars listed on its site have risen 8.2%.
Looking to North America, Carvana, the second-largest used car marketplace in the U.S. (which is also online-only) sold 37% more cars in its most recent reported quarter. Clearly, there is a rising demand for used cars across the world, and Motorway is intent on scaling up to grab it.
“It has been a crazy year for the used car industry,” says Leathes. “Ever since the pandemic, there has been this shift for people to buy a car. There are lots of reasons for that: people are avoiding using public transport, and there’s a shortage of new cars, so this has led to a very buoyant used car market and a renaissance for that market.”
BMW’s interest in Motorway
One of the more interesting aspects of Motorway’s growth is a key investor behind its recent funding round. BMW’s venture fund arm, BMW i Ventures, took a stake in Motorway, obviously believing in the power of bringing a digital edge to a used car market ripe for disruption.
“With Motorway, we have invested in a company that has created an innovative way for car owners to sell their vehicles by connecting consumers to car dealers directly,” said Kasper Sage, partner at BMW i Ventures. ”Their platform marks the start of a new era in used car retail by making the selling process simpler, faster, and hassle-free – and by delivering both a superior experience and a better deal for both parties.”
Motorway is set to expand: it will build the “most advanced platform for used car transactions,” according to Leathes, and in order to do so, the company will grow from its current size of 160 to about 200 by the end of 2021. The company is currently looking for all kinds of engineering, marketing, and sales roles at its London office.