AM catches up with Tom Leathes to look back on the last year
A year has passed since AM last interviewed you (for an online article). Could you remind our readers what is the premise of the Motorway offering?
Motorway makes it easy for dealers to move more stock acquisition online and buy more efficiently straight from private sellers.
We provide all the sellers need to profile the vehicle.
We take them through any damage, the service history and demand detailed hi-res imagery.
We only allow vehicles online that meet those strict requirements and then we manage the transaction through to completion.
We have an aftercare team which makes sure that the sales go ahead without any issues and to answer any questions or concerns from dealers or consumers.
There have been 3,500 reviews of Motorway on Trustpilot to date and we have a five-out-of-five rating.
We have two ways in which the platform works, online car buyers that handle most of the lower value cars and then the online marketplace, which offers structured auctions every day.
There were 100 vehicles a day passing through the marketplace prior to the UK lockdown, on top of the sales we’re orchestrating online for car buyers.
The fee for retailers is based on the value of the car they’re buying (ranging from £175 for cars up to £4,999 or to £1,500 more than £250,000). There are no monthly fees.
Has the business delivered on your growth expectations since launch?
Absolutely. We’ve grown really quickly in the past 12 months.
Ahead of the Covid-19 lockdown we were well over 100% up by volume and value year-on-year.
We now have more than 1,500 dealers using Motorway and right into mid-March we had been averaging an enquiry every 15 seconds, with in excess of 3,000 completed sales each month.
The team’s now 70 people, up from around 35 a year ago. It’s been a real rollercoaster 12 months that saw us complete £300 million in sales.
That’s a huge increase on where we were.
It feels like we’ve moved from being just another tech start-up to becoming a key source of stock for a lot of dealers.
Which large car retailers were first to embrace Motorway as a source of stock?
Arnold Clark was one of the first to launch ‘sell your car’, which features on Motorway and we have a good, long-standing relationship with Sytner Group and Carbase.
Evans Halshaw has been live for about a month or so, and that’s doing really, really well.
Big, well-known brands are joining, and they see that we are one of the best ways of getting private sellers ‘through the door’ in a very effective way.
We’re beginning to partner with some big car selling websites too: heycar, Parkers, Regit, Telegraph and confused.com.
That’s helped us gain exposure to a much larger selling base.
Our marketing has also benefited from a national radio campaign with Neil Morrisey, of Men Behaving Badly fame, and is airing on LBC, Absolute, RadioX and Jazz FM.
We did some testing on TV last year and found radio to be far more effective.
Has Motorway evolved since its launch, with the addition of new services?
We are now able to provide a transport service, which includes a full vehicle inspection.
We’re working with third parties at the moment, which means that it can potentially scale very rapidly.
What remains important to us is that the standard of service we would want to offer ourselves is maintained.
Inspection and delivery attract an additional cost, but it’s based on distance from the dealership and whether a covered vehicle is required, and we’ve tried our best to keep it as competitively priced as possible.
We haven’t done anything about stock funding yet, but we do get a lot of questions about that from dealers.
We’re looking to solve all the issues with functions that people might normally get from a physical auction but don’t currently get from us.
At the moment we’re 100% focused on the things that we do right now, though.
We’re still very small. We’re growing, but there’s a long way to go.
What we really want is to become the clear leader in doing this one thing – sourcing quality vehicles from private sellers in a simple and transparent way.
How has the Covid-19 lockdown impacted the business?
The week prior to lockdown was our biggest ever, by a massive margin, and we had to stop short of making a lot of deals. It was frustrating.
We were really transparent in our communication with the dealers and the private sellers, though, and everyone was really understanding.
Continuing beyond the point that we did, which was a little earlier than Government suggested, would have felt unethical.
We make a lot of our brand values revolving around honesty and I think it was important for us to come out and say that it was irresponsible to continue trading beyond that point.
Making the call allowed us to structure for that and double down our focus on product during the lockdown period to ensure that everything was in order.
Whether or not you eke out the number of transactions that you had pending, it’s never really going to be what you need to make a difference.
When we were forced to pause because of the various transport restrictions imposed under lockdown measures, we furloughed our customer service team.
We topped up their salaries to make sure they were earning more than the 80%.
It’s such a stressful time and keeping everyone’s mental health intact was important to us.
Are you confident trade will pick up where you left off when lockdown restrictions are eased?
All those sellers are still ready and waiting.
We’ve not been able to formally guarantee the valuations, but from all the conversations we’ve been having with dealers there doesn’t seem to be a huge difference in valuations yet.
We now have to make sure those stalled sales are prioritised when we get back up and running again (Motorway re-commenced online auction activities on May 11).
We’re doing what we can to help dealers and remaining in touch with them helps us get a handle on when they expect to resume trading.
It’s unlikely there’ll be an immediate lifting of restrictions, though.
The first consideration will clearly be ‘is it now okay to move cars back and forth?’ Then we’ll have to see who is trading again.
What was your approach to the temporary pause in trading, from an operational point-of-view?
We’ve a software development team of 25.
Right now, coronavirus is giving us a bit of time to really double down on our tools and the tech features that really make it easy for people to do business with us.
We’re focusing our attention on all the dealer tools, including our online bidding app.
We’re determined to make that the ‘best in class’.
If we’re going to be asking dealers to take more of their stock sourcing activity online with us, then we need to make that process as simple as it possibly can be.
That’s not easy when you’re looking at an auction platform.
Ultimately, we’re trying to make the most of the Covid situation.
There was already a move online and this is forcing people to re-think all the physical things that they do.
The car industry has been slower off the mark than some sectors in making that switch and if this is the catalyst for that then I guess you could imagine it as being a really powerful trigger for a step-change.
Our aim is to move as much of that transaction volume online, with more people getting a much better deal.
The challenge we have got is delivering the service that we have now to a much larger group of dealers.
We have 15 account managers and we’re constantly trying to automate more of the process, so that we’re able to get five, six or seven time our current volume of dealers.
You would describe yourself as a tech start-up. How secure is the business’ funding, especially given the fragile economic climate right now?
We raised £11m last March, which, I guess, is a decent-sized investment.
But underlying that is the fact that we are growing sustainably.
We work very hard to ensure we have a sustainable business model that can scale.
We’ve got a strong cash position and our strong trading means we’re not burning money.
That’s a good position to be in right now. It’s scary for a lot of start-ups.
If you were just about to raise a round of funding, the current crisis hitting your plans would be a very scary thing.
While Motorway is offering a service to car retailers, many ‘start-ups’ in the automotive space are widely described as disruptors. How do you see the market evolving?
Many of those are guys we talk to and we share our experiences with.
What is interesting about many new online start-ups entering the sector is that they have experience of ‘productising’ this online experience.
A lot of franchised dealers have (been selling cars online) for a long time, but it kind of exists in the background.
At the moment, it still feels like there are online sales businesses and offline sales businesses.
That’s not the case but these newcomers just tend to be better at ‘productising’ what they have to offer.