Frontier Car Group, a Berlin-based startup that develops used-car marketplaces in developing countries, has raised $58 million in series B funding to further expand its foothold into Asia, the company announced early last week.
The funding round, which includes $41 million in equity and $17 million in debt funding, will be used to propel the business further into Africa, Latin America, and Asia. Since launching at the end of 2016, the company has sold 50,000 vehicles and is on track to do $200 million in annualized revenue per year, according to TechCrunch. Frontier Car Group currently operates in Nigeria, Mexico, Chile, Turkey, Pakistan, and Indonesia under a variety of brands Cars45.com, CarFirst, BeliMobilGue.
Frontier works by giving would-be sellers an online quote for how much their car might sell for, then Frontier inspects and buys the vehicle at that price, according to TechCrunch. Would-be buyers meanwhile use an app or web browser to shop Frontier’s stock and arrange for financing before buying the car online.
Often, these markets don’t have auction houses to get inventory and consumers are faced with a lot of fraud through classified advertising and cash deals. Frontier’s platform hopes to provide inventory and a trusted marketplace for safe used-car transactions.
Separately, Frontier is also working on new vehicle financing solutions aimed at small to medium-sized industry operators and “aspiring consumer customers in markets previously underserved by traditional lenders,” the company website says. “We’re leveraging the reach of our platform and physical network to offer innovative B2B and B2C financial products.”
Over the past few years, used-car sales have become a targeted industry for startup disruption. Carvana, the used-car platform that utilizes vehicle vending machines, went public in April 2017, Fair.com has raised over $1 billion in financing, while SouChe has made a splash in the Chinese market. But there have also been a few notables that were forced to fold such as Beepi and HelloCar in the UK.
Asia, in particular, is a strong emerging market for used-car sales. Since 2009, China has been the largest new-car market but the infrastructure for used sales has been limited. That’s starting to change Kate Gao, senior consulting manager at Ipsos Business Consulting, previously told AFN
“As new car sales peak, aftermarket (including used car) will become an important battlefield for automotive-related players,” Gao said. “From January 2017 to November 2017, China traded 11.2 million used cars, soaring by 20% year over year, and sales are expected to grow significantly in the next few years to [approximately] 21 million by 2021.”
By comparison, U.S. used-car sales hit a record 39.2 million units in 2017 — representing a 1.6% increase year over year.
Frontier did not respond to a request for comment.
