The used car market is experiencing an unusual phenomenon. It has experienced unprecedented demand resulting in unit appreciation. In simple words, this means that anyone who wants to sell their used vehicle can get a very good resale value. And one of the options to sell a used car is on platforms .
Alejandro Guerra, general director of Kavak Mexico, explained in an interview at the end of 2021 that used vehicles appreciated between 14% and 25% last year. But there are some specific makes and models that are priced even better.
Industry experts estimate that this phenomenon will continue during the first half of the year, or beyond. The consultancy KPMG estimates that the average price of used cars will fall between 20% and 30% in late 2022 and early 2023, as inventories of new models are restored.
“This is a market with an approximate value of 60,000 million dollars, where 40% of transactions end in fraud. The market needs transparency, security and value. And all the platforms come to provide these tools”, says Miguel Ángel Bulnes, co-founder and CEO of Caranty.
In the last two years, new platforms have emerged that allow the operation to be carried out safely and quickly. Whether you want to sell or buy a used car, these are the technological platforms that offer a verification process of the documentation and the physical-mechanical conditions of the units. Some also offer financing and all guarantee an immediate deposit.
Apps to buy or sell used cars
The biggest benefit of this business model is that the seller does not have to wait for a buyer since it is the platform that buys the unit.
1. Poplar
Business model: It implemented a model based on the acquisition of cars from individuals, to subsequently recondition them in its own branches and offer them for sale to the public, with a guarantee, financing and after-sales service.
The company has a technology center where nearly 200 people work, including system engineers and data science experts, focused on developing algorithms that allow it to be more accurate when setting vehicle prices, making credit rating and model recommendations to clients.
It has facilities and mechanics to evaluate the physical-mechanical conditions of the models in one hour. It has experts specialized in reviewing vehicle documentation capable of evaluating that the vehicle has no debts or reports of theft in a similar period of time.
Guarantee: return of the vehicle in the first 7 days or 300 km of test.
Financing: The company launched its financing arm Kavak Capital in May 2020. It offers a down payment that goes from 15% and plans from 12 to 60 months. It offers interest rates from 14% to 20%, depending on the client’s profile, and an opening commission of 20%. Approves the credit in less than two hours.
Commission: around 20% to 25% on the price of the vehicle.
2. OLX
Business model: Buy pre-owned cars from individuals and then resell them to established lots or dealers.
Those interested in selling their pre-owned vehicle can request a quote online and, if they are satisfied with the price, make an appointment at one of the 60 points of purchase that OLX Autos has in CDMX, Guadalajara and Monterrey. There, a mechanical inspection of the vehicle is carried out and it is verified that the documentation is in order.
If the vehicle presents debts or mechanical failures, the price of the vehicle is adjusted, and when the seller agrees with the final price, the company completes the purchase of the unit. OLX will then resell the units to used car dealers, such as lots or independent dealers, directly or through auctions.
Unlike other alternatives on the market, OLX Autos will purchase any model, regardless of make, mileage and year. The price will be established based on the physical and mechanical inspection and the review of the vehicle’s documents.
Financing: It also has a financial arm since the first quarter of last year for final consumers, dealers and car lots, so that they can in turn offer credit to their customers. OLX’s finance company becomes one more alternative, in addition to those of brands or banks. It finances vehicles that are more than ten years old – most finance companies only give credit to models less than five years old – with down payments from 15% and terms of up to 72 months.
Commission: around 20% to 25% on the price of the vehicle.
Platforms that only accompany in the buying and selling process
The main benefit of this business model is that the commission charged by the platform, with respect to the value of the vehicle, is less than 5%.
3. Odetta
Business model: Unlike other alternatives on the market, Odetta has no assets, no warehouses, locations, reconditioning center. When a client wants to sell his car, he enters the Odetta platform and fills out a form with general and vehicle data. After that, an advisor contacts him and offers him alternatives of mechanical workshops near his home to carry out the inspection of the vehicle at no cost to the client.
If the vehicle has a fault, the platform covers the repairs and is subsequently deducted from the sale price, as well as the money invested in the payment of fines or surcharges, if any.
Once the car is in good physical and mechanical condition and the papers are in order, an offer is posted on the website.
Financing: When a buyer is found, Odetta assists him in case he wants to apply for a loan. For now, the platform has an agreement with the Brazilian fintech Creditas and Crédito Real -which offer interest rates of between 10% and 16% for clients with a good track record-, and is in talks with traditional banks.
Guarantee: Odetta’s focus is on fraud protection, which is why it offers such a guarantee. In addition, it grants up to three months of mechanical warranty to buyers.
Commission: around 5% on the price of the vehicle.
4. Caranty
Business model: Caranty does not buy the vehicle; Instead, the platform facilitates direct negotiation between individuals to agree on the final price without sharing personal data in order to protect the information of each of the parties. Upon reaching an agreement, the buyer makes the payment to Caranty, who safeguards the money until a successful sales cycle is certified. If the buyer were to change his mind before the delivery of the vehicle, the immediate return of 100% of the money is made.
The buying and selling process begins with a virtual review of the vehicle with algorithms and artificial intelligence. In parallel, the platform makes a legal evaluation of the car’s documentation. After verifying that everything is in order, an ad is published with the price decided by the seller. The company ensures that most usually receive at least one offer in the first 72 hours.
The delivery of the unit is made in one of the five Caranty showrooms -located in Atizapán, Copilco, Interlomas, Pedregal and Río San Joaquín-, where a physical inspection is carried out at 260 points of the car. The vehicle comes with exclusive benefits at no additional cost, such as a six-month mechanical warranty, with options to extend it.
Guarantee: the buyer has 24 hours to return the car if it is not to their liking.
Financing: for now the company does not have a financial offer, but it is evaluating in the medium term to incorporate financing alternatives through banks.
Commission: around 4% on the price of the vehicle.
