Joydrive, a newly launched online automotive retail marketplace, wants consumers to order cars from their couch, arrange financing from their phones, and have the cars delivered to their driveways without ever stepping foot in a dealership. And it’s enlisting an unlikely ally to accomplish that vision — dealerships.
In the first seven months of operations, the company has enlisted more than 50 dealerships with a combined inventory of 12,000 vehicles for its platform, which is offering no-haggle pricing on new and used vehicles and the ability to arrange financing through the dealers’ existing network of lenders.
“Others out there are trying to cut out the dealer, but we embrace the select dealers we hand pick for our network,” Chief Executive Hunter Gorham told Auto Finance News. “We’re transacting most of our lives this way online whether it’s music, shoes, or whatever you want, but most consumers are still going in and spending four to six hours in a dealership when a lot of us would prefer to have an alternative.”
Many dealerships have been reluctant to make this sort of change in the past, but now dealers are seeing the growth of online dealerships and recognizing the need to upgrade, Gorham said. For example, used car online dealership Carvana is expecting to sell 90,000 to 94,000 units by yearend — an increase of more than 100% year over year, according to the company’s latest earnings report.
“There’s not a dealership in the country growing at that rate,” Gorham said. “Our pitch to dealers is you already win at brick and mortar, why don’t you win at digital as well, which means capturing an instrumental customer that would prefer not to come into the dealership.”
Financing penetration on the platform is “north of 60%” because dealers can tap into their lender networks, which typically include local credit unions that are offering better rates lately, he added.
Although dealers have asked Joydrive to offer a white-label solution or a buy button for the dealer’s own website, Gorham believes that’s not the experience consumers are seeking.
“Amazon, Airbnb, and Netflix tell us what the consumer wants, which is a one-stop shop marketplace with every brand and unlimited selection,” he said. “In the same way it doesn’t make sense for Airbnb to own all the homes, or for Uber … to own all the cars, to me it made more sense to do digital car buying with a network of dealers.”
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