The founder of the Europe-wide used car stocking platform Auto1 has said that artificial intelligence will help it meet the needs of retailers from Walsall to Warsaw - and avoid the effects of an economic downturn.

Already Hakan Koc, co-founder and co-chief executive of SoftBank-backed Auto1, has 35,000 cars on the balance sheet of the start-up business and its new credit business, Auto1 Fintech, which was established with Deutsche Bank and Allianz earlier this year.

A Financial Times feature stated that the German start-up raised €460m earlier this year from SoftBank’s Vision Fund in one of the biggest tech funding deals in Europe and will use machine learning technology to buy tens of thousands of cars each month, before selling them to car retailers in more than 30 countries.

Koc told the FT that he was aware the platform presented “a lot of risk”, but he is confident in his AI-based trade knowledge. He said: “We can see clearing prices, we can see what people sell to us for, what people are buying for…the algorithm comes up with a price thesis and says at this moment of time is it relevant that this seven-year-old car is green, or does it matter whether it has leather seats or not.

“You have the selling side certainty, the buying side certainty and the balance sheet becomes a technical function.”

Koc, a former employee at start-up Home24, founded Auto1 six years ago with co-chief executive Christian Bertermann, who previously worked at the voucher website Groupon.

The FT reported that the start-up initially struggled to raise funding, but is now “awash”, suggesting that many investors now see scope in the AI-driven car retail model.

The newspaper’s report highlighted, however, how the business differs from the likes of Amazon in one key area, taking risk on to its own balance sheet – exposing it to downturns in consumer demand.

One investor, who spoke to the FT on condition of anonymity, voiced concerns that the AI-based functionality of Auto1 might not be able to spot signs of a downturn, having been developed during a period of growth for the automotive sector.

Koc suggests, however, that the Europe-wide reach of the Auto1 platform means that it could simply shift its sales to an alternative country in the event of a downturn.

He said: “We are convinced that we might be the only party that can very profitably lend to car dealers in a downturn environment.”