Buying a used car in Vancouver this summer felt akin to venturing out for a COVID-19 vaccine jab last winter when supply was low and demand was high.
“There’s a bit of a perfect storm” for sellers, said Autozen Technology Ltd. CEO Olivier Vincent.
His Vancouver-based startup launched an online marketplace for vehicle sales earlier this year after it raised $4.2 million in private equity investment. The company is set to expand throughout B.C. this summer following a spring beta launch.
The current supply of automobiles is low amid a global shortage of microchips — specifically small chips known as semiconductors needed for newer cars — while many drivers have been sitting on savings during the pandemic.
The white-hot auto market means dealers are competing directly against one another on Autozen’s platform to replenish inventories at lots. That is benefiting car owners looking to sell their vehicles.
“Car dealers are all hungry to buy used cars,” Vincent said, adding 150 “rooftops” (a description he uses to include individual lots that might fall under the same dealership group) have tapped the company’s platform.
Users looking to sell can plug in their vehicle’s make, model and year, and Autozen will respond with a range of prices for how much the automobile will likely fetch.
The platform is free to use for consumers; Autozen charges a commission to dealers for every vehicle sold.
Potential buyers can compete against each other before Autozen delivers a firm offer to the seller.
If the seller accepts the offer, Autozen will pick up the car in about a day and payment is deposited into the seller’s bank account.
But the high demand for used cars might seem counterintuitive given flagging sales of new cars this past year.
New car sales totalled 1,661,560 in 2020 — down 15.64% compared with a year earlier when 1,921,449 automobiles were sold, according to Statistics Canada.
But with fewer new cars sold over the past year (a trend extending back to 2018), fewer vehicles are being passed onto the used-car market, according to Canada Drives Ltd. founder and co-CEO Cody Green.
The Vancouver fintech is best known for its online platform that helps secure financing for vehicles.
Late last year it shifted lanes and began offering B.C. customers the option of buying used cars through its platform. There’s no room for any haggling on the platform, but once purchased, Canada Drives delivers the vehicle in a trailer within a day of sale.
Because Canada Drives does not rely on stocking inventory at dealership lots located at premium locations, the company’s overhead costs are lower than those of dealers.
Green said that’s allowed Canada Drives to maintain a higher level of inventory so that the supply issue hasn’t been throttling business, and prices can remain competitive.
“We hear a lot of what’s happened in the States,” Green said, referring to rising prices for used cars in the U.S. (prices were up 23.6% last month in that country compared with July 2020, according to the Manheim Used Vehicle Value index).
“We definitely had a more muted version of that in Canada.” •