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Autoquake is selling cars straight from fleets to the public, cutting out auctions and supermarkets
Waqas Qureshi
When you are spending over £5,000 on a car, you don’t expect to pick it up from a storage park and pay for it in an office housed in a portacabin.
But this is exactly how one (mostly) online car supermarket is selling used, mainly ex-fleet cars – pushing the boundaries of price guides to deliver value for money.
Autoquake was set up three years ago, based on a business model aimed at cutting out the fees and profits made by auction houses and dealers.
The company takes delivery of cars from fleet companies looking to offload stock and sells them direct to consumers.
But Autoquake does not buy the cars from fleet companies – it just stores them until they are sold via the website.
“What we do is we take out the dealer – who on average will charge 23 per cent higher than the Cap margin,” said Garry Hobson, Autoquake chief executive. “We sell at 108 per cent of Cap, which on average is about £1,000 cheaper than traders.”
He claimed the company usually pays fleets 5-6 per cent more than they get at auction, which is around £300-400 more per car – a considerable amount of saving over the year when thousands of cars are defleeted.
Fredrik Skantze, co-founder and chief marketing officer, spent a decade working in California’s Silicon Valley, alongside IT experts, engineers and venture capitalists. He said research showed 20 per cent of UK consumers are prepared to buy cars online – a figure that will continue to rise.
“People generally don’t trust dealers. They are viewed as professionals who will squeeze money and margins out of customers through the price, the part-exchange and the finance.”
The company started out with a site in Bradford, Yorkshire, and followed by one in Birmingham, along with offices in London. There are plans to open a site near London by summer next year.
Sales boom in 2008
In 2007 the company sold just
600 cars, but this year it plans to sell over 5,000, rising to 10,000
in 2009.
“This rise has been mainly due to getting the supply of a variety of cars, building the relationships with fleets, and improving the website and driving traffic to the site,” said Skantze.
Autoquake sells each car within 17 days on average. “We keep a car listed for a maximum of 30 days, after which it is returned to the fleet company,” explained Hobson. “It’s a low cost model and we have to turn the fleets stock quickly into cash. We have to mirror the time an auction sells – but we give fleets more money.”
Typical product profile is five years old, 60,000 miles, usually one owner, fully serviced. There are over 500 cars listed on the website.
The company fully documents each car with up to 50 pictures highlighting all angles and any dents or scratches.
A sale is secured by leaving a £100 deposit, and additionally a seven-day/500 miles money back guarantee comes with every car for piece of mind. Around 30 per cent of cars are sold without the customer viewing it.
“The savings in comparison to our competitors vary. We are around 12 per cent cheaper than car supermarkets, we monitor that all the time. The savings against independent dealers is 17 per cent and against franchised dealers it is up to 25 per cent,” said Skantze.
Finance and part-exchange
The finance rate is just 15 per cent currently, but this is something the company is aiming to increase with the recent launch of its online finance application.
Customers enter their details online and get a response for approval there.
Customers wishing to part-exchange their existing cars can fill in a form online and are instructed to upload as many photos as possible.
Skantze said the company has been increasing web traffic primarily through using internet search engines, as well as classified adverts.
Creating confidence
Hobson said Autoquake’s success was down to stocking the right cars and creating confidence for customers.
“The reality is we live up to our promise – the cars are exactly how we describe them to be. Openness, transparency and integrity is key in this field.
“We are cutting costs to deliver value for customers and fleets by operating this car storage and delivery model. It’s a fusion of motor industry experience and e-commerce skills. Now we have more cars on the website, driving more traffic, generating more sales, and consequently getting more fleets further involved,” said Hobson.
With the continuing deterioration in the economy, and buyers increasingly willing to purchase online, Autoquake is confident its business model is ideally suited to deliver value for money to today’s car buyers.
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