Toronto Star Classroom Connection

Changing the way you buy a car

BRENNAN DOHERTY

Buying a car is still a surprisingly analog process in a world where everything can be bought online.

Most car buyers still need to go to a dealership, test-drive a model or two with a salesperson giving an extended sales pitch, and fill out a mountain of paperwork.

CarDoor, a Toronto-based automotive trading site founded by Kijiji veteran Matt McKenzie, is trying to take the old-school car buying process into the fast lane.

Site users can get a value on an existing ride of theirs, browse thousands of options, secure financing and even have a new car delivered to their front door — and have it exchanged for free if they drive under 700 kilometres in two weeks.

While it isn’t the only company trying to digitize the car-buying process, McKenzie says it is one of the most well-sourced. Instead of just handling transactions from existing car owners, it works with dealerships all over the country to give buyers as wide an offering as possible. In turn, that gives dealers even more reach and exposure.

But the car world is running into plenty of speed bumps. According to Autotrader, the average price of a new vehicle in the first quarter of 2023 was $61,821. For used cars, the total was just shy of $40,000. Low

inventory levels and high demand from buyers is driving prices up, the site said, and historically high interest rates aren’t making car loans cheaper.

McKenzie spoke to the Star in early June:

Why did you leave Kijiji to start CarDoor when you had so much experience handling automotive sales there?

Automotive was one of the biggest verticals on Kijiji. There was an old, traditional way of doing these transactions. And there seemed to be the perfect opportunity to use my background to build out a new marketplace that could enable these seamless, transparent and convenient transactions.

I think it was just perfect timing, in retrospect, especially with the constraints on supply and the convenience of doing these transactions from home, in a COVID world, when a lot of people weren’t able to even go to a dealership. Or, they weren’t comfortable doing a private transaction. It couldn’t have been a better time for CarDoor.

At the time, I’m sure it was a lot more stressful.

Oh, for sure, especially those first six months. They gave us a lot of time to sit back and understand where the market was going. We didn’t, at that point, know the degree of supply chain constraints. But we were very fortunate relative to even some of the competitors in this space, and even south of the border where our model was quite resilient to market conditions over these last few years.

What has made CarDoor more resilient than U.S. companies doing the same thing?

We have an incredible depth and breadth of inventory. We’re one of the top 10 biggest dealers in all of Canada, and we only operate in Ontario at the moment. We partner with very reputable dealers in Ontario. The vehicles that are on our site are dealer vehicles you want to go and see, but you don’t want to waste your time driving around from dealer to dealer, or having uncomfortable conversations in a dealership.

Do you only handle pre-owned vehicles, or do you sell new ones, too?

We do pre-owned vehicles, and are testing new vehicle sales right now with two franchise dealers. But we also have what we call “new-used,” meaning we have lots of 2023 cars with under 500 kilometres on them. They’re more or less new.

Why do you have so many cars with fewer than 500 kilometres?

It’s funny. A lot of them are actually over $100,000. By driving even just one kilometre, they fall into the used-car category. It’s a bit of a loophole when selling luxury units sometimes. But some of those vehicles could be demo units, or units dealers are looking to off-load. That’s why our platform is so great, because we can carry everything from a $10,000 car right up to a $900,000 Ferrari. We have everything for every single consumer type.

There are drivers out there who are pretty frustrated by dealership markups. What do consumers have to think about when they’re paying for your services?

They don’t actually pay anything for our services when they’re buying a vehicle. What they’re really getting is convenience. They’re valuing their time, rather than going into a dealership and negotiating a few dollars off or maybe some free winter mats or something like that.

I think gone are the days of negotiating. We’re finding that gen-Zs don’t value negotiation. The reality is there’s not a lot to be negotiated on a car. At this point, people are absolutely valuing their time and the effort required, rather than saving a buck or two.

We’re willing to drive a vehicle essentially anywhere in Ontario. For some rural communities where the selections may not be as great as somewhere in the GTA, they now have thousands of vehicles available to them that are going to be delivered to their doorstep in whatever town or city they’re in.

Over the past couple of months, auto repossessions have risen in Canada thanks to higher prices and financing costs. Have you seen that play out among buyers and sellers at CarDoor?

We actually have quite a few lenders across Canada that actually send us their repossessed vehicles to our location to our warehouse where we then in turn, turn those around and obviously provide those back to the dealers as vehicles. Dealers are looking for vehicles, whether they’re repossessed or whether they’re, you know, a used vehicle or any vehicles for that matter.

But you’re absolutely right. In the last six months, the repossessed vehicles that we’ve seen has probably doubled.

Millennials and gen-Z are increasingly disinterested in driving compared to older generations. Does that worry you?

For gen-Y and gen-Z, the biggest factors are obviously the cost of owning a vehicle and rising interest rates and the cost of just driving. And I think that’s the reason why when gen-Y or gen-Z are looking for transportation, they are moving more toward ride-sharing and other options. But we find they’re looking at lower-value vehicles they can afford. They’re also looking at either fuel-efficient or EV options.

In urban centres, ride-sharing is an option, but there are a lot of places outside of these urban centres where ride sharing and other transportation options are just not available. So, we do see a majority of users on our site from those demographics. So yeah, I think they will use a combination of ride sharing options or transit, but there is still a huge, huge market for owning vehicles.

Some newer car manufacturers like Tesla deliver cars to doorsteps without involving a dealership at all. Are you worried that might become the norm?

That’s typical on the new-vehicle side. There are a few players in Canada that are doing that direct-to consumer sale in Canada, although it isn’t as prevalent as it is in, say, Europe. We will still play in the used and new car sides as well as other nonpassenger vehicles — whether it be boats or bikes or motorbikes.

And yeah, sure, there will be some direct-to-consumer sales on the new vehicle side of the market, but on the used side — every single used vehicle is a unique vehicle. There aren’t two used vehicles out there that are the same.

You’re from Toronto, and you’re in the car business, so I feel I can ask you this. What are your thoughts on congestion pricing?

I think, with the congestion that we have today, a city like ours is absolutely ripe to test things, and I’m all for figuring out what works best for everyone.

But I commute across the city every single morning, and something needs to be done. And I’m open to trying and testing whatever helps.

“The reality is there’s not a lot to be negotiated on a car,” CarDoor founder and CEO Matt McKenzie says. “At this point, people are absolutely valuing their time and the effort required, rather than saving a buck or two.”

BUSINESS

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2023-06-10T07:00:00.0000000Z

2023-06-10T07:00:00.0000000Z

https://torontostarnie.pressreader.com/article/281831468135484

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