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Why we invested in Digital Motors, the automotive e-commerce platform

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Category: News
Published: 19/02/2020

Digital Motors today announced their latest funding round, led by Autotech Ventures with participation from InMotion Ventures, OpenRoad Auto Group, Maryann Keller and Ryan Kerrigan. The press release can be found here.

Sebastian Peck, Managing Director of InMotion Ventures, explores why we invested in Digital Motors.

In 2019, global retail e-commerce exceeded 3.52 trillion US dollars. Nearly every car buyer journey begins online today, researching products on manufacturer websites, social media and independent review sites. Surveys indicate that nearly half of all customers would happily complete a purchase online. And yet only 2 percent of new cars are actually sold online. The physical store with its location, stock and relationship-based model remains the predominant sales channel of the automotive industry. Manufacturers still expect customers to visit their dealership network, while virtually every other retail category delivers an omnichannel experience where relevant products and services are available anywhere, anytime. Automotive franchise laws and long-standing contractual arrangements cement the status quo, as manufacturers who have attempted to change the system have found out at their peril. And while the industry acknowledges that changes are needed and the role of the dealer has to evolve, automotive manufacturers on the whole continue to support the system as loyalties run deep and the cost of unwinding the system it is simply too high.

When I first spoke with Andreas, founder and CEO of Digital Motors, we had a lively debate about the future of the franchise system as the experience of buying a car is increasingly diverging from how we purchase most other goods and services. With millennials preferring a trip to the dentist to setting foot in a car dealership, what is to be done?

Andreas had a simple answer: make your peace with the franchise system and work with the dealers to help them transition to the brave new omnichannel world. The opportunity is exceedingly large. In 2019, 4.7 million passenger cars were sold in the US. Total car and light truck sales amounted to approximately 17 million units in the United States and around 77 million units worldwide. J.D. Power estimates US consumers spent a record $462 billion on new vehicles last year. It is the mother of all addressable markets.

Digital Motors has developed a configurable online store technology that can be integrated with the websites, systems, and processes of any dealership, manufacturer, auto lender, or marketing site to power a state-of-the-art car buying and financing experience – tailored to individual clients’ business needs and corporate identity. Most importantly, however, Digital Motors hands back control to consumers who can now decide whether or not to complete the entire purchase of a new vehicle online.

We believe that this is a big step in the right direction and look forward to supporting the Digital Motors team in delivering their vision for automotive retail.

If you’re building a business transforming the mobility and travel sectors, we’re keen to hear from you. Contact our team on investments@inmotionventures.com