Former Director at Auto1 Group
Dominic is a Former Director at Auto1 Group, the largest wholesale remarketing auto platform in Europe. In 2013, he met the founders of Auto1 and joined the company originally to roll out new countries across Europe and oversee International operations. After 1 year, Dominic joined the finance department where he worked closely with the current CFO in preparation for raising capital.Read moreView Profile Page
Disclaimer: This interview is for informational purposes only and should not be relied upon as a basis for investment decisions. In Practise is an independent publisher and all opinions expressed by guests are solely their own opinions and do not reflect the opinion of In Practise.
Dominic, could you provide a short introduction to your background please?
I started my career at BCG and got to know Hakan Koç who was one of the founders of AUTO1 and he persuaded me to join them in 2013. My role at that time was director of international roll out, where I oversaw the international expansion activities of AUTO1. I opened the relevant markets outside Germany, set up all the reporting and controlling lines, operations and staffing. That process took a year after which I joined the finance team at AUTO1 where I worked closely with Markus Boser, who is the current CFO. There I worked on due diligence requests from potential investors.
Can you walk me through how a vehicle flows through the system and which retail customers sell their vehicle to AUTO1?
Unskilled consumers who are less price sensitive or in need of cash and want a hassle-free car sale as opposed to a high price. If a consumer places their car on a classified page it takes an average of 90 days to sell, whereas with AUTO1 it could be two to three days. That is the main reason many consumers choose AUTO1.
That explains the increase in price per unit sourced from consumers from €5,000 to €6,000?
It appears in the report due to the recent IPO; €5,200 in 2017 and €5,500 in 2019.
Is AUTO1 consciously moving that or is it the fluctuation in used car prices?
Car prices were €4,000 in 2014 and 2015 and AUTO1 clearly drove up the price.
At first, AUTO1 bought cars as low as €100 which were hard to resell but later, they bought less of those because, from a unit economics perspective, it made no sense.
Are these cars over six years old and lower spec models?
On average, six years is a fair estimate but there are also almost new Porsche 911s. There are many cars older than 10 years which are difficult to sell. AUTO1 have built up a huge inventory of older cars which have slim profit margins.
Do dealers repair these cars or simply sell them on to retailers?
I will walk you through the process so you understand how it works. If you want to sell your car in Germany where AUTO1 is well established, and you are a digitally savvy you would probably type into Google, I want to sell my car. AUTO1 will appear on the first page of Google. This will not be AUTO1 but rather a consumer-facing branch, which in Germany is called wir kaufen dein auto and in France vendez votre voiture. They have a separate web page for each locale.
In Germany you will end up at wirkaufendeinauto.de where you enter the make, model and mileage of your car and AUTO1 emails you a non-binding online quote. As you open that email, someone from AUTO1 calls you to set up an appointment at your nearest branch. AUTO1 have 350 branches throughout Europe so there will likely be one in your area. In Berlin, for example, there are three branches, so you would drive your car to one of them.
A purchaser reviews your car based on a clear structure. They take 12 pictures and document all the information. AUTO1 do not do any repairs and, generally speaking, only buy cars which drive and have no issues. While you are at the branch, the purchaser uploads the information in real time to the AUTO1.com bidding platform which is European wide and dealers begin to bid on your car. This is an innovation which AUTO1 came up with.
After 30 minutes, you will receive an instant price for your car. That price is calculated by a pricing team in Berlin, Paris and Madrid. If they offer you €10,000 for example, you leave your keys and documents and they send an instant money transfer to your account. AUTO1 handles the bureaucratic side which is a great value proposition to the consumer.
You mentioned how consumers have other options such as Auto Trader or other classified sites. Most higher priced vehicles are part exchanged on dealer lots so how will the options for customers evolve as AUTO1 moves that price point higher?
Consumers can put their car on Auto Trader or other classified pages and can also sell it directly to a dealer. In Europe, most classified pages offer an instant sale or something similar so they are currently trying to copy AUTO1. It does not work that well and will not be as successful as AUTO1 but this alternative could become interesting for consumers.