When you buy a new car and drive it off the lot, it depreciates or loses value almost immediately. This loss is approximately 15% to 20% of its value each year.
The wholesale value is always less than the original retail value of the car, and for a well-known brand, this depreciation can be in significant proportions.
Thus, finance experts always suggest buying a late-model used car over a new car due to first-year depreciation, knowing that a new car depreciates the minute you drive it off the lot.
With the increasing economic literacy, people are investing their money in beneficial ways. This economic literacy also changes the social stigma of buying a used car, considering that someone’s used car can be someone else’s first car.
Hence, the demand for used cars is rising with each passing day. Looking at this demand, CarSwitch entered the used cars market to provide comprehensive services for buyers as well as sellers – from checking and monitoring to advising and documentation.
In the following interview, Imad Hammad, the Founder and CEO sheds light on the company’s journey, its offerings, and the future of the used cars market.
Please brief our audience about CarSwitch, its USPs, and its position as a leading name in the automotive space.
Our business is a peer-to-peer, digital-first platform that allows users to directly buy and sell used cars. Sales are conducted through a private transaction, protected by CarSwitch, and this ensures that both the seller and buyer get the best value, and both remain safe throughout the transaction. By buying and selling directly through CarSwitch, users are able to benefit from greater transparency with our verified vehicle checks and secure transaction model.
Buying directly from another private individual allows our users/customers the ability to benefit from better financial deals. The traditional dealership model will always have to factor in their margins and overheads, but we’re able to offer customers a better deal through a model that keeps the entire transaction crisp, clean, and professional.
Starting with our mobile app, we have introduced a two-minute financing pre-approval facility, so buyers can get pre-qualification online and know which cars fit their wallets. On top of that, the app also tells you that your EMI (Equated Monthly Instalment) will be based on your chosen down payment and loan period.
When it comes to securing the loan, CarSwitch handles all the paperwork and secures the financing from one of the approved lenders in the UAE. So overall, we have digitized a difficult and time-consuming process and made it extremely user-friendly for people looking to buy a car on finance in the UAE.
Tell us more about CarSwitch’s offerings and what aspects make it stand out in the industry.
Speed, transparency, and value are the overriding factors in CarSwitch marking new standards for the industry. Our financing model is designed with speed in mind allowing buyers easy access to loans and as much information as they require to purchase. In the eventuality that there are outstanding loans on a car, we also manage that process to take the pain away from the end-user.
Being an experienced leader, share your opinion on how the adoption of modern technologies like AI and ML is impacting the automotive industry and how is CarSwitch adapting to the change?
While the terms Artificial Intelligence and Machine Learning are usually heard in the automotive industry in connection to self-driving cars, car manufacturing, and route navigation, it’d be a mistake to overlook its impact in the used cars industry.
With the used car industry booming, and more and more people looking to buy and sell cars using online channels, there is an abundance of data on our hands to provide a ‘smarter’ experience to customers.
At CarSwitch, we’ve gone all-in on the use of AI/ML. Our car recommendation engine analyses user behavior and determines patterns to suggest the most suitable cars for your needs. The recommendations are not just based on obvious facets like the year, make, model of the car but also whether the car is considered ‘premium’ or ‘reliable’ and based on your viewing history and those of other customers, the algorithm knows exactly which car to pitch to you!
Our car valuator is another AI-backed area where we marry historical transactions data, current market trends, and car conditions to determine the most suitable price for your car. And at CarSwitch, we like to put our money where our mouth is, so when you list your car on CarSwitch, we make you an instant cash offer for your car, based on our algorithm’s recommendation. At CarSwitch, we believe we’ve barely scratched the surface of what AI/ML can help us achieve. There’s a long road ahead, and we’re excited to be on this.
Considering the current pandemic, what initial challenges did you face, and how did you drive the company to sustain operations while ensuring the safety of your employees at the same time?
Like all businesses, over the last 18 months, we’ve had to adapt to a rapidly evolving environment. Our business is digital-first which meant that our period of adjustment was less painful than others in the industry. We don’t have forecourts; therefore, our business isn’t built on the need to have large numbers congregating. When someone is looking to sell their car, we send one qualified technician who can test the vehicle, take the photos, and advise you. After that, the entire process is online.
We manage so many aspects of the sales process that we were able to still provide customers with information about the industry and their cars and allow people to research potential acquisitions during the early lockdowns.
Once things opened up, some customers were still understandably hesitant about interacting with multiple parties to buy or sell a car, so factoring in our health and safety protocols, we were able to reduce that worry for them.
The reality of many retail channels over the past 18 months has been how customers could actually view products. Our model was built with the digital element upfront, allowing buyers to research and view multiple cars directly from their phones, ask questions, and arrange test drives. For the test drives, we manage that process for them as well, so our customers can feel confident about the process progressing even when they are not on site.
What would be your advice to budding entrepreneurs who aspire to venture into the automotive industry?
Watch the road ahead and be ready to change gear. Listen to your teams, your customers and give them what they want. This is something that we are deeply committed to as we grow. We’ve recently completed a market research study in the UAE to better understand market needs, and the findings from that directly feed into how we are planning to move forward in 2022.
Invest in your technology but do so with customers in mind. Technology without purpose is a waste of time, money, and resources. From our website, AI, CRM systems, and partner relationships, we’ve been looking to enhance our technology to serve the customers’ needs first. We’ll continue to evolve, but with every step we take, we’ll keep focusing on tomorrow’s market needs and what our customers are telling us today.
How do you envision scaling CarSwitch’s operations and offerings in 2022 and beyond?
We’ve just launched our company in Saudi Arabia and are very excited about this. The Saudi market represents over 35% of all GCC sales in the region and is on the steepest growth trajectories globally. In the first quarter of 2021, KSA accounted for 1.5% of global sales – a 28% growth in absolute volume of sales.
The growth in Saudi is being driven by young people. Almost 70% of the population is under 30, with 50% being under 25. If you look at the wider issues of a relatively limited public transportation network, then the pattern for an increasingly mobile population has to follow. And since the structural change in KSA, the growth is certainly being accelerated by women being able to drive independently. All of this is critical in how we are looking to tap into this massive market.
About the Leader
Imad has led CarSwitch since its launch in 2016. Since then, he has raised over $10M in funding, growing the business 32x, reaching $100m in annual car sales. Through Imad’s leadership, the CarSwitch platform now has over 500k app users and has led the platform to become one of the highest-rated automotive experiences on both the iOS App and Google Play Store.
Imad’s background is in consulting at McKinsey & Company, and he spent over ten years working across 10+ developed and emerging markets. This has allowed him to understand the needs of an evolving industry as well as develop mechanisms to communicate effectively with and respond to the needs of a very disparate consumer base.
With CarSwitch, he’s been able to create a platform that combines the increasingly digital needs of a younger, hyper-connected consumer and aligns this with the evolving trends of the used car market.
Buyers and Sellers will always exist but finding the right platform on which they can conduct their business easily, underscored by the verifiable trust, has always been the key. Core to the business strategy has been Imad’s long-term aspirations for the brand.
November 2021 has been the next step for this with the rollout of the platform in Saudi Arabia. Imad will continue to lead CarSwitch’s Middle East expansion plans to make the platform a go-to site for the used car market across the region.
We’ve just been awarded the title of Most Trusted Pre-Owned Car Dealership Company by Dubai MEA Business Awards 2021, which has been a great achievement for the team.
We are the highest-rated iOS and Android Play Store app with over 500k app users. Over the last year, we’ve grown by ≈ 40% alone. Talking about Organic web traffic, we have grown 100% and in Direct Web Traffic, more than 40%.