Is CarSwitch the answer to your used car headaches?
THE START-UP SAYS IT RUNS A 200 POINT INSPECTION ON ALL USED CARS BEFORE LISTING THEM
Imad Hammad and Ali Malek founded CarSwitch in 2016, hoping to change the way cars are bought and sold in the UAE, whilst simultaneously tapping into a multimillion dollar market.
The Dubai-based website, which has to date interacted with 25,000 car sellers and is seeing its traffic grow by 15 per cent month on month, offers buyers a transparent and pre-validated way to browse used cars.
And what do the sellers get out of it? Vetted and highly motivated potential buyers, many of whom have made up their mind before ever actually seeing the car, such is the trust that Hammad and Malik seek to foster through their rigorous checking procedure.
“Our fundamental purpose is to create transparency in buying cars,” Hammad told Gulf News on Thursday. It is, after all, the second largest transaction most people will make in their lifetime after real estate, he added.
“But the difference is, cars move and hit things, and their conditions change over time.”
The problem the pair found with classifieds was that they provided no transparency. That, Hammad said, was the genesis for CarSwitch. “All you’re given with traditional used car ads is the price, a couple of pictures, and a phone number. We offer 100 per cent transparency on the website. We run a full 200 point inspection on the vehicle, and then we display this on the website in a very user-friendly way,” he said.
To do this, CarSwitch employs mechanics to visit sellers and run these thorough inspections, taking pictures of minute details to give buyers a comprehensive understanding of what they’re buying. This includes details like how much percentage is left in the brake pads, how old the tyres are, which panels have been repainted, and any scratches or dents.
As a result, Hammad explained that many buyers had made their mental purchasing decision online, and one in three test drives results in a sale. “We’ve sent a Lamborghini to Bulgaria without the buyer ever seeing it,” he said.
After the sale, a team from the company will accompany the buyer to the Roads and Transport Authority (RTA) to assist in the transfer of ownership. For this CarSwitch charges sellers Dh2,000, taking care of the entire process, including fielding queries, and vetting buyers.
Added revenue
Asked if he would ever promote listings on the site as a way of generating added revenue, a common model for property websites and online marketplaces, Hammad was quick to reject the idea.
“This is what makes us fundamentally different. Any promoted listing is purely an automated algorithm that judges the best deal based on price and condition of the car, so they naturally float to the top,” Hammad said.
While he didn’t rule out one day introducing a paid model where sellers could promote their car, Hammad said there were no plans to introduce such a system.
The chief executive says that while the company has not yet reached profitability, the scale achievable and size of the market gives him confidence it will be attained soon.
To date, the company has raised $2.3 million in seed funding, with plans to raise a Series A round by the end of the year.
Hammad says that the company is targeting a $3 to $4 million funding round, with a focus on expanding regionally, primarily into Saudi Arabia.
Raising money has not been without its challenges, however.
One of the difficulties, he said, was in getting a local venture capital (VC) firm to lead a funding round.
“They will participate, but are often hesitant to lead. And since there are only four or five large regional VCs that will lead a round, if they have already invested in your vertical, they will not want to do so again,” Hammad said.