December 10, 2020
By Douglas Busvine and Nadine Schimroszik
BERLIN (Reuters) – German used-car trading platform AUTO1 will ramp up direct auto sales to consumers next year, co-founder and CEO Christian Bertermann told Reuters on Thursday, after reporting its first clear quarterly profit.
The Berlin startup plans to deploy its own fleet of see-through trucks to deliver cars to buyers’ doorsteps, helping to boost awareness of its newest Autohero brand.
“It’s a glass truck – everyone sees what’s in there,” Bertermann said in an interview.
Founded by Bertermann and partner Hakan Koc in 2012, AUTO1 has drawn $1.4 billion in backing according to Crunchbase, including from the SoftBank Vision Fund, and is the top platform for buying and selling in Europe’s 600 billion euro used car market.
AUTO1 is eyeing a stock market listing that could value it at more than 5 billion euros ($6 billion), sources say, and has chosen Goldman Sachs, Citi and BNP Paribas as global coordinators of the deal.
While Bertermann, 36, declined to discuss a possible listing, he did share financials showing that AUTO1 rebounded in the third quarter from a spring slump caused by the coronavirus pandemic.
Revenue grew by 90%, quarter on quarter, to 769 million euros off the back of an 82% increase in the number of cars sold to 120,000. The top line shrank by 17% from a year ago due to a reduction of inventory early in the pandemic.
Adjusted EBITDA reached 16 million euros – clearly exceeding breakeven for the first time – from a year-earlier loss of 11.5 million euros. Gross profit margin grew to 11.3% from 9.5%.
INVESTING IN GROWTH
That profitability is unlikely to be sustained in the near term, Bertermann cautioned, driven as it was by people seeking their own wheels during the pandemic, just as auto industry slowdowns starved the market for new cars.
Still, he said AUTO1 is well positioned to invest in growth after raising 255 million euros through a convertible note sale in July.
Autohero will build on AUTO1’s existing fulfilment setup and data analysis skills, but will need to invest in last-mile delivery and branding to win over millennials to the idea of buying a car online.
“We believe there is a better way to buy a car – completely online,” said Bertermann. “Online is a thousand times better than offline.”
The direct-to-consumer strategy resembles that of Carvana in the United States, where a sales boom has driven its shares 180% higher this year to value the business at $45 billion.
Bertermann saw no risk of Autohero cannibalising AUTO1’s wholesale franchise – the cars sold will be younger and have fewer kilometres on the clock than those destined for dealer forecourts.
Autohero will scale up in the 10 European markets where it is already present, he added.
(Reporting by Douglas Busvine; Editing by Kirsten Donovan)
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