Trust, reliability and convenience are not words you would normally associate with the car-buying market. It’s an industry surrounded by the uneasy sense that the consumer might not be getting a good, or even fair, deal.
But while automotive retail has a mixed reputation, it represents a core segment of the broad consumer industry that is consistently among the top three spending buckets across European markets. This presents a significant opportunity for companies able to tap into the evident demand, while addressing underlying trust and quality issues. In an industry that still largely operates a very traditional retail model, there is ample scope for innovation right across the supply chain.
One company clocking impressive mileage in this direction is brumbrum, and we are excited to announce today that we are partnering with them to back the next stage of their expansion. Founded in Milan, Italy, brumbrum allows consumers to either purchase used cars online or hire a vehicle through subscription; bringing new mobility options to automotive retail, while creating a new direct-to-consumer offering in a typically fragmented space.
Several aspects of brumbrum’s model are compelling to us. The first is how it sets about creating trust in the used car market through its end-to-end retail model. brumbrum maintains complete control over the supply chain by purchasing from a combination of sources and performing refurbishment itself before retailing to consumers. As a result, customers benefit from full transparency over every vehicle’s provenance and road history from the time they start searching for their new car, to the moment it is delivered to their door. This is in stark contrast to how much of the used car market currently operates; with vehicles shifted from dealer to dealer, and country to country, in a multi-auction process which distributes margins to multiple players. By the time the product reaches the consumer, it often can’t be traced back to its original source; meaning the consumer lacks critical information about any previous issues, accidents or repairs in the car’s history, making its true condition difficult to judge.
Thanks to this unique level of transparency, we’ve seen impressive feedback from brumbrum’s customers. No buyer has taken up the 14-day, or 1,000km, grace period in which they can return their car and, what’s more, the business has never sold a vehicle at a loss. In a market of low expectations, brumbrum is showing that service, value, quality and reliability is not only possible but should be a given.
Second, with its new long-term rental offering, it creates a new ‘Car-as-a-Service’ option, where consumers can access not only a car but financing, service, maintenance and car delivery all in one. This new solution provides more flexibility and convenience around car-use on the foundation of a familiar subscription model, while allowing brumbrum to truly create an end-to-end automotive retail space that directly answers the needs and expectations of the modern consumer.
And finally, is the extra level of choice that brumbrum offers to consumers; a degree of customisation that people have come to expect in e-commerce but aren’t accustomed to when buying a car.
brumbrum is one of a small handful of tech-enabled companies bringing much needed tech-led innovation to the automotive industry. It is demonstrating how the data-driven, customer-centric approach characteristic of e-commerce, can be a catalyst to radically enhance trust, transparency and quality across out-dated industries.
This approach is symbolic of a new wave of marketplace companies, characterised by the need to add more value and better services for the customer. If the first generation was about providing consumers with information and connecting them to third-parties – through classification and listing-style services – this new wave of businesses realise that the digital consumer expects more: greater knowledge and choice, reliability of product and service, accurate personalisation and, ultimately, transparency. In other words, companies need to shape and enhance the product or service, not simply expedite access to it. As brumbrum is demonstrating, you can only add value if you vertically integrate more steps of the value chain.
For the auto industry this approach has significant implications, including the opportunity to transform how carmakers understand and serve the needs of their customers. With the dealership model under pressure, and consumers increasingly willing to buy cars online or to shift toward subscription services, the industry needs a more integrated relationship between manufacturers and consumers. The notion of mobility is evolving quickly, but with an industry not set up to serve fast changing customer needs, a window of opportunity has emerged for a new player with a fresh approach.
Founded by former McKinsey partner Francesco Banfi, brumbrum will use our partnership to expand internationally in 2019. In Europe alone, the entire automotive market is worth over €400 billion.
We have been impressed by the rapid progress the company has, and its relentless focus on operational execution. This investment also – once again – emphasises the wonderful diversity of the European market. We nurture tech-talent across geographies and sectors, because innovation comes from everywhere.
The auto industry has long lagged behind other direct-to-consumer propositions, but we fully expect brumbrum to accelerate the process of change and to create a leading brand that consumers love. We look forward to playing our part on the road ahead.