By Nick Carey
LONDON (Reuters) - Fast-growing UK startup Motorway has taken an asset-light, eBay-like online marketplace approach for consumers to sell used cars directly to dealers, a model the company hopes to expand to other countries and eventually lead to a public listing.
"We definitely have global ambitions," Motorway CEO Tom Leathes told Reuters. "But we want to do that carefully. So definitely down the line, but not in the next few months." He declined to elaborate on which countries outside Britain the company sees as potential markets.
Founded in 2017, Motorway has sellers upload photos of their car from their phone and dealers bid on them in daily auctions.
The startup never actually owns any cars, unlike online used-car sellers like Carvana in the U.S. market or Cazoo in the UK that have struggled with inventory problems that sent their stocks plummeting.
EBay also sells cars in the UK, though its own marketplace consists of consumers or dealers selling to consumers.
The pandemic "acted as a massive accelerant" for Motorway because physical auctions were closed for months and dealers needed access to cars, Leathes said.
Sellers upload interior shots as well as exterior photos of cars and are asked to include service history. The car undergoes an in-person inspection when it is collected.
The startup now auctions up to 1,500 used cars daily. In 2022, its auctions doubled to 1.7 billion pounds ($2.06 billion). That should double again this year, giving Motorway around a 5% share in a UK used-car market worth 80 billion pounds, Leathes said.
Motorway has raised over $250 million from investors including venture capital firm Index Ventures, investment firm ICONIQ Growth and BMW I Ventures, the venture capital arm of BMW.
In 2021, the startup hit unicorn status - unicorns are valued at $1 billion or more. It charges a fee per sale - ranging from 225 pounds to 1,000 pounds - and its revenue for 2022 more than doubled to 41.2 million pounds.
Asked about an IPO, Leathes said: "We believe Motorway is on that path," but said there are currently no specific plans for a listing.
By cutting out middlemen and selling directly to dealers, Leathes says the initial price quoted to sellers is around 10% higher than rival car-buying web sites - and most sell for more at auction which is conducted entirely online.
Cars that been part of rental and business fleets make up a significant part of the used market, often sold after heavy use.
"Dealers love it (Motorway) because it's well-maintained, privately-owned stock they just don't get access to," Leathes said.
On a recent demonstration of Motorway, Leathes showed the nearly 1,000 cars on sale ranged from 350 pounds up to a Ferrari (NYSE:RACE) for 174,000 pounds.
Nick Templeton, 60, recently sold a 2020 Tesla Model 3 with 33,000 miles, for 25,400 pounds on Motorway, around 2,000 pounds more than car-buying web sites offered.
This is the third car Templeton has sold on Motorway. The retired school headteacher said he could maybe make more selling a car privately, but does not "want the hassle or stress that causes."
Lewis Jent, buying manager at CarShop, which has more than a dozen branches and bought Templeton's Model 3, said the used-car seller buys via Motorway every day and finds that "consumer-owned cars are always very desirable."
But he said it can be challenging dealing with individuals instead of buying in bulk.
Leathes said Motorway is focused on making buying easier. Dealers can now use "wallets" for multiple transactions and Motorway now picks up around 30% of the cars it sells and delivers them to dealers.
"These are very, very hard problems to solve," Leathes said. "But that's how we got to the next thousand cars a day."
($1 = 0.8245 pounds)